Murali Shanmugham discusses the importance of APIs in digital transformation, and how they can be managed as part of an SAP landscape.
Digital transformation is becoming our industry’s buzzword, which in simple terms really encompasses the five key technology concepts– big data, cloud computing, hyperconnectivity, smart devices and security – to radically improve the performance or their reach to customers.
Organisations have started to use these technology concepts to reach the market and consumers in different ways. They have started to rely on mobility, social media, analytics and smart devices to create new channels in order to connect with their customers and improve their relationship and also add more value proposition.
In a recent survey in ANZ, one of the main reasons for digital transformation was the need to provide omni-channel customer experience. A consistent customer experience across multiple channels was the top priority for financial institutions and telco firms who operate in B2C segments. This was followed by business networks, where organisations are looking to collaborate more efficiently with different partners.
The role of APIs in digital transformation
One thing which connects all these five key technology concepts is the API (Application Programming Interface). APIs are the foundation for the digital transformation, and in essence are building blocks. APIs have changed the way in which we do business and commerce these days.
If you look at the companies below, you will notice that all of them are masters in exploiting managed APIs and most importantly they have started their digital business on the cloud. APIs can be used by organizations to transform their business into a digital business, changing the way they interact with their customers and partners.
Traditionally organisations have been using service-oriented architecture (SOA) as a means to expose data and functionality across organisations. These organisations used SOAP Web Services as APIs to expose data.
Today web APIs are a popular choice when it comes to building applications for the web, mobile and cloud. The key difference between web services used in SOA and web APIs is that web services were traditionally used to integrate internal systems and partners. The web APIs enable the direct interaction with consumers externally. Web services are not mobile friendly and are not easily consumable from HTTP based client. This is where web APIs come into play. How do these companies (who have heavily invested in SOA) ensure they can also innovate in this digital economy? I will answer this in the latter part of this article.
What are APIs?
They are a set of defined functions and methods for interfacing with the underlying system. APIs enable organisations to expose their backend data and functionality for use in other applications and services. APIs are not new. In the SAP world, we have been using BAPIs (as an API) for a long time. To give another example, when you are reading articles on the internet, you often get to see Facebook/Twitter buttons at the bottom, which allows the user to publish this article on their Facebook/Twitter accounts. This is possible because of the public APIs which are developed by Facebook/Twitter for consumption and exposure via third parties.
Types of API
Private API
These are APIs which are built and exposed primarily for internal developer. The focus is on enabling internal developers to reuse functionality created by other departments within the organisation. It can substantially reduce the efforts when building applications which integrate multiple systems. It’s important to note that internal developers could also build apps which could be customer-facing. No external developer would not have access to the corporates API to build applications on top of it. These APIs constitute 70 per cent of the world’s APIs.
Partner API
Partner APIs are built for use by partner companies. These APIs can be used to collaborate with partner companies and enable organisations to extend their brand and products. It promotes collaborations within the ecosystem. These APIs constitute 25 per cent of the world’s APIs.
Open API
These are APIs which are built and exposed to the outside world. Any developer outside the organisation can start to consume these APIs to build applications on top of it. It can also be used by internal developers. It is fair to say that open APIs are the ones which provide more business value to the organisation. However, it also comes with additional security measures as the APIs are available in public. These APIs are the key drivers for innovation. Open APIs constitutes 5 per cent of the world’s APIs.
What is the business value of APIs?
Revenue generation: APIs can be used a means to generate revenue. APIs are the product which is sold. Take, for example, Google Map APIs. Google charges customers to use their APIs within other apps. So for every call that a customer makes to these APIs, Google gets paid. If there is a company that is looking to monetise APIs, they would need to provide a service which is unique and competitive.
Extending business reach: APIs can be used to create new business channels and gain new customers. As an example, Facebook and Twitter have free APIs which allows third party app developers to integrate their apps with Facebook/Twitter. Now Facebook doesn’t charge the developers for this and make any money out of it. Ultimately, it increases their value with brand generation. Companies can use these APIs as a way to even market their products.
Integrating your systems efficiently: This is focused more on private APIs where you can now use API to better integrate your applications and make them communicate to each other and improve your interaction with customers.
Role of API Management
When starting an API program, it is necessary to ensure your APIs can be built and exposed quickly, and at the same time are secure, user-friendly, scalable, testable and reliable. An API Management solution take care of this. Some of the core capabilities of an API Management are as follows:
- Connect to diverse backend systems and help in composition of an API along with its lifecycle management,
- Provide a robust authentication and authorization system to allow controlled access to external users who access the APIs,
- Performance and caching mechanisms,
- Developer authentication and onboarding,
- Analytics for monitoring API
- Provide robust traffic management
- Ability to scale and meter the API usage.
Layered architecture
There are different layers which are usually involved in an API program.
We normally have one or two layers at the bottom which are referred to as ‘Generation Layer’. The generation layer usually consists of the on-premise/cloud solution which constitutes the system of records. Data is locked in its own silos and this is what we are looking to expose using lightweight APIs. Above the generation layer sits the API Management, which accepts commonly used protocols like OData/SOAP.
Below is a layered architecture for SAP API Management. If you have data residing in an external database, or you have an SAP BAPI which you are looking to expose, you could use the systems in the optional layer, for example, Gateway, to expose them as OData services. If you have a SOAP API and would like to expose it as an OData/REST API, you could use some of the tools in this layer to transform the underlying API. Above the API Management sits the consumption layer where desktops and devices connect to your digital assets centrally via the API Management.
API Management complements the architecture by working along with other platforms like mobility or integration to securely use and expose the APIs. It does not work as a replacement of the mobility or integration platform which exist within your organisation.
Fundamental components of an APIM
Below are the main elements for any API Management solution.
API Portal
This Portal should provide functionality for the organisation’s developers to build new APIs. API Portal needs to enable the developers to:
- Build and version the APIs,
- Ensure their APIs are securely accessed and detect threats accordingly,
- Handle transformation of the messages,
- Set quotas and concurrency limits to restrict the traffic,
- Maintain documentation for the APIs which are to be used by external app developers,
- Test the APIs before publishing them.
Developer Portal
This portal is primarily for external developers and hence needs to be available for access outside the organisations network. This Portal would be the point of access to all the digital assets of the organisations. Hence, it is important to ensure that it is highly secured. It needs to provide an easy mechanism to onboard new developers and also authenticate them. The Developer portal should facilitate the developers to discover the APIs they are after and facilitate in the building of applications.
Analytic Engine
The Analytic Engine is one of the core engines of the API Management. It provides insights into how the APIs are being used and also tells how each of the APIs are performing. The Analytic Engine could provide reports to identify:
- Real-time overall traffic trends
- Traffic trends for top APIs, applications, developers
- API response time and cache performance metrics
- Visibility on developer engagement.
Considerations
It is important to pick the right API Management tool which can provide all the support required for the organisation to enter into a digital transformation. SAP offers API Management both on-premise and also on the cloud via the HANA Cloud Platform. Before you even start to design your API, get to know your audience and market segment. You need to know what type of developers would be consuming your APIs. Make your APIs very easy to use. APIs with less documentation would be hard for external developers to use. The success of your APIs are simply based on how well it is adopted in the community.
Murali Shanmugham is a HANA Cloud Platform evangelist working at SAP Australia. He is passionate about mobile, cloud and the Internet of Things. In his previous role as a solutions architect he spent most of his time helping customers in their UX journey to adopt and implement Fiori applications.
