KPIs for APIs: How Metrics Change Over Time
This is the fourth and final installment in our series about the importance of setting appropriate key performance indicators (KPIs) for digital programs and the APIs that underpin them. Here, we’ll discuss which KPIs are appropriate at various points in an API program's evolution.
KPIs and metrics are living tools and should be revisited periodically.
For example, to get started, tracking the number of APIs produced and the number of developers signed up can be effective in focusing the program on improving the API team’s execution skills. During this "crawl" stage—before the program walks or runs—tracking the “speed-to-API” is also useful, which in turn raises the importance of agile product development as the skills improve.
Don't move too fast
Once a few APIs are in use, if an API program jumps to business KPIs such as direct revenue and NPS too quickly, it can stifle its progress before it has learned to walk. Instead, API programs should build business value by shifting the focus to the number of apps, the number of partners, or the number of customers that are using the newly minted APIs.
By doing so, these programs establish the go-to-market strategy for APIs as first-class products. This approach should also drive a critical internal discussion about digital business priorities, which in turn reinforces the overall enterprise strategy for APIs. Ideally this results in the correct KPIs for the maturing API management program, and provides clarity about what the expected mid- to long-term business impacts should be.
Maintain business and digital metrics in parallel
It’s important that these increasingly business-relevant KPIs are not defined by the API product team in isolation, but as part of a broader executive alignment around transformation of the enterprise. Once a good production cadence around APIs is operational and begins to "run," the API product management team can begin to add more familiar business impact reporting to its dashboard, such as “direct revenue,” “NPS,” “breadth of business,” and “cost reduction,” as agreed to with the rest of the executive team.
Compared to the speed of change in the digital world, business metrics tend to lag and are not always useful in the day-to-day operation of APIs. To maintain a proactive stance in the market, good API management continues to maintain both business metrics and more digitally-focused metrics in parallel. Digital metrics can be tracked in near-real-time, and provide critical insight into the success of the ecosystem as a result of ongoing changes in API libraries, versions, and go-to-market programs. These metrics include “speed to onboard,” “growth of traffic,” effectiveness of campaigns, and all the metrics from the "walk" phase of maturity.
Set a baseline for enterprise KPI health
Here’s a checklist to self-assess how closely your enterprise goals or KPIs are aligned to support digital transformation. It’s particularly powerful to use this information in conjunction with Apigee Compass, a free online tool that measures a business’s digital competitiveness, including its use of APIs. Apigee Compass also provides actionable recommendations for accelerating the organization’s digital transformation.
You can use this exercise and the more wide-ranging diagnosis delivered by Apigee Compass to detect gaps in accountability across the enterprise and pinpoint the areas that your teams can remedy.
- Name at least one “digital” KPI, or explicit goal expressed by officers of the company that requires a digital strategy to deliver.
- Name the most important traditional business KPIs for the enterprise.
- Describe how the digital KPIs are linked to the more traditional KPIs, and how the digital are necessary to achieve the traditional.
- List the funded digital initiatives that will directly contribute work specifically targeting the digital KPIs.
- Describe how each of these initiatives contributes to the digital KPIs.
- List the existing business units that should be involved for each digital initiative to succeed.
- For each of these business units, list the primary KPIs or goals for the next 18 months.
- For each of these business unit KPIs, describe how they link to the enterprise digital KPI.
- For each of these business unit KPIs, describe how it is impacted by the digital initiatives.
- For each initiative, list the planned or candidate projects to realize the initiative. There is likely to be overlap, which is fine.
- For the software components of each project, describe the envisioned major groups of application services, or APIs. Again, there may be overlap; various projects typically use very similar or the same APIs.
- For each major group of APIs, describe how it supports the business unit KPIs, and the enterprise digital KPIs. This description should include quantitative metrics, including those that can be produced by the instrumentation of the APIs and the API platform.
While I believe the pace of change continues to accelerate, API programs are emerging to be increasingly central to most forms of business success. As you consider integrating KPIs more deeply to benefit your enterprise or the organization you are advising, be sure to formulate them as core elements of a strategic plan that reflect your specific market conditions and organizational constraints.
Please reach out to us with your observations and to delve deeper into the transformation of your enterprise, and join the lively debate at Apigee Community.
Michael Leppitsch works on transformation strategies for global enterprises at Google Cloud.