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How can organizations with large legacy footprint plan their API journey? [1/3]

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The cost of building a business is decreasing year-on-year, given the new innovations in cloud and open source software. I see that the application programming interface (API) economy is also factoring in cost-effectiveness while enabling profitable businesses, by allowing organizations to adopt capabilities of other players and create new business and revenue streams much faster. According to Gartner, APIs enable organizations to be transformed into a platform. They also enable organizations and their partners to use capabilities mutually and create an ecosystem of value for customers. It is no wonder that APIs are also considered as the building blocks of the digital economy.

Some interesting examples of how APIs are reshaping organizations are as follows:
  1. Retailers are exposing their catalogs, shopping cart services, and other common services as APIs, which other organizations are using to create new types of products and services, thereby paying the retailer on every order of API service
  2. Banks are working with FinTech companies to provide common services for payment gateways and treasury functions, which can offer new products and services to the customers
  3. Credit card companies are consuming geolocation APIs, offered by third parties, to monitor fraud in credit card usage by comparing the location of the credit card transaction with the location of the user
  4. In the UK, the government established the Open Banking Working Group in August 2015, mandating banks to design a detailed framework for the development of an open API standard. This framework will authorize banks to open up and make available certain information, which can be used by other third-party organizations to in turn provide data and service to their customers
  5. In the auto insurance sector, the information gathered from usage-based insurance is captured through APIs and used by retailers and gas stations along the way to provide targeted marketing messages

The list goes on and the potential of APIs as building blocks of the digital ecosystem is huge. In fact, many organizations are reaping benefits from the API revolution by conducting hackathons that request thousands of developers to create innovative solutions on the core capabilities of the organization.

"APIs enable organizations to be transformed into a platform" Let's explore this further.

When large organizations want to expose their core capabilities, they often realize their core functions are actually running on legacy. It becomes critical for them to plan API-fication of legacy. Some of the aspects of the planning include:

Governance structure
  1. Who decides on creating different kinds of APIs?
  2. How are the service level agreements (SLAs) on the API monitored?
  3. Who decides when an API needs to be decommissioned?
  4. Do we need a shared service organization to build APIs or can they be built by the IT in the business?

Funding models
  1. How does the platform for exposing APIs get funded?
  2. Who will fund the API development and the common services?
  3. Will the APIs be monetized and which model is most suitable?

Technology architecture
  1. Since exposing the legacy capabilities as an API implies opening up to millions of mobile user, how do we ensure that legacy components are able to manage the increased load?
  2. Is there any additional layer of security to be created?
  3. How do we build micro services architecture on legacy?
  4. What are the methods using which, APIs can be exposed on the legacy?

The explosive growth of APIs, demands of the digital economy, and the regulatory mandates that will require organizations to customize their capabilities, have made it imperative for all organizations to start charting an API journey for their legacy applications as well. More in my next blog. Stay tuned.

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