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November 16, 2016updated 17 Nov 2016 8:35am

Why the API Economy needs evolution, not revolution

CBR's Ellie Burns delves into the API (Application Programming Interface) Economy with Hugo D’Ulisse, discussing technical debt, adoption challenges and and the role of the API Economy within the Fourth Industrial Revolution

By Ellie Burns

EB: How would you define the API Economy?

The API economy is a set of business models and communication channels which use secure access for the exchange of data and access to functionality or programmes.

APIs aren’t a new concept. However, using them in an open and flexible way for building platforms and capability, makes it easier to

Hugo D'Ulisse, SAS UK&I

Hugo D’Ulisse, head of analytical platform at SAS UK & Ireland.

integrate and connect individuals, locations, systems, data, things and algorithms to add new value for users and companies while sharing data and information.


EB: Which companies do you think have the edge in the API economy and how are they beating more traditional, established companies?

The companies that best take advantage of the API economy will be the ones that most quickly adapt to the economy based models of the Fourth Industrial Revolution.

The company nearest to what Google or Apple looks like today, in 10 years’ time, doesn’t yet exist.

Case in point, in the mid- 90s Yahoo was the big name and Google wasn’t around. This is an example of the expected disruption.

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EB: Where are organisations going wrong in the shift to the API economy?

The API economy is about openness. It is about providing an open transport to achieve new value and new business propositions through greater relationships and connections.   In respect to that, the term ‘open’ can often be mistaken for ‘open source’ so in many ways, too many companies have mistaken the concept of open source for carte blanche in house R&D projects to create open APIs.

This has led to an overload of examples of ‘reinventing the wheel’.   We don’t need to reinvent the wheel, we need to deploy the best fitting wheels in the right way, to the most valuable opportunities to grow our businesses. Sometimes that does mean open source, but it might also mean combining open, proprietary and open source architectures to deploy wheels in the most valuable way that will allow companies to industrialise the solutions and derive the greatest value from them.


EB: What is technical debt and why is this important for organisation’s looking to embrace the API Economy?

‘Technical debt’ is quite literally a cost-based pseudonym for age old ‘legacy’ systems.

However, technical debt can also refer to in-house owned and maintained data centers, long and expensive contracts with third party service companies, contractors running the creaking IT infrastructure and old legacy systems developed in-house that are no longer viable.

If technical debt is not repaid, then it accumulates interest making it harder and more expensive to change later on. Every established organisation has technical debt but very few can afford to pay it all off in one go.

API Economy & technical debtTherefore, managing technical debt is a given and priorities need to be set about what you pay off and when for the maximum effect. Laying the groundwork for the API economy can be started by embracing methodologies like Agile and DevOps, to avoid debt in the first place and help in its reduction over time. It is also important to make sure that future technology investments are focused on those that can support open standards and componentisation.


EB: What is the role of governance in the API economy and why is it so important?

Governance is a huge topic in the IoT space. The challenges of joining many different things and products together, all of which use different APIs and levels of security, means that we witness an increase in attacks on vulnerabilities over the internet. It requires vendors and manufacturers to work closer together.

New regulations such as the EU GDPR will force companies to think very differently about the safety of the data they store. Fines for non-compliance will be up to four percent of worldwide turnovers.

The large penalties and the continuous cyber infringements into business networks becomes so risky that it is a better option to offload the risk of managing the data to a provider in the cloud or the actual source of the data being the individual themselves.


EB: How does the API Economy play into the Fourth Industrial Revolution?API Economy

The API economy is one of the many technological branches of the Fourth Industrial revolution.

Other branches include the Platform Economy, Algorithmic Economy, Internet of Things, Cyber, Blockchain, AI and Machine Learning and Cognitive Computing.

However, these branches of the Fourth Industrial Revolution are not mutually exclusive.  For example, current thinking is that for AI to succeed and be widely adopted, we need people to involve more IoT devices in their daily lives for AI to help control. Conversely, for the IoT to become successful, we need AI to control and bring together the ecosystems of the disparate IoT world into simple-to-use, passive, Natural Language Processing and interactive interfaces.


EB: Does the Fourth Industrial Revolution create any significant obstacles or challenges for the API Economy?

The main challenges will be around the proliferation of connected devices and the management of threats to our infrastructure and operations.

According to our research with the Centre of Economics and Business Research, the total economic benefit to the UK from IoT is expected to total £81 billion over the period 2015-2020. However, with over 20 billion connected devices by 2020 there needs to be a balance of threat vs. benefit adopted by manufacturers otherwise the adoption rate for the API economy will fall.


EB: Does the Fourth Industrial Revolution make governing an API Economy more difficult? Or easier?

It should become easier as the Fourth Industrial Revolution will drive many of the standards and governance that will be required for the API economy to be successful.


EB: Organisations have two choices – augment existing infrastructure or replace it with new tech. How should companies go about making this choice?

The successful adoption of technological advances requires evolution not revolution.

Whenever you rip out and replace you generally fail to achieve significant adoption.  Hence the most successful companies that embrace the Fourth Industrial Revolution will take full advantage of augmenting what they have and phasing in new technologies as they go forward. It’s extremely cheap and easy to try something, fail or succeed, then move on to the next idea.

In this exciting new world, adopting what works and replacing legacy systems and skills over time with iterations of change will be the best way to succeed.

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