Put simply, a business offering up its services in a highly consumable, repurposable, and online form enables anyone to “onboard” themselves and begin innovating on top of the business data that the API provides. These relationships then embed the provider’s data feeds deeply into 3rd party products. And don’t forget that APIs are typically integrated to live databases, literally connecting together the supply chains of the API provider and consumer in real-time.
Dion Hinchcliffe has a great explanation on how open business models can be built on top of Open API’s.
Excerpts:
“In the last year or so we have started to see a genuine industry grow up around open Web APIs, which in their simplest form is Data-as-a-Service (DaaS) that allows any authorized external entity to access a predefined set of business data programmatically over the network.
Actual examples of successful open APIs include companies like Salesforce, Amazon, and Twitter, which in all three cases the public API — and not the traditional Web user interface — comprises between half (Salesforce) and 90% (Twitter) of their real-world use today by their customers.”
Dion then details Key Aspects of Open Supply Chains (aka Web APIs):
“As a business, there are a number of implications for opening up an API over the Internet to existing and potential partners and customers:
* Asymmetric partnership scale. With the API model, you do the partnership work one time and then partners onboard themselves going forward using their own resources as often as they like for marginal additional cost to the provider. Done right, an API is essentially a turnkey partnering program where the API provider does the upfront work to create the infrastructure (see diagram above) and each partner does the technical, business, and legal work on their end. This makes it easy to support tens of thousands, or in the case of large providers, literally hundreds of thousands of partners with just incremental resources.
* APIs can create direct growth in revenue and market share. Because APIs provide the technical and legal framework for reuse in other products and services, a businesses providing APIs gets embedded across the network in often countless 3rd party applications (mashups), internal IT systems, and destination sites. Depending on how valuable your data is (if it’s close to best-of-breed you can even charge for it), this will grow marketshare as well as directly drive revenue. Look at Amazon’s revenue curve for their API as of last year to get a sense of how powerful a driver APIs are for growth.
* Success with APIs involves business and legal support, as much as capable technical implementation. It’s increasingly appearing that APIs are an important new business channel in the same vein as storefronts, the telephone, and even Web sites were in years past. While it’s almost exclusively a B2B story, APIs require the same investment as older traditional business channels. This includes marketing, relationship management, partner support, and legal permission to create derivative works, to name just a few.”
The original article has a list of API infrastructure providers is in alphabetical order.