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API Economy

Last modified Sep 16, 2017

Motivation & Background

An Application Programming Interface (API) is a machine-readable interface trough which IT applications or data repositories make their functionality or data accessible to another authorized application or machine.1 Traditionally, APIs were used to integrate applications within an organization2, but due to the advancements in Web-Technologies (Web-APIs, Cloud), more and more organizations open their APIs to specific external partners or interested software-developers via the internet3.

Opening up APIs has led to a range of new business models, which in turn created a new market with complex relations. This new market is summarized under the term the API Economy. One possible business model based on open APIs is to make the consumer of a functionality or data pay for its use (subscription, license, freemium, Pay-as-you-go).4 This enables organizations to enter new markets by to monetizing existing core competencies or data sets.1 An alternative approach is to publish functionalities and data free of cost but with the goal of fostering innovation which can be integrated into the organization later on.

The API Economy plays an important role within the digitalization of todays world, since APIs are transformed into a digital product. Furthermore, the API Economy affects the way organizations cooperate. Until recently, setting up a partnership with another organization to integrate their capabilities into the own business model was connected to a lot of effort (contract design, cooperation model definition, etc.). Now, the API Economy allows highly automated sourcing of such capabilities via Web-APIs, which enables organizations to form relationships a lot easier, faster, and with more partners.5 

Goal & Approach

The goal of this research project is the identification and evaluation of success factors for the participation of organizations in the API economy. To achieve this goal, the following steps are taken:

  • Identification of application scenarios and success factors that already prosper in the API Economy (mainly digital organizations)
  • Evaluation of the transferability of application scenarios and success factors to organizations not involved in the API economy (established organizations in the service and production industry, SMEs)

Contact

If you are interested in a collaboration in this research project, please contact Gloria Bondel at gloria.bondel@tum.de.

 


Sources:

Kepes, B. (2014). Software may be eating the world but APIs are giving it teeth. Diversity Limited.

2 Vukovic, M. et al. (2016). Viewpoint Riding and Thriving on the API Hype Cycle. Guidelines for the enterprise. Communications of the ACM, 59(3), 35–37.

3 Holley, K. et al. (2014). The Power of the API Economy business performance. Retrieved from http://www.redbooks.ibm.com/redpapers/pdfs/redp5096.pdf

4 Evans, P. C., & Basole, R. C. (2016). Revealing the API ecosystem and enterprise strategy via visual analytics. Communications of the ACM, 59(2), 26–28.

5 Kubler, S. et al. (2017). Open IoT Ecosystem for Sporting Event Management. IEEE Access, 14(8), pp. 7064-7079.