6 Reasons Why APIs Are Reshaping Your Business

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  2. 2. AcknowledgementsWe would like to thank our partners for their help in making this studyMehdi MedjaouiCo-founder & COO at WebshellPierre-Antoine DurgeatFounder & Partner at Novacodex faberNovel 2012 2
  3. 3. This work was made for you to share, reuse, remix, rework! !!!!!!!!!!!!!!!!!!!!!!!"!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"""# # It is licensed under the Creative Commons BY-NC-SA license to allow for further contributions by experts and users in the coming months. You are free to share and remix/adapt the work. You must cite this document: faberNovel, 6 Reasons Why APIs Are Reshaping Your Business, November 2012. You may not use this work for commercial purposes. You may distribute a modified work under the same or similar license. Why do we release this kind of work for free? Our job is to help big organizations think and act like startups. And we believe that this cannot be achieved without causing people to want to innovate and explore new business models. Our ambition is to inspire you by giving you the keys to understand new markets like Russia or successful companies like Apple, Amazon, Facebook! or the business value of APIs.!!!!!!!!!!!!!!!!!!!!!!!"!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!""#!!!!!!!!!!!!!!!!!!!!!!!"!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!""#faberNovel 2012 3
  4. 4. Deep-Dive in the API World
  5. 5. What is an API ? An Application Programming Interface (API) is a specification intended to be used as an interface by software components to communicate with each other. An API may include specifications for routines, data structures, object classes, and variables.Source: Wikipdia faberNovel 2012 5
  6. 6. In other words, APIs are like male and female plugs allowing software toshare data and functionalities. Input ProcessingOutputAPI Provider Program Consumer ProgramfaberNovel 2012 6
  7. 7. An analogy: The evolution of the car industry follows the logic of APIsYesterdayTodayCarmaker = craftsman Carmaker = system integrator Tailor made Car divided into subsystems (powertrain, Custom design for each element of the car brakes, steering, suspension, etc.) (wheels, seats, brakes, lights, roof, etc.) Main elements designed separately and Restricted modularity reused in different cars No standardized processes Standardized processes Communication interfaces between different engineering teamsSource: 3Scale, What is an API?faberNovel 2012 7
  8. 8. So, what is an API ?API interface API providerJust like a car which consists of several!an API is a software brick that allows someonesubsystems designed by different to share data, content and functionalities withspecialized teams (internal or partners) who others, for them to build new services based oncommunicate with each other all throughout this data, content and functionalities (i.e. using onethe design process!or several bricks). The services built can use one or several APIs from the same or different API providers.faberNovel 2012 8
  9. 9. The Facebook Like button uses an API to dominate social recommendationBefore 2010: no Like API After 2010: a Like APIAPIThe Like button was at first intended to be used only By embedding a line of code in their website,on Facebook to like photos, status, comments and fannow anyone can benefit from the Like buttonpages.functionality and enable their visitors to Likeany content while browsing. faberNovel 2012 9
  10. 10. There are three main types of APIPrivate PartnerPublic Private APIs are used internallyPartner APIs are used toPublic APIs allow companies to to facilitate the integration offacilitate communication andpublicly expose information different applications andintegration of software between and functionalities of one or systems used by a company.a company and its businessvarious systems and partnersapplications to third parties that Advantages: do not necessarily have a Rationalized infrastructureAdvantages: business relationship with them. Reduced costs Value-added service Increased flexibility Up sellAdvantages: Improved internal operations Must have for business Delegated R&Dpartners Increased reach, traffic New revenue streamSource: 3Scale, The rise of the APIs faberNovel 2012 10
  11. 11. Historically, APIs were used by big software companies but their usage isbecoming more democratic today Application Services APIs Build new functionalities Trouble-free Web services APIsinteroperability Share data or services internally Accessible to bigand externallycompanies More unified communicationprotocol Accessible to any company Easy integrationAPIs for operating systems Create application for OS Attract developers Enlarge customer baseInfrastructure services APIs Limited to big software Allows companies to externalize companies IT infrastructures Access to computing power Available to anyone1985 - 2001 1990s20022006Source: 3Scale, What is an API?faberNovel 2012 11
