What is an API Product?
APIs become products when they have a budget, roadmap, monetization strategy and a Product Manager assigned to them, just like any other tangible product or intangible product developed by any company today. They are not just a bundle of APIs that serve different purposes and work together in one app or software program, although this is important, an API product is a delivery method of a business solution or capability. There is more emphasis placed on the product management or capability management roles of monetizing the API:
- Product pricing (tiers, pricing, subscriptions, etc.)
- Value realization (ROI analysis, business cases, etc.)
- Business analytics (custom API dashboards, real-time event notifications, etc.)
- Channel distribution (dev portal, internal vs. external, etc.)
- Product definition (roadmap planning, budget allocation, etc.)
Application Programming Interface (API) Products are a software solution to a business problem and are delivered via an API instead of a desktop app or web GUI. They are building blocks to the cohesive and smooth experience we have on apps like on smartphones and computers. Some apps are made up of a single API, while others are made up of many APIs from different sources.
How Do API Products Work?
To understand how API products work, it is helpful to look at an example: app-based food delivery services.
Internal APIs are used to:
- Manage ordering of food from the restaurant
- Perform customer-care
While external APIs are related to tasks such as:
- Bank and payment gateways used for payments
- Google Maps to aid in tracking the delivery
Restaurants have separate access to the APIs to manage their menu and aspects related to them, subscribe to APIs for payment processing, order management, and so forth while the customer gets access to APIs that help manage orders and its delivery. Some of the APIs that make up the total app experience are from API products that the app-based food delivery service subscribes to or has a fee-based contract to consume and or publish data too.
Benefits of API Products for Organizations
API products are much more than interfaces for software to talk to each other. API product managers can use APIs as delivery methods to solve customers' business problems while adding to the company’s bottom line and overall success. The Developers use APIs to access data, to research and develop new services, complete their product development, and to improve business models. Business models are constantly evolving, and there is a demand for rapid change in app usage and interface. An API Product Manager that is managing his or her API product roadmap using a full lifecycle API management solution will be successful in creating new and innovative APIs all while bringing a sustainable and long term revenue stream to his organization.
Challenges in Using API Products
One of the biggest challenges API products face is the change from approaching APIs as ‘projects’ to ‘products.’ The aim here is to have a product that is a part of a long term plan while iterating itself according to the changing use cases. Approaching APIs as a project is only for one-time use and is not future-proof. It doesn’t take into consideration iterations over time, product investment cycles, and customer feedback.
Approaching an API as a product, means the API Product Manager has kept in mind the features like future integration, iterations, ROI, customer use cases, and ease of consumption. All these are derived through full lifecycle API management, which is possible using various API management platforms.
Managing API Products with Analytics
Like any product in the market, the success and effectiveness of an API product depends on how well it is designed, managed, and marketed--it should be monitored and improved on continuously. API Managers use the API analytics insights to update the product roadmap with new features and functions.
API management tools effectively track and generate reports on areas like traffic monitoring, security, uptime, and endpoint valuation. Using these insights, API Product Managers can make better decisions on where to invest in the API development and have a more focused approach towards its iterations based on the target consumers. The data becomes crucial not just to the product owners but also to the developers and customer service associates. It is critical to track the right metrics such as uptime, availability, latency, customer engagement, or user consumption data.
The effectiveness of an API product is dependent on how well it helps the customers do their job better. A properly designed API product can help consumers build the solution easily, using various and diverse sources. Another feature of an effective API product is the increased consumption of any API, ease of on-boarding of partner APIs, and the ease at which the development takes place.
The most efficient way of going about this is to first create a minimum viable product (MVP), and then go into iteration based on feedback from the reports generated by the management tools and developer feedback. The minimum viable product represents the core idea of the app, and based on feedback and insights, it can be scaled. Naturally, not all minimum viable products succeed, but those that do go on to form new products and maybe even change business practices.
The Future of API Products
The success of an API product largely depends on the business opportunities it enables. Using the right monetization strategy APIs with the appropriate access protocols in place makes it an effective tool for the success of any business. Having an in-depth knowledge of the business and identifying the right MVP metrics is the key to a successful API product.
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