Written by Harini Krish
Digital Marketing Lead Content Writer at Royal Cyber
Modern businesses with robust API business models are breaking ecosystem boundaries to open new channels of growth. Although APIs are ubiquitous, defining an API business model is not easy. MuleSoft has created a realistic method to outline API business models that will derive the maximum value from your APIs.
In today’s business environment, customer expectations are changing at an incomparable rate, more and more establishments are expanding their digital ecosystems to outspread their reach to new customers and create connected customer experiences.
Top organizations are restructuring markets with increased ecosystem footprints. They are doing this by leveraging an API-led connectivity foundation on their platforms, connecting an organization’s core capabilities to new channels to engage with customers.
80% of organizations are implementing APIs, only 12% have a leadership-mandated API approach in place. Without a proper strategy, you are choosing to limit your APIs' value — downgrading them to a tool that can simplify project implementations. But, if your organization is looking to use APIs to forge new partnerships, monetize assets, and open for new innovations, you must establish a stringent API strategy, hold on to core ecosystem principles, and pick the right API business model.
Whether you are new to the API economy or you have a conventional API strategy, having a rational approach to picking an API business model will improve your stake in the API economy.
Though APIs are universal, creating a sustainable API business model is an ever-evolving process that needs strategic approaches. At Royal Cyber, we have developed deep experience in API business models by working with many organizations at various stages of API maturity. We have created this guide that will empower you to select the right business model and get the most from your APIs.
API ecosystems are organized with the goal to win in value creation for all stakeholders involved. The first step to select the right API business model is to find the three essential elements of the API value chain:
The second step is to outline the why API. This is done by defining the purpose and expected benefits.
With the audience identified, API's purpose and benefits are now ready to take that info and select the right business model.
Organizations in every industry are turning to APIs to transform their technology system to support the next-generation technologies. APIs streamline operations by connecting the existing business capabilities with new innovations. In case the APIs are used internally, the investments should be valued and choose an API business model based on the internal APIs' purpose.
Two instances are:
Using APIs to refactor traditional software infrastructure into easily serviced components.
Improving the customer experience and developing the underlying technology to increase the speed of delivery.
Any API exposed to stakeholders outside the organization should be considered as an external API. External APIs should not be misunderstood as direct revenue channels. Before trying to monetize an API, you should identify the consumer’s will to pay for the asset and the benefits to the organization. Based on the target audience and the anticipated benefits, external business models can be further classified into:
Partnership: Closing the gap between customers’ desired experiences and your capabilities by joining hands with partners.
Standardization: Responding to market pressures, evade regulatory fines by normalizing API initiatives.
Productization: Creating API products as an entry to monetize with data or capabilities.
Marketing: Using an API to facilitate marketing initiatives, to promote the core platform, increase brand awareness, grow a network, or honor commitments to transparency.
In the end, an API business model is a set of logically laid-out assumptions of how your business will generate value. API business models should be used to measure the value in potential earnings o savings in API products and be a guide for your future investments.
Do you wish to dive deeper into the several API business models and need help in choosing the right API or get the most value from MuleSoft APIs, reach out to our MuleSoft experts at [email protected] or visit www.royalcyber.com