  12. 12. Today, API growth is skyrocketing!Number of public APIs listed on ProgrammableWebSource: ProgrammableWebfaberNovel 2012 12
  13. 13. !however, most APIs are private and thus invisible to the public8014 APIs Public APIsPrivate APIs faberNovel 2012 13
  14. 14. APIs mean a lot of exposure for web giants!13billion API calls / day 5billion API calls / day5billion API calls / day1,4 1,1billion API calls / day billion API calls / day1billion API calls / daySource: Open APIs, Whats Hot Whats Not, John MusserfaberNovel 2012 14
  15. 15. !and also significant revenue= $2billion/year90% of what we do is business through APIsJohn Watton, Expedia Affiliate Network, Travolution.co.uk, April 2012Source: John Musser, Open APIs, Whats Hot Whats Not faberNovel 2012 15
  16. 16. API revolutionized a century old industry: the Canadian Yellow Pages!Yellow Pages databaseAPIYellow Pages bookBefore, The Yellow Pages were delivered Today, The Yellow Pages data can beas a paper directory. Users had to flip accessed via an API, allowing it to be presentpages to find relevant information. The on any device (PC, smartphone, tablets, etc.)content was not mobile, you had to have a and associated with search, location-basedYellow Pages book at hand to find whatservices and other functionalities.you were looking for.faberNovel 2012 16
  17. 17. !and is expanding its reach to many industriesInternet Social Tools MappingShoppingTelephonyFinance Enterprise Music Photos Videos Messaging faberNovel 2012 17
  18. 18. Did you know? APIs can also be used to do unexpected thingsGenerates full report of available Users pass CAPTCHAs through the The FullerData Fortune Cookie APIinformation about a specific vehicle API where they are solved by an randomly generates a message (a based on its vehicle identificationOCR or manually. Average solved fortune). There are a total of 882 number.response time of 15 seconds, and fortunes available.average accuracy rate of 90%. The KBS API provides users with Whos Hurt is an injury reporting The MyFitnessPal API allowsprogrammatic access to the KBSsservice for professional sports developers to access and integrate theKorean translation of the Bible. leagues, including football, baseball, functionality of MyFitnessPal (trackingbasketball, hockey, and soccer food and exercise) to create new leagues. applications.Source: ProgrammableWebfaberNovel 2012 18
  19. 19. API Case Studies
  20. 20. APIs, an innovative and efficient model allowing companies to manage their corebusiness activities onlyTRADITIONAL COMPANY API-DRIVEN COMPANYCore Financebusiness HRR&D HR Finance R&Dvs.ITCorebusinessMarketingITLogistics Marketing LogisticsIn a traditional company, all functions In an API-driven company, supportare internalized to support the corefunctions are externalized via an API,businessfocus is on the core businessfaberNovel 2012 20
  21. 21. Case Study #1
  22. 22. Case Study 1. Salesforce, CRM in Platform-as-a-Service mode 1 23Salesforce provides a range of CRM services in thecloud via an API, on a subscription basis!Sales force automationCustomer service, support, helpdeskSocial media monitoring!and also some products related to companiesworkflow.Performance managementEnterprise social networkUsing Salesforce requires no software installation atcustomer companies sites.faberNovel 2012 22
  23. 23. Case Study 1. What would it cost if there were no APIs?1 23If Salesforce did not have an API, it would have to install its software at each clients site, whichmeans sending out staff to install the software. What would it cost?Lets 3 meeting/dayassume200 days/year =that:Salesperson50 000$/year 1 salesperson 600 meetings/year Salesforce has 104 000 clients To reach that client target in 3 years Salesforce would need around:60 salespersons = $9 millionSalesforce is able to handle a large basis of clients while maintaining low costs. Delivering services through an API is far more cost effective than running software locally on clients IT infrastructures faberNovel 2012 23
  24. 24. Case Study 1. Salesforce API eases IT services integration1 23 Thanks to its API, Salesforce can easily integrate with: Applications Web servicesfaberNovel 2012 24
  25. 25. Case Study #2
  26. 26. Case Study 2. Expedia, marketing through APIs 123Expedia is a travel booking company (train, plane, hotels, etc.). Before, their webmarketing would be done thanks to an HTML framed window that affiliates wouldembed in their website. Today, Expedia opened up an API for their affiliates to enable them to pick up:Bookings Photos Search results User reviewsIt allowed developers who needed a piecemeal access to Expedia content to integrate itseamlessly in their interfaces and experiences.Today, Expedia Affiliate Network includes 10,000partners and makes $2 billion revenue per year, 90% of which comes from its API.Source: RWW, How an API Can Transform Your Enterprise faberNovel 2012 26
