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Driving revenue through API enablement

Once relegated to simply connecting software, application programming interfaces can be a profitable source of revenue.

Overview

Developers have been using application programming interfaces (APIs) for decades to enable connectivity from one piece of computer software to another. APIs are essentially links or pathways that enable integration within the enterprise, making it possible for IT systems, such as enterprise resource planning or customer relationship management systems, to exchange data electronically.

Today’s renewed relevance of APIs, however, is expanding beyond the traditional borders of the IT department into the business organization. Why? APIs can also enable integration between software systems across enterprises. As consumers increasingly expect a seamless experience, businesses are being forced to traverse corporate boundaries in response.

As consumers increasingly expect a seamless experience, businesses are being forced to traverse corporate boundaries in response.


Background

Experience shows that companies developing a business case on the assumption that they will directly monetize APIs will most likely be disappointed. However, those that leverage APIs as an enabler for a broader digital strategy can unlock potentially endless new revenue opportunities.

Digging a bit deeper, companies in telecommunications, financial services, government, retail and other industries have created API programs to find APIs they can sell. However, they quickly realize that customers are not willing to pay for most of these APIs. This is because the model relies on a key misconception—a business does not sell an API; it sells data through an API.

Companies that leverage APIs as an enabler for a broader digital strategy can unlock potentially endless new revenue opportunities.

Analysis

Companies lacking the data that customers are willing to pay for will be unable to develop an API that can be monetized directly. There are, however, a few exceptions. For example, some telecommunications companies have found cases for selling location data. But these opportunities are rare and typically directed toward other businesses, not consumers.

The inability to monetize APIs directly does not imply a lack of revenue opportunity, however. In fact, the opportunity is vast. Successful businesses have discovered that APIs are critical in furthering their digital presence and have pursued strategies to leverage API capabilities and drive increased revenue indirectly. In this way, APIs help further the primary strategy of selling more products or services.


Successful businesses have pursued strategies to leverage API capabilities and drive increased revenue indirectly.



Recommendations

Accenture has identified four elements of a digital strategy that can be enabled by APIs.

  • Ubiquitous customer experience—Today’s consumers expect to interact with service providers anytime and anywhere in consistent, simple and seamless ways, e.g., a customer looking for a new jacket expects a similar branded shopping experience whether online or in a store.

  • Nurture digital innovation—Current partners, new partners and third-party developers can fuel innovation by creating new products that customers did not know they wanted and companies did not realize their data could enable.

  • Bigger data: outside the enterprise—Correlate external data from multiple sources by integrating with partners and vendors, building a more intelligent view of customers to offer more relevant, tailored and unique products and services.

  • Next-generation delivery model—Focus on your core services and hire knowledge for peripheral enablement. APIs offer a never before-available opportunity to disassemble systems into blocks at the product level.

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