An Introduction to APIs & What They Mean for Your Business

Apr 29 2022

Has anyone ever asked you, “have you considered using an API for that?” — after which, you thought to yourself, “how on earth would an API have anything to do with my business?”

Almost every business today is crucially data-driven. The sheer amount of data constantly being collected, analyzed and synthesized is so overwhelming that companies are being forced to call for backup. CRMs, or Customer Relationship Management platforms, are being deployed by sales and marketing teams to harvest better data on their connections with leads and clients, and that data is stored for cross-referencing and analysis. Without Quickbooks, many small business concepts would be inconceivable. Even love is found on The Bachelor using data analysis (seriously). Banking, manufacturing, transport, healthcare… you get the idea.


What’s an API?

TL/DR:  An API (Application Programming Interface) is a set of instructions or a protocol that borrows data and functionality from one application to another. Private or public, APIs are software intermediaries that allow two applications to talk to each other.

A popular metaphor is the typical restaurant scenario. You enter your favorite eatery, study the menu, and summon the waiter, with the intention of communicating with the kitchen – the system that will prepare your meal. Your choice, of course, is pizza. The waiter is the API (a piece of programming that enables two apps not specifically designed to work together to seamlessly interact and exchange information, with a dashing pompadour), who communicates your order to the kitchen.

You are the end-client, ordering a structured format of data (pizza!) to the waiter (a public API) and your response is the order you placed. The menu is the instruction set for ordering, processing occurs (invisibly to you) in the kitchen, and you receive your response.


Who even uses APIs?

There are endless examples; here are just a few.

Bloomberg, a financial information provider, allows unrestricted access via their private API to their raw financial data to corporate customers to leverage and reinforce their position in the market.

Google isn’t in the business of weather data (yet), so they source this information from a third party by means of an API, which sends them the latest weather details in a way that’s easy for them to reformat.

Uber is built on dozens of 3rd-party APIs, including Google Maps, Braintree and Twilio, which secured them a role in a future technology (at the time) of ride-sharing.

Banks utilize APIs to allow customers to make cashless payments via Venmo, Chase, PayPal, Apple Pay, etc. APIs allow schools to share lesson plans, develop curriculums and share files. They enable medical facilities to keep track of vaccine records, previous tests and vital patient data across the world. Travel booking sites are able to aggregate thousands of flights and destinations and showcase the cheapest option by using third-party APIs to collect availabilities from providers (likewise, they use their own APIs to confirm trips with those providers). News agencies leverage APIs to stream and collect breaking stories across huge ranges of categories.

To put it simply, APIs are the connective network that binds today’s digital ecosystems.


Why the heck would I hand over valuable code or technology to someone else?

Companies are not giving entire access to their code. Instead, they give access to certain pieces of raw data that will help to connect your application with theirs. For example, Google Maps partners with Yelp by delivering its own API that helps recipients to display geographic locations. Yelp currently uses this API (for a price) to show locations, rather than developing its own comprehensive mapping system, which would be far more expensive.

By developing a solution within your company with an open-ended API, you wouldn’t be giving away any data, rather, you would be leasing insights to that data. And, by creating a pathway to making others dependent on your data, you are asserting dominance in your industry.

Although delivering a unique digital experience is not as easy as it once was, by developing their own APIs, businesses are reaping rewards and profits in places previously unconsidered.

Think of it as turning your data into a service.

Streaming your data in this way could mean overcoming barriers both within and between organizations that previously prevented content, resources and data from flowing efficiently.

Just as importantly, APIs future-proof companies, because they make it much easier to improve existing internal systems (or develop new ones) down the road, creating commercial processes that are much more scalable and growth-driven.



Chances are, your company is sitting on a treasure trove of data, and if so, you should be considering how to leverage it. Deciding how the API revenue model fits within a broader business model requires a good understanding of client needs and use-cases, as well as what competitors are doing and the price sensitivity of your potential end-users. Whatever the case, ignoring the potential benefits of extending your market reach through API development is not a wise move.




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