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How to Win in the New API Economy
How to grow your business by sharing
enterprise data and services via application
programming interfaces (APIs)
Open APIs, once used only by leading technology companies such as Amazon and
Facebook, have become much more prevalent. Enterprises are beginning to reap
the benefits from the API economy. Open APIs are projected to reach 30,000 by
2016, compared to less than 600 in 2007, 2,500 in 2010, and 11,000 in 2013.1
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Craig Burton. More on the Open API Revolution. KuppingerCole Analysts.

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A well thought-out API strategy can help you compete and grow in new ways by:
• Plugging into a digital value chain for extended market reach
• Growing and managing your partner network more cost effectively
• Inspiring a developer community to create the next great set of apps for you
• Driving customer satisfaction with shared services
• Increasing brand awareness through data sharing
• Accelerating growth with internal data sharing and inter-company APIs
This ebook explains:
• How the API took off
• How APIs can be used to drive business value
• The three API business models
• The open API ecosystem
• The power of APIs
…and offers some advice on:
• Determining your API business strategy
• Managing the digital value chain
• Establishing an API business model and keeping it running
• Choosing an API management platform

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How the open API trend started
By 2010, three trends started to converge, leading to an upsurge
in connectivity and a more client-centric approach to application
development using RESTful APIs:
Rapid growth of mobile devices
The rapid growth of mobile phones and smartphones coupled with affordable connectivity allows
users to be always connected to their information, and constantly be receiving updates.
Rapid enterprise adoption of mobility
Spurred by BYOD policies, companies began mobilizing web assets, workforce policies, marketing/
sales channels and business processes (HR, ERP, CRM, and messaging platforms). Employee
demand for connectivity and heightened productivity drove the creation of APIs that exposed
these apps outside the IT boundaries of the corporation.
As a side note, today, not only is the business mobile app market growing at approximately the
same rate as the consumer app market, it is less congested and offers better revenue potential for
developers because the primary route to market is via direct sales (B2B) rather than app stores.
Continuous growth in Internet business models
During the last decade, as companies continued to experiment with new commerce models,
merchants, supply chains, and marketplaces, the model changed to “always connected and
available.” Social media has also accelerated the connectivity and generated personalized
connections between businesses and consumers. Emerging trends such as the Internet of Things
will be generating more demand for APIs.
And today…
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“Mobile app projects will outnumber PC
projects by a factor of four by 2015.”
— SaaS Industry Report, Summer 2013,
Siemer & Associates
“Today’s $67 billion mobile app market (2013)
will exceed $140 billion by 2016.”
—Vision Mobile
“Tablet adoption in enterprises is estimated to
rise by 50% annually over the next few years.”
—TrueWireless Inc.
“More than $28 billion was spent on apps by
business and professional users in 2013, and
this will reach $58 billion by 2016.”
—Vision Mobile

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Today, the open API is one of the most powerful
sources of competitive advantage.
It comes down to the potential of your data and services.
APIs can be used as connectors to get your business plugged into
the always-on digital value chain. As a result, you can reach into new
markets for additional revenue streams.
You can use APIs to grow and manage your partner network more
quickly and efficiently, which lowers the cost of onboarding business
partners and lets you cost-effectively take your business into
new channels.
APIs can also facilitate customer satisfaction. You can address and
resolve customer experience issues, build better relationships, and
increase the touchpoints you have with customers because you can,
for example, see them browsing, evaluating, and using social networks
before they purchase.
You can inspire a developer community to create the next great
application while gaining a competitive advantage through innovation.
You can also monetize your APIs.

