What are APIs and why are they so dominant in business today?

It often feels like the world is obsessed with acronyms these days but, when it comes to tech jargon, the term API might just be one of the most over-used – yet equally least-understood – acronyms of all.

However, strangely – and probably without even realizing it – you likely make use of APIs daily. API stands for Application Programming Interface, and an API is essentially a way for different computer services to communicate easily with one another.

To give a real-world scenario, you might like to think of an API as being similar to a waiter in a restaurant – essentially a conduit between the customer ordering their food and the kitchen that prepares it. The customer orders their food – the waiter relays the order – the kitchen makes the food – then the waiter returns the order to the customer’s table. An API works in a very similar way, just in a digital format.

Why are APIs so important?

Today’s society is data-driven on almost every level, and as the real and digital worlds increasingly become one, data is becoming more important than ever. Indeed, many industry analysts now suggest data is the world’s most valuable commodity – worth more even than traditional heavy-hitters like gold and oil.

With our seemingly insatiable thirst for gadgets, tech, and online platforms, we are coming to rely more and more on digital services – making the communication between these systems all the more vital. Digital services have become an integral part of most people’s work and personal lives – so much so, it’s now almost impossible to imagine a world without the likes of Facebook, Google, YouTube, or Amazon.

What is an example of an API?

As you might expect, APIs come in a huge variety of forms, ranging from the highly complex to the relatively simple. For the purposes of keeping things familiar and easy to understand, one of the most common and easily recognized APIs that you’ve likely used many times is the ability to sign in to services with credentials supplied by other platforms.

For example, you’ll have likely visited online services that allow you to subscribe, identify yourself or sign in using your Facebook, Twitter, or Google ID, etc., rather than having to set up a new account. This kind of sign-in is only possible using APIs. Another common example of APIs at work is the familiar “Pay with PayPal” logo you’ll have often seen on e-commerce websites, where you can pay immediately, so long as you’re already logged into your PayPal account (i.e., without having to input credit card details, etc. into the retailer’s platform).

In both these cases, when a user clicks these buttons, the service doesn’t actually log in to their social/PayPal account – rather, they leverage the power of the platform’s API to check user details (in the case of Facebook, for most people, that’s quite likely). This makes API security considerably easier to manage since the API only gives specific access to specific credentials rather than cross-board rights to user data.

This ability for systems to communicate and verify user credentials isn’t just convenient – it’s also fast, secure, and saves users having to create multiple accounts.

Why are APIs important for business?

In short, APIs help reduce barriers to access, foster innovation and provide two-way benefits for both third-party developers and the originating API firm. They can even help companies expand into different markets by allowing external organizations to use their base data in new, innovative, and exciting formats the original company may not have imagined. They also allow firms to collaborate (sometimes without even realizing it) with other companies on different uses for their original data or service.

A great example of how a firm can use APIs to develop an entirely new product can be seen in the way Uber rolled out its services. Rather than starting from scratch and having to build its own payment, mapping, and communications services, Uber piggybacked on existing platforms to build its unique and, at the time, groundbreaking service. To have faced developing all these aspects of its ride service might have proved prohibitively expensive at the outset – but by taking advantage of APIs, the firm could slash development costs while also improving the reliability of its data.

How APIs are cultivating a creative culture – and how your firm could benefit

Many industry experts believe APIs represent the future of business – and it’s easy to see why. As exemplified by the Uber development cycle above, APIs allow entrepreneurs creative freedom to concentrate on dreaming up ideas rather than having their potentially seminal concepts fall at the first hurdle of having to develop everything in-house. With the impending growth of the Internet of Things (IoT), it’s quite easy to imagine how APIs could bring cross-board advantages to multiple, otherwise disparate firms for the benefit of all.