The Role of APIs In Digital Transformation

Digital transformation is increasingly propelled by rapidly changing user expectations. Release frequency is increasing, as is the need to connect a growing number of applications and digital experiences. As a result, 83% of IT specialists consider API integration critical to their business, found the State of API Integration Report.

Application programming interfaces (APIs) hold powerful sway in tech discussions of late. Building API-first could increase internal reusability. APIs have become a standardized machine-readable mechanism for connecting partners. There is also a hot market for API startups, meaning APIs are becoming products in their own right.

APIs are also enabling change for large enterprises. I recently connected with Bernd Gross, CTO at Software AG, to get his perspective on the role APIs and integrations are playing within the new wave of enterprise digital transformation. Below, we’ll see how connected customer experiences, digital business excellence and a new ecosystem-driven economy are driving the emergence of more API-based strategies.

Three Drivers of the Connected Enterprise

Businesses continue to transform into more connected enterprises. Once relegated solely to improving back-office efficiency, digitalization efforts are being applied across the board — to employee management, assets, machines, partners and the supply chain at large, said Gross.

Amid rising digitalization, connectivity is the glue that unites disparate elements and tools. A fully connected world is “the new flavor of digitalization,” said Gross. To his point, ‘connected experiences’ is a crucial driver for 68% of platform providers, The State of API Integration Report found.

So, how are APIs fueling the new connected enterprise? Gross identified three key reasons why integration is now fundamental to enterprise digitalization initiatives.

Software AG Marketecture, used with permission.

1. Connected Customer Experience

Many organizations “want to transform into a technology and software company,” said Gross. To participate in the connected digital economy, organizations are striving to create advanced 360-degree customer experiences. Today’s technology needs to “look beyond a PC application,” Gross said. These experiences must cater not only to desktops and smartphones but also to IoT devices and physical assets.

For example, he explains how one large elevator company architected an embedded connected experience, incorporating digital touchpoints within elevators to showcase signage, entertainment and ads, opening new monetization possibilities. This change was so radical that the mechanical engineering company pivoted its mission statement, reimagining itself as a “vertical transportation company.” Soon, their AI-enabled elevators will predict behaviors and optimize travel times, so they are always on the right floor, waiting for human riders.

Intelligent building technology is similarly being applied by digital-savvy hotels, Gross explained, which is especially important for contactless visits during the pandemic. A fully digitalized customer experience could involve automated check-in, a room access code sent to a smartphone, an online billing system, physical sensors and more. Enabling a seamless digital hotel experience sounds easy, but it’s technically quite challenging — there are endless integration requirements to connect. In some cases, it would take 24 integration points, noted Gross.

2. Digital Business Excellence

Gross recognized the high expectations for modern digital experiences. He described a “new trend of business excellence in delivering more of an end-to-end digital experience.” This means data can no longer be locked up; even traditional companies must transition to platforms to offer software and data to their end users. In the process, interesting things may occur — your customers could become partners, Gross adds.

He described how one medical company, a leading centrifuge producer, sought to build more digital experiences to complement their hardware. Though the machine functioned seamlessly, there was no easy way to port data results to other applications. This inhibited initiating the fully digitalized workflow required for a smart lab experience.

In this case, APIs were imperative to opening up back end cloud services to enable smooth user interfaces and end-to-end workflow automation. “Intuitive user interfaces must integrate all services, including cloud and on-premises services, to create and automate workflows,” Gross explained. “To do this, you need integration.”

3. Ecosystem-Driven Economy

The network effect of platforms is that they enable an ecosystem to form. And, according to Gross, involving partners in this new digital experience matrix is imperative for success. For example, the API gateway is one area where partnerships help an integration strategy; “You need an API gateway for security and governance reasons,” he stated.

Throughout his experience overseeing APIs on many projects, Gross often noticed a naïveté associated with defining the ecosystem. “When [clients] engage in the first phase of these projects, they think they know how to do it, but they typically don’t,” he said. Potential API providers often don’t fully realize their monetization strategy, the security implications or the complementary software providers necessary to support a working model. “Partnerships often facilitate a value-add to customers — they enrich the total offering through APIs and ecosystems,” said Gross.

Similar to how a machinery company may embed a bill of materials into the product they sell, digital partnership ecosystems can open up data so partners can access and innovate with it, Gross said. Frequently, ecosystem partnerships make a lot of sense, as they can better meet consumer expectations. For example, Gross suggested that integrating a ticketing system into a conditional monitoring system would bring compelling value.

The Next Stage: Self-Service Integration With APIs

According to the report, 40% of companies said that digital transformation is driving their need for app integration. Truly connected enterprises must embrace digitalization and integration across all aspects of the business. As a result, this is forcing a business shift toward more open ecosystems.

But building these systems will require newfound knowledge dissemination around developer experience and self-service capabilities. “Self-service has become fundamentally important,” said Gross. It’s not enough to simply open interfaces — you have to also add self-service capabilities to integration tools, he added. This could mean offering low-code options alongside APIs — such drag-and-drop UIs would help facilitate integrations for more citizen developers. A self-service approach to digital platformification is an emerging trend, yet one that’s “not fully at mass market,” described Gross; it’s still in its early stages.

Open ecosystems are guided by consumers, who often desire connections between your tool and external partners. But, opening up data isn’t just helpful for partner integration; it could also benefit internal use. As Gross described, time-series industrial analytics could empower operators on the shop floor or production facility to make sense of local data. “You need self-service analytics tools to give them that ability,” Gross said.

Building new customer experiences to cater to various devices and platforms is a big driver for API adoption. As a result, headless styles are emerging to address multi-platform requirements. For these reasons and many more, APIs are fueling new digital transformations across enterprises, powering innovative customer experiences and hiding complexity in the back end. With APIs, smart processes, smart machines and smart partners can all come together.