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Open API is a term that
describes a business model
where APIs are published
on the Internet to be shared
with business partners and/
or third-party application
developers with the intent
to deliver a successful
open initiative. The model
fosters collaborative services
environments between API
providers and application
developers who consume
APIs.
Theoretically, this creates
a three-way win because
enterprises, developers, and
application users can share
the innovation and cost
benefits created.
Three API business models
and how they work
Public
APIs are consumed by external
partners and developers. Developers
unknown to you can use your APIs
to build innovative, highly practical
applications. Sometimes the term
“open API” specifically refers to
this model.
Partner/B2B
APIs are consumed by business
partners, including suppliers,
providers, resellers, and others. This
model tries to achieve extended
market reach and cost reduction
through tighter partner integration.
Internal
APIs are consumed by internal
developers within your organization.
This model may include external
contract developers, but the
targeted projects still remain inside
and aim at cost reduction and
operational efficiency.
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The open API ecosystem
APIs are of great advantage to the enterprise, with success supported by the nurturing of an ecosystem
that includes application end-users and application developers.
Application end-users
can gain tremendous convenience and productivity with API-enabled
apps that transform the way they work and play.
ISVs and application developers
who consume APIs to create applications drive innovation for their
products and services. They can shorten time to market while
reducing costs by leveraging someone else’s services (like yours). For
this part of the ecosystem, APIs can also act like a bridge to the user
bases of API providers.
WIRED magazine explains it like this: “Today’s software development
does not require building everything from scratch. Instead, if you’ve
created any piece of software, you are well likely to find tools and
documentation that will help you fashion at least a small part of it
thanks to APIs, open source code, and code-sharing services such as
GitHub. In a nutshell, you can shape and reshape almost anything in
this world as long as you know the code.”
So you see, the world’s knowledge can be API-enabled.
Some examples:

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The power of APIs
Because an API is essentially an instruction manual, it’s about organizing and packaging existing knowledge—
what we know about any particular subject—to solve problems. Some examples of how APIs are used:
Retail
National brands can connect to customers wherever
they are by exposing inventory and price information
via APIs. Applications that third-party developers
create can cost-effectively improve market reach and a
brand’s stickiness.
Healthcare
One challenge for health caregivers is staying current
with care routines for multiple patients. APIs supply
this information to caregivers via mobile applications
so that the right medication and the right care are
provided to each patient at the right time
Insurance
An insurance company improves broker responsiveness,
information transparency, and operational efficiency by
off-loading work now performed by brokers, such as
providing certified car repair locations to claimants.
Financial Services
Banks and credit card providers seek to strongly
differentiate. Using APIs, customer information can
be protected, yet shared with business partners to
create applications for greater customer service, such
as providing credit card holders with the option to use
reward points for purchases.
Airline/Travel
By making product and customer data available to
travel brokerage services, both customer service and
profitability can be streamlined and improved, despite
the industry’s multi-layered sales channels.
Telecom
Mobile network operators wholesale their excess
capacity to companies that tack on value-added
services and sell to the same subscriber base. APIs
could help determine and deliver the right service
to the right place at the right time to help operators
capitalize on this market.
Media/Market Research
Using APIs, market and consumer behavior data
enriches content for directories, reviews, ratings,
recommendations, deals, and other social applications.
Crowd-sourcing could be used to create innovative
applications.
Logistics
For traditional delivery and logistics providers, address
and location information is a core competency. APIs can
help these providers integrate with retail, e-commerce,
and other businesses to offer differentiated delivery
services.

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The Internet of Things
A company that produces sensors and switches for
the smart-home or connected-car market can activate
and deactivate AC and lighting systems based on data
received through APIs, such as weather and sunrise/
sunset times, in addition to the location and recorded
information on the consumer’s lifestyle. The Internet
of Things will provide tremendous opportunities for
leveraging data and services for consumers and is
estimated to be a multi-trillion dollar market by 2020.
The Enterprise
Enterprise data, including payrolls, expenses, travel,
training, operations, finance, sales, and marketing can
springboard innovation both within a company and
outside it via third-party developers. With the trend
in mobile app development shifting from B2C to B2E,
companies without APIs may be left behind.
Government
Our personal data is secreted away across multiple
government departments and agencies. What if
healthcare, social security, veteran’s claims, or school
loan information could be accessed from one central
site with just a few clicks? APIs could help make
this happen if siloed data were opened and privacy
protection enforced.

