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Launching an API Strategy: Breaking Through Inertia

Dec 10, 2013

The focal point of end user computing power is shifting from the desktop to the customer’s smartphone or tablet. As a result, consumers’ expectations have changed dramatically.

This sea change has created the opportunity for businesses to develop new experiences crafted just for these mobile devices. But sometimes, making this move towards a digital transformation is met with reluctance.

A cause of concern when establishing partner and open APIs often lies in the notion of exposing corporate data to an ecosystem of developers outside the enterprise. Sometimes this triggers worries over disintermediation: how will the enterprise benefit directly from innovation if it comes from outside? The notion of farming out creativity to outside developers can be unsettling to companies; security concerns might be an issue too.

Both of these concerns are actually addressed very nicely by an API strategy. Rather than build a wall between a business and innovation, opening data to developers invites a broad spectrum of external innovation, and, if done properly, creates a partnership and a healthy codependency between a company and developers. On the security front, a variety of standards exists to provide security and privacy for API traffic and apps.

Perhaps the most compelling reason to overcome a reluctance to embrace apps and an API strategy is this: customer expectations have changed and will continue to change rapidly with the evolution of new technology that enables them to interact with greater ease and agility. Your customers expect to interact digitally with you; if you don’t have digital products, you might be viewed as deficient, or behind the curve.

A business that moves early to institute an API strategy and add a “digital layer” to the way it interfaces with customers can be perceived as a leading-edge company, no matter their presumed legacy. A great example is Walgreens. By opening photo printers in its more than 8,000 brick-and-mortar locations to developers, who created apps that enable users to print photos directly from their mobile devices, this 114-year-old pharmacy chain quickly took on the vision of a modern, digital enterprise.

Being the first in your industry to adopt an API strategy may be a strategic advantage, but it can also enable you to accomplish traditional business goals in new ways. Apps and APIs can help you surmount all-important traditional business challenges, including boosting revenue and customer share-of-wallet.

For example, an app enables “impulse actions,” the definition of which, in this context, goes well-beyond a small impulse purchase made during checkout at the register. They can be large product buys or simply "opt-ins" to your services that are based on the trust in the relationship between vendor and customer, perceived need, and previous product research that may be cursory or complete. The mobile device and app make it remarkably easy for a customer to take action, and the arrival of an offer may be all that's required to incentivize the desired action.

After all, apps, when properly designed, are an elegantly simple way to interface intimately with your customer. There are very few distractions when a user has an app open, and it's a showcase for how unique you are as a business. Facilitating impulse actions is a key strategy in some digital business models, whether it is the latest Groupon offer or bottle of interesting wine available through WTSO.com (WinesTilSoldOut).

It’s understandable why embracing an API and apps strategy might be met with some uncertainty by enterprises considering embarking on this path. But the risks that crop up from not building a digital products portfolio are significant. The growing pressure of customer expectations will burden enterprises that ignore the ever-growing role that smartphones and tablets—and the apps that reside on them—play in their customers’ everyday lives.

For more discussion on these topics, watch the webcast, “Building a Digital Products Portfolio for Real Business Results."

image: David Yan/Flickr


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