  27. 27. Case Study 2. Room 77, a hotel search website using1 23the Expedia APIRoom 77 is a hotelreservations aggregatorUsers perform a hotelreservation search.Several options aresuggested; they all redirectto the matching hotelbooking partner websites.Links redirecting toExpedia websitefaberNovel 2012 27
  28. 28. Case Study 2. Eased partnership for Expedia and its affiliates1 23Drives more trafficGenerates newNew distributionto Expedia revenues sources channels Thanks to its API, Expedia affiliates do thepartnership and marketing work for Expedia at a low marginal cost for Expedia.faberNovel 2012 28
  29. 29. Case Study #3
  30. 30. Case Study 3. Netflix, distribution on a large scale thanks 123to APIsNetflix offers subscription to In October 2008, Netflix opened an API tounlimited streaming movie andallow developers to use its resources:TV shows Movie database Queue management Rental history ! The API is free and allows for commercial30usefaberNovel 2012
  31. 31. Case Study 3. Many use case scenarios are built on the 1 23Netflix API 800+ devices can streamNetflix content20 000 developers usethe Netflix APISource: Redesigning the Netflix API, Daniel Jacobson faberNovel 2012 31
  32. 32. Case Study 3. What would it cost if there were no APIs? 1 23 If Netflix did not have an API, it could not have developed thousands ofapplications for hundreds of devices on its own. What would it cost if Netflix developed these apps themselves?Letsassumethat: =50 000$/yearDeveloper20 000 developers use Netflix APIHaving these developers in-house would cost Netflix:$1 billion/year Netflix allows third party developers to build applications forall sorts of devices, thus catering to many needs without involving high development costsfaberNovel 2012 32
  33. 33. Case Study #4
  34. 34. Case Study 4. Facebook Connect API, partnership on a1 23worldwide scaleFacebook Connectallows users to log-in onany websites orapplication using theirFacebook information.Third party developers canadd a Connect withFacebook button by usingFacebook Connect APIs. Facebook Connect API has standardizedcredentials on the web, creating a universal IDfaberNovel 2012 34
  35. 35. Case Study 4. What would it cost if there were no APIs? 1 23If Facebook did not have APIs, it could not let third party developers onboard themselves touse Facebook Connect API, and would thus have to do partnership work. What would it cost if Facebook did partnership work?Lets 10 phone meetings/dayassumethat:200 days/year=50 000$/year2000 phone Salesperson 1 salespersonmeetings/year7 million websites and apps use Facebook Connect To reach that partners target in 3 years Facebook would need around: 1100 salespersons = $55 millionFacebook let partners onboard themselves in its ecosystem through its API, and thus built partnerships on a worldwide scale while maintaining low costsfaberNovel 2012 35
  36. 36. Case Study 4. Facebook Connect enriches its Social Graph1 23Facebook Connect is embedded in iOS 6 and in InstagramConnect with Facebook to apps like Safari, Photos,Camera, Maps, Game Center, etc. Post pictures directly to FacebookSynchronize contact info, events and birthdays yourfriends have shared with you on Facebook Chat in a native Facebook interfaceLike songs, albums and apps directly from iTunes andthe App StorefaberNovel 2012 36
  37. 37. Case Study #5
  38. 38. Case Study 5. Fitbit API, externalizing R&D 1 23Fitbit is a fitness tracker that records healthand fitness data.Originally, there was only one applicationusing the data developed by Fitbit.In 2011, Fitbit created an API to allow thirdparty developers to create fitness appsusing Fitbit health data such as daily steps,calories burned, food eaten and weight.faberNovel 2012 38
  39. 39. Case Study 5. Thriving innovation based on the Fitbit API 1 23 20 apps were built on the Fitbit API creatinginnovative uses of fitness and health datafaberNovel 2012 39
  40. 40. Example: MapMyRunMapMyRun uses FitBit health data to provide joggers with statisticssuch as calories burned, heartbeat, speed, altitudefaberNovel 2012 40
  41. 41. Case Study 5. What would it cost if there were no APIs?1 23If Fitbit had not had an API, they would have had to develop applications internally to createinnovative use cases. Without an API, it would not be able to leverage third party developerscreativity. What would it cost if Fitbit had developed these apps themselves? Lets assume that: = $50 000 1 application 20 applications are using fitness data from Fitbit API Developing these apps would have cost FitBit:$1 million Fitbit lets developers create new apps with its data, which results in higher usage of Fitbit device. It only cost Fitbit the maintenance the API. faberNovel 2012 41
  42. 42. Business value ismoving towards dataand its associateduses
  43. 43. Takeaway
  44. 44. APIs allow companies to effectively pursue the classical triptych of businessgoals #1#2 #3BusinessProductSupply Chain DevelopmentDevelopmentManagement faberNovel 2012 44
  45. 45. !by giv...