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APIs and your business strategy
There are many compelling reasons for incorporating open APIs into
your business strategy. As you consider whether the time is right and
what the benefits might be, ask yourself:
• What data or application functionality could we expose to
existing business partners, channel partners, or suppliers that
would make it easier to do business with us?
• Where can we take cost out of the supply chain by enabling
more self-service and more flexibility in how suppliers interact
with us?
• How can we use an open API to create competitive
differentiation and deliver additional value to customers?
• Would it make sense to repackage our data or product
subscriptions as a collection of fine-grained micro-subscriptions
that can be monetized via APIs?
• What new routes to market or business partnerships can we
potentially create by exposing data or application functionality?
• Does our strategy include an opportunity to leverage growth in
mobility and potentially reach new markets?
• How can APIs used by external developers help drive product
innovation and out-of-the-box thinking within the company?
• How can we leverage real-time data to enhance customer
experience and drive more users and businesses?

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Where do you start?
Let’s assume you’ve decided to explore open APIs. First,
determine a strategy (based on who, what, and why).
After that, you’ll need to decide how you’ll execute it.
What are the objectives you are trying to achieve?
Consider what problems you need to solve:
• Poor customer satisfaction?
• Limited brand reach?
• Costly partner management?
• Revenue issues?
What would the ideal world look like after resolution?
Can you see APIs helping to make that happen?
Then, identify which assets you can expose and to
whom. Would you make these assets available only to
internal developers or to business partners outside the
company? Or does it make sense for these assets to be
public, or at least, have that planned for the future?
Try uncovering these elements by drawing potential use
cases or customer stories that use APIs as the catalyst.
In some cases, APIs can be your products, which will
require lifecycle management.

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Managing the digital value chain
Let’s say you’ve done the homework and identified strategic value
for an open API. You’re anxious to get some experience with this new
business model.
Here is a recommended practice in managing the digital value chain
enabled via APIs:
You expose selected internal enterprise data or business functionality as web APIs and make this
data or service available to external developers.
Developers consume your APIs by embedding them in their applications. These applications are
mainly delivered as mobile apps and/or B2B services and used by your business or end-users.
Monetization opportunities are available, yet some companies offer APIs for free if they are more
interested in brand exposure and indirect returns. Twitter, for example, does not directly charge
developers for the use of some Twitter APIs, yet 60% of all tweets come from third-party client
apps. Other companies take a more conventional route by setting the pricing schedule using
various models such as pay-as-you-go, tiered, unit-based, and freemium.
Set metrics that will define success of your API business. Through an API management tool, such
as end-to-end monitoring, you will track operational KPIs and SLA compliance. This will help you
gauge your API performance and identify future capacity needs.
Live monitoring of API usage patterns and specific user behaviors will give you deeper insights
into your initiatives and allow you to look for opportunities to grow them.
To deliver the best performing API-enabled applications, API analytics should be shared with
application developers. They can then be proactive in auditing and debugging, as well as
monitoring KPIs and SLA compliance from their end.
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Establishing an API business model and
keeping it running
What are the key challenges to establishing and running a business
using APIs? What are the major differences between the SOA and API
management practices?
The challenges, in a nutshell, have to do with opening up internal assets
beyond the firewall and dealing with external businesses that will be
using your assets.
While SOA governance may help manage tens of partners and hundreds
of services, API management addresses hundreds or even thousands
of partners. This complexity requires different approaches for service
governance, security, performance, partner on-boarding, contract
management, and product lifecycle management.
Questions that may arise:
• How can we maintain control over growing partners and APIs? Can
we provision partners and APIs using our own rules and policies?
• Can we protect our internal assets against potential threats at all
times without additional investment?
• Can we ensure agility to bring new and improved services and APIs
to market?
• How can we scale without compromising API performance?
• Would it be possible to empower business users to manage API
lifecycles on their own?
This is where an API management platform can help.
Build vs. buy
An API management platform can help
you manage partners and APIs with ease,
security, and governance. But should
you build your own or buy a commercial
solution?
You can certainly task your IT
department with assembling the
infrastructure for hosting and managing
the environment. However, it is an
expensive proposition and competes
with many other IT priorities.

