How to build customer-centric API ecosystem

With a thriving API ecosystem, businesses can use their data to create outstanding customer experiences.

To create an industry-leading API ecosystem, organizations of tomorrow need to think beyond traditional full lifecycle API management and shift to universal API management. By opening up their management capabilities to APIs built on any platform businesses are more agile, deliver faster, and maximize investments.

This article has created a baseline methodology for establishing an API ecosystem with a customer-centric mindset. In this article, you will learn how to:

• Shift to consumer-centric thinking.
• Treat APIs as products through design, delivery, and consumption.
• Build your organization’s API ecosystem roadmap.
• Find an API management solution that acts as a single source of truth.

Content Summary

Introduction
Get started building a successful API ecosystem
Start with customer experience
Embrace ecosystem principles
Define an API business model
Engage with partners and co-create value
Design and deliver API products
Drive API consumption
Build a review cycle: observe, measure, iterate, and repeat
Conclusion

Introduction

Digital transformation is constantly shifting in our daily lives and every industry. Digital growth is dependent on businesses adapting to changes quickly, and APIs are enabling them to do so. As APIs gain popularity and ubiquity, organizations must evolve to meet rising customer expectations. The result? The adoption of modern cloud‑native applications powered by APIs moved companies away from legacy monolithic applications.

The most successful digital organizations know that their APIs grow in value when connected to an ecosystem of applications, developers, partners, and customer experiences. However, the hard truth is that the traditional enterprise landscape uses more than 500 APIs. And most of these APIs come in different shapes and sizes, are in multiple programming languages, live in heterogeneous environments, and serve different functions.

As a result, the technology estate across every enterprise is experiencing an API sprawl. This makes it challenging for IT organizations to identify which APIs exist and block them from effectively governing and managing them from a single place.

Future-forward organizations need to think beyond traditional full lifecycle API management and shift their paradigm towards universal API management — opening up their management capabilities to APIs built in any specification, on any platform, and in any environment. Through universal API management, companies can compose their business using digital building blocks, which Gartner calls packaged business capabilities (PBCs), and orchestrate them universally. The use of PBCs, which include APIs, connectors, and other integration assets in conjunction with a full lifecycle API management solution empowers internal and external developers to work with assets relevant to their use case in a single source of truth — regardless of their function, specification, or location.

ONLY 18% OF ORGANIZATIONS SAY THEY CAN INTEGRATE END-USER EXPERIENCES

Consumer-centric thinking

Traditionally, we see the term consumer used to reference customers in a B2C business. But in the world of APIs, all customers are technically consumers, but not all consumers are customers. Consumer in this context refers to someone or something that consumes or uses an API.

Defining a leading customer experience starts with consumer-centric thinking — an outside-in approach where business leaders:

• Imagine the best possible end-to-end customer experience.
• Recruit the necessary partners into your ecosystems to co-create value.
• Put API-led architecture integration in place to enable experiences that propel the success of future projects.

More and more organizations are co-creating API-based products in collaboration with other ecosystem members — including customers, partners, independent developers, software vendors, and others. Empowered with a fresh perspective of consumer-centric thinking, organizations should reimagine value creation in collaboration with their partners.

When API ecosystems are created with the best customer experience possible, it can be a win for all — including the organization that hosts the ecosystem, the partners, and the developers with whom the value is co-created.

Use the seven steps in this whitepaper as a framework to build your foundation for a thriving API ecosystem.

Get started building a successful API ecosystem

Many well-intentioned articles and whitepapers provide advice on APIs at different stages in their API strategy journey, ultimately confusing companies. That’s why this article share observations and insights from working with thousands of organizations at varying stages of API maturity.

After extensive research, we have compiled the best practices into seven fundamental steps.

Step 1: Start with customer experience

Step 2: Embrace ecosystem principles

Step 3: Define an API business model

Step 4: Engage with partners and co-create value

Step 5: Design and deliver API products

Step 6: Drive API consumption Step

7: Build a review cycle: observe, measure, iterate, and repeat

Start with customer experience

Whether your final consumer is a customer, an internal stakeholder, or a developer, it is crucial to start by defining the best possible customer experience or business outcome. Be sure to avoid any preconceived notions about the organization’s limitations or capabilities, as the aim is to develop a strategy that is not limited by your existing processes and thinking.

This approach is an outside-in strategy, which typically:

• Relies on customer needs and preferences to guide strategy.
• Is objective and oriented around your consumers’ use cases rather than the structure of the data in your system.
• Consider developers and end-users.
• Requires the efforts of IT and business teams to brainstorm customer experiences.

