Historically, the model to increase an enterprise’s revenue was-to put it plainly-add more. Launch more products, open more locations, print and mail more catalogs, run more advertisements, and so on. If the company wanted to grow, it needed to invest and scale up its processes, systems, human resources and physical presence.
Today, that model is being complemented, and some would say challenged, by a new one. “Scale out” is the new model that organizations are increasingly adopting as a growth strategy, and it starts within the IT department.
With businesses increasingly becoming digital, their information assets can more easily be shared and, essentially, tinkered with by third parties. Why would you want a third party tinkering with your valuable proprietary data? Because recent history has shown that it can lead to unexpected innovation and multi-fold growth.
APIs Bring Unexpected Innovation
The primary driver of this trend is the application program interface, or API. Essentially, it is a piece of computer code that allows software programs and systems to interact with each other in some fashion. When considered in the context of the open source movement, APIs allow programmers to make new applications that tie in to existing applications or data sets created by other entities.
This is very popular for social media sites-APIs that allow readers of a local news website contribute to the “Comments” section via their Facebook profiles. Or a sports site that displays a live Twitter feed of tweets related to a specific football game while that game is going on. But APIs are creeping into traditional businesses as well, and the results are often remarkable.
For example, A fortune 50 retailer opened up to developers select parts of its IT infrastructure, such as catalogue, pricing and supply chain information. The developers, who got a piece of any revenue they helped generate, were able to spread this retailer’s product information to new markets, roping in more than $1 billion in extra revenue. Or, we did a consulting engagement for a leading bank to define API strategy that would enable exposing certain data (historical and aggregated) to a select developer community. The Open Bank API platform is shaping up to be an ‘App Store’ like platform where developers and entrepreneurs can build innovative apps that can connect to any bank API that adheres to its standards. There are many more such examples.
Take the Leap and Wait for Results
It’s time for traditional businesses-whether in retail or finance or travel/hospitality and others-to open up their digital assets to the emerging niche of tech startups and developer communities. These new players will build innovative products and offer innovative services by using the deep expertise that enterprises have built over decades. This is akin to a new model of crowdsourcing for businesses, where the organizations give innovative entrepreneurs among the crowd the digital assets they need to build solutions, products and services that exploit (in the very best way) that enterprise’s knowledge, expertise, and infrastructure.
But for an enterprise to “scale out,” it’s imperative to build digital systems with an outside-in view. Businesses need to be able to easily expose their digital IT infrastructure in a self-service or “as a service” model. It must be secure, of course, and exposed to only the developers the business is comfortable with. But I truly believe that any digital system that is built or transformed NOW should be driven by an “API FIRST” principle, where the API will be treated as paramount rather than an afterthought.