APIs – three little letters driving an economic revolution

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Last updated 05:00 27/01/2015
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A 'building block' approach to business allows organisations to rapidly innovate and reinvent themselves to stay ahead of new customer expectations.

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There's more to cloud services than meets the eye. Cloud expert Ben Kepes explains how the cloud can transform your business.

I've written previously about how new, more nimble organisations are disrupting existing businesses. This disruption relies on three distinct technology changes - the rise of the cloud, the ability to derive value from data, and the availability of mobile and social platforms.

A new digital economy is emerging, and it's giving rise to a new breed of business - a composable business. Composable businesses operate and behave very differently from what we're used to. Processes, applications and services are built as individual parts that can be assembled and re-assembled rapidly, as business needs require. This 'building block' approach allows organisations to rapidly innovate and reinvent themselves to stay ahead of new customer expectations.

At its heart, a composable business places power in the hands of business leaders, developers and IT leaders to work in new, faster, more impactful ways. But what does this actually mean for an organisation, and what are the key building blocks that allow this composability?

Application Programming Interfaces (or APIs) are the way applications, devices, sensors and component parts speak to one another. API's enable the cloud to deliver the amazing value that we see every day. The "API economy" then is the notion that organisations have more to gain by connecting with their various stakeholders, than they do by remaining isolated. One of our best local examples of this networked ecosystem is Xero.

Despite not existing less than a decade ago, Xero has grown to the point where it employs over 1000 staff worldwide, pulls in over $100 million in revenue annually, and has almost single handedly put technology on the map in New Zealand.

Perhaps more importantly however, and often forgotten, are the literally hundreds of companies that exist as part of the broader Xero ecosystem. From accounting practices that have optimised their businesses to work with Xero, to startup companies producing cloud solutions for retail point of sale, farm management, expense tracking and time tracking.

All of these individual organisations connect to the Xero application and customer data in the cloud using APIs. APIs are literally the glue that ties discreet pieces of technology together.

Given this rise of the API economy, it is imperative that all organisations start to think about what APIs mean in the context of their industry - connected devices, wearable technology and the so-called Internet of Things are all of importance here. While it would be easy to think that this is only a topic related to the technology industry, here are a couple of examples of how APIs are changing traditional industries as well:

*A massive international construction and engineering company is embedding cheap sensors into concrete pours. As the concrete cures, supervisors can assess in real time relevant information from within the concrete - temperature, curing progress and stress levels

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*Physicians in developing countries are using economical wearable sensors to monitor patients living in remote areas. By integrating these sensors into medical systems (via APIs of course), patients are able to remain at home, but still have close monitoring of their condition

*A small consulting business based in New Zealand has employees around the globe. Much of their day-to-day administration is automated by the use of APIs. As an example, when a piece of work is completed for a client and updated in the project management tool, an invoice is automatically generated, the managers are informed and a series of emails are sent - all enabled by the use of APIs.

While it might strike some more conservative readers as an exaggeration, it is accurate to say that a digital reinvention is underway. To thrive in this digital economy, organisations need to be able to embrace new customers and new partners, and be positioned to take advantage of new opportunities. New business models built on an API economy that weren't even envisioned a few years ago - are reality today. Companies must prepare for the radical disruption ahead and by leveraging the cloud, mining collected data and powering social and mobile tools, all enabled by the API, organisations position themselves strongly for the future.

In my next article I'll take a deep dive into what organisations need to think about when choosing a cloud product and vendor.

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