Public API Value Chains

Public APIs have created new ways to deliver business services. The biggest and most powerful technology companies like Apple, Google, Facebook, Twitter and Flickr are able to scale public APIs in amazing ways. Some of these API economies run on cash, and some have other motivations. The millions of apps that have been created are the most profound testament to the power that APIs can have to spark innovation given the right business conditions.

Here are the basic elements of a public API value chain:

  • The business assets
    • Public APIs are frequently used to extend a successful product into new arenas and niches that cannot be reached efficiently in other ways.
  • The API provider
    • In addition to designing and creating the API, the provider must create an environment in which the API can be understood and used. The provider must create some sort of incentive to encourage developers to use the API. And then must promote the API to developers
  • Developers
    • Some developers are motivated to experiment with interesting technology. Some developers are interested in public service or activism. Others are motivated by the challenge of innovating.
  • Applications
    • The apps created using a public API must have a distribution channel to find an audience. Public APIs have been used to create millions of apps for diverse audiences with different needs.

Following are the ways Public APIs can be used in an organization:

  • Enhancing value and extending the brand
    • The companies with successful public APIs have been able to reach new audiences and niches, benefiting from the creative energy of thousands of developers. Most of the successes just mentioned are based on a wave of excitement about the business asset. Creating the API helped harness that excitement in new ways. One common mistake is that companies confuse the excitement about business assets with excitement about an API.
  • Reaching niche markets
    • Public APIs have been used to create apps to reach niche markets. eBay and Amazon have pioneered this use of APIs. In addition, the public APIs make it easy to embed the ability to buy a product or service.
  • Expanding reach across platforms and devices
    • Making APIs available also allows developers with a wide variety of motivations to solvetheir own problems.  APIs make it easy to work with developers who have skills to create specialized apps. Talented developers can access the API and create apps. One interesting aspect in expanding the reach of a business asset through an API is the motivation of the developers
  • Fostering innovation
    • Public APIs can support innovation both directly and indirectly. A direct approach to supporting innovation might involve exposing some business assets through APIs and then running a contest to promote creation of solutions. Another way that public APIs help support innovation is by providing good ideas that can then be completed or enhanced by the API provider.

There are many benefits of using Public APIs, including

  1. Innovation and brand awareness
  2. Recruiting and public relations
  3. PR – Generate goodwill in the marketplace

But there are also some risks to be taken into account while adopting the Public API Strategy

  1. Rights infringement
  2. Attacks against the API systems
  3. Attacks against the content
  4. Potential cannibalization of your core business
  5. Overexposing your business assets to your competitors
  6. Conflicts in expectations between public developers and potential partners
  7. Resource allocation out of line with the value proposition
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