To establish an outside-in approach, consider what API standards you would ideally like to support within the API ecosystem. For example, when it comes to advances in API management solutions, API design choices should not be limited to what is currently supported by the current API infrastructure. Instead, they should focus on what best supports an optimized customer experience or outcome.

“By working with MuleSoft to deliver on an integration strategy centered around API‑led connectivity, the Ahold Delhaize brands will be able to continue quickly delivering new best‑in‑class digital experiences to our customers at scale.” – ERIK ROOZEBOOM, DIRECTOR OF INTEGRATION, STRATEGY AND ARCHITECTURE, AHOLD DELHAIZE

For example, while a synchronous architecture based on the REST standard might be best for some use cases, an asynchronous architecture based on the AsyncAPI standard could be the right choice for some real-time use cases. A hybrid approach is also a popular solution with RESTful and EVENTful at different endpoints within the same service. Ultimately, make sure your approach is flexible and that you are not aiming to commit to a process as hard and fast rules since adaptability will be invaluable as the ecosystem develops.

59% PERCENTAGE OF BUSINESS USERS WHO THINK THEIR ORGANIZATION’S INABILITY TO CONNECT SYSTEMS, APPLICATIONS, AND DATA WILL HURT THE CUSTOMER EXPERIENCE

Embrace ecosystem principles

Do you currently see your technology assets as differentiated business capabilities? Industry-leading organizations construct ecosystems with APIs as building blocks (or PBCs) to be reused in the API ecosystem, acting as a launchpad for future growth. In their journey to build a company of the future, organizations should embrace these ecosystem principles to innovate:

• APIs have transformed in recent years and are now treated as products and services in the marketplace. This shift in thinking towards APIs as products is often the most significant hurdle for organizations to unlock new sources of revenue. Organizations must challenge their preconceived ideas, open up their business models, and allow partners and developers to co-create value.
• As organizations build API products, they must avoid crumbling under questions such as “how should I bundle the products?” or “how should I go to market with the products,” as these questions can get overwhelming quickly. Be prepared to experiment, fail fast, and mature your API capabilities as your ecosystem develops.
• Establishing a single source of truth through a full lifecycle API management solution is critical since different organization members will only consume certain PBCs relevant to their use case. By gathering all ecosystem components in a single place, organization members are not dependent on custom components.
• Paired with this extensive experimentation, organizations also need a data-driven mindset and a direction for management and operations. To drive maximum value, leaders should continuously size their ecosystem investments for revenue, productivity, and customer experience to identify where APIs can best add value. Organization leaders should also identify APIs with the highest business impact and strategic value while considering the importance of quick wins. It’s all about balance here.

“A single source of truth becomes key to the data‑driven business. As digitization continues to drive an increasing amount of data, organizations will seek a single source of truth where consumers can get the right data in the right context at the right time.” – TOP 7 DIGITAL TRANSFORMATION, TRENDS SHAPING 2022

Define an API business model

The right business model can help build infrastructure to sustain an API ecosystem. There are two branches for these models: internal and external. During this step, you must identify areas where API standards should be universally enforced for management and governance between internal and external branches. Note that there are a variety of business models within the scope of internal and external audiences.

For internal API products, organizations should evaluate their API investments based on reduced operational expenditure, demonstrated value with legacy modernization, and increased efficiency.

Organizations should brainstorm on a business model for external API products that can open new revenue streams or valuable business opportunities. With a sustainable digital strategy in mind, organizations must consider multiple business models to drive long-term value. These include, but are not limited to:

• Partner programs to integrate with select partners. Organizations can explore revenue-generating tactics like revenue sharing and consulting models to advance the core competencies of both parties.
• Productization of APIs which can either directly monetize the API as a standalone product or be used to upsell APIs as a higher tier subscription model within a digital platform offering.
• Standardization of APIs to comply with government regulations and align with established industry-accepted standards.
• Marketing that allows audiences to understand your external API products and promotes brand loyalty, help promote the core platform, or grow a network.

Organizations derive the most value from their API investments when they continuously develop and adjust their business model, identify new opportunities, and adapt them within their ecosystem.