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API management platform considerations
When you shop for your API management platform, consider how its capabilities, technical support availability,
and deployment options fit your overall API strategy.
Complex API scenarios and enterprise environments require solutions that are more than just cloud proxies or
plug-ins. If you are aiming at enterprise-class API management, here are the key features to consider:
• Controlled and regulated access to curated
enterprise data and services makes it easier to
manage and govern your APIs. With the right API
gateway, centralized runtime management and
governance of APIs can be applied to any service
in the organization.
• A federated gateway architecture, which scales
with caching, throttling, and load balancing, can
ensure performance and availability.
• Rules and policy creation defines how specific
events are handled throughout the processing
pipeline of an API call. Customized policies and
actions can extend anywhere, globally, or for
specific services or partners.
• Native support for REST and SOAP APIs can
conform to the demanding needs of mobile
applications. Any SOAP service can be exposed as
a REST API.
• Advanced security and threat protection shields
APIs from attack, controls access, and secures
API-transmitted data. Examples include API keys,
OAuth, mutual SSL, WS-Security (SAML, User
name, X.509, LDAP), HTTP Basic, and Kerberos.
They should easily integrate with existing
databases and identity management systems.
• A self-service developer portal allows you to
package APIs quickly and manage partners cost-
effectively. It’s also helpful if it allows you to host
and manage the API community.
• Support for building an integrated marketplace
supplies a place you and your developer partners
can come together to host, manage, learn about,
and use APIs.
• API analytics allow you and your developer
partners to perform end-to-end monitoring of API
usage and performance. Analytics allow you to
easily gain insights on API revenue opportunities,
future road maps (plans), and capacity needs.
• Wide deployment options allow you to include on
premise, cloud, and hybrid models to meet unique
and complex configuration requirements common
to enterprises.
• Support for streaming APIs make it possible to use
one request with query filters and respond with a
stream of continuously changing responses.

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Conclusion
A well thought-out open API strategy can drive innovation and help you
compete in today’s business environment. However, open APIs may not be
for everyone. We recommend considering carefully the use cases, services
needed, and the nature of the problems you are solving. What does your
ideal world look like when they are resolved? In that ideal world, are
software applications powered by your enterprise data playing a part? If so,
API is the answer for you.
Download the TIBCO API Exchange datasheet (PDF)
Download the API Exchange Gateway datasheet (PDF)
See how API Exchange Gateway supports a logistics use case (03:09 min)
©2014, TIBCO Software Inc. All rights reserved. TIBCO, the TIBCO logo, TIBCO Software, and TIBCO API Analytics, TIBCO API Exchange, TIBCO API Gateway, and TIBCO API Manager are trademarks or registered
trademarks of TIBCO Software Inc. or its subsidiaries in the United States and/or other countries. All other product and company names and marks in this document are the property of their respective owners and
mentioned for identification purposes only.
As a complete API Management
Platform, TIBCO®
API Exchange
provides everything needed to expose,
distribute, and monetize enterprise
data and services. It empowers
enterprises to increase agility and gain
a competitive edge with three key
components of API Management:
• API Manager. Management portal
for enterprises and developers
• API Gateway. Runtime routing and
security enforcement
• API Analytics. Interactive
visualization of usage and behavior
TIBCO API Exchange easily integrates
with other TIBCO solutions and covers
any API scenario—internal, B2B, and/
or public API.
Get more information at
www.tibco.com/api