“With the power of MuleSoft and Salesforce technologies together, our teams were able to unlock data across systems, develop scalable integration framework, and ultimately create connected experiences for our customers and employees alike.” – ALK A ARORA, D IRECTOR, IT M&A, SALESFORCE

Engage with partners and co-create value

Once you identify your customer experiences and outcomes, coordinate them against your organization’s core competencies and capabilities. Here’s what you may find:

• In most cases, you will find gaps in your organization’s capabilities. If this isn’t the case, the preconceived notions mentioned previously might have shaped the team’s brainstorming direction. In terms of time-to-market, resist the temptation to fill those gaps with anything but third-party or partner-provided capabilities.
• Identify the best partners to join your ecosystem to address those gaps and serve as your co-creators for delivering outstanding customer experiences. Remember that with full lifecycle API management, many hybrid cloud ecosystems can efficiently meet the organization’s demands.
• Decide on the business models that ensure lasting value to your organization and the members of your ecosystem. Be prepared to discuss your vision and the outcome when recruiting cocreators to join.

If your vision includes the participation of anonymous third-party developers with whom you have no business relationship, start to think about how you will market that API as a product.

Tip: Hackathons are not only a great way to learn how third‑party developers might innovate with your API product offerings in the future. They’re also perfect for eliciting the sort of technical feedback needed to offer the best developer experience.

“MuleSoft has been great for our ability to reuse code. We are able to reduce development time because we can reuse components across multiple applications.” – PHIL CONNAUGHTON,, DIRECTOR OF ENGINEERING, ASICS

Design and deliver API products

• Finalize the API designs and systems necessary for your thriving API ecosystem, then develop APIs and securely deploy them using a full lifecycle API management solution.
• Successful API products help their consumers succeed and generate intended API adoption.
• Ensure that your API product is in a stable state and ready for consumption, as a poor experience could drastically impact your reputation and bottom line.

ON AVERAGE, ORGANIZATIONS THAT USE APIs GENERATE OVER A QUARTER (27%) OF THEIR REVENUE FROM THOSE APIs AND RELATED IMPLEMENTATIONS

Drive API consumption

Like all products, driving adoption is critical to a successful API investment, and there are several initiatives that can help you accomplish this.

Consider your strategy carefully, and adopt initiatives that align with your API and business goals. Here are some examples of top-performing initiatives:

• Include adoption campaigns with customer education and marketing in your API strategy.
• Segment developers and run pilot programs with individual segments to drive developer relations.
• Build out personas for target developer segments and focus on segmented messaging to drive API usage.
• Measure your performance by rigorously monitoring usage, traffic, and other key metrics.
• Aim for a universal API management solution that functions as a single source of truth that can catalog all APIs within the development lifecycle.
• Create a developer portal to act as the communication nexus for internal and external customers.

Ideally, the full lifecycle API management solution adopted by your organization will also provide the ability to bring together APIs built anywhere, by any team, into a consolidated source of truth. This source of truth will ultimately engage your partners and developers in branded experiences. For example, including them to run pilot programs to identify the most responsive consumer segment or participate in educational hackathons can drive API consumption and provide meaningful feedback towards improving the developer experience — including the API itself.

“Universal API management empowers internal and external developers to work with assets relevant to their use case in a single source of truth — regardless of their function, specification, or location.”

Build a review cycle: observe, measure, iterate, and repeat

Continue to monitor business metrics thoroughly and often communicate with API ecosystem members to highlight successes, spot anomalies, and surface unanticipated opportunities. Then, iterate as necessary.

Organization leaders must continuously monitor these metrics in order to make improvements by tracking business outcomes. In tandem, an API product manager should follow the adoption, usability, and reliability of the APIs that drive the business outcomes. Leaders within the organization should also review the entire API portfolio consistently.

By recognizing historical trends, teams can better evaluate which APIs to promote or retire and which business models and parts of the API ecosystem to evolve or recalibrate.

Conclusion

Designing an effective API ecosystem requires a new perspective on partnerships, reimagined business models, and most importantly, an accelerated pace of development. With technology ever-advancing and customer expectations rising, organizations must stay agile, deliver faster, and maximize investments — and it all starts with APIs.

To effectively implement an industry-leading API strategy, organizations must establish a centralized governance model to monitor the ecosystem’s progress against their business objectives and ultimately measure the impact of the investment on the organization’s bottom line.

IT leaders must ask themselves three key questions regarding their current API ecosystem:

• How do we ensure value creation with your APIs?
• How do we increase developer and partner productivity?
• How do we maintain a sustainable and thriving API ecosystem?

To enable your ecosystem to the fullest, choose an API management solution that will:

1. Provide easy access to APIs built on any platform
2. Implement any architecture, and
3. Flexibility to deploy and monitor APIs in any environment.

With universal API management, organizations can catalog APIs — even built on other platforms like Apigee and Kong — in a single place where any consumer can discover them. This solution helps increase project delivery speed, provide flexibility to operate in any environment, and improve governance across assets, resulting in top-tier consumer experiences and digital growth.