Success in today’s fast-paced era is underpinned by how quickly companies can respond to consumers’ ever-evolving needs. Today, consumers can deposit cheques, order groceries and request taxis with a few taps of the finger. If they don’t receive connected experiences across channels, they’ll move on. According to a report, 69% of consumers would consider changing service providers if they receive a disconnected experience.
Technology disruptors have fueled an on-demand culture and are putting increasing pressure on established organisations to innovate faster. However, established organisations are often plagued with slow-moving legacy technology. To keep up and thrive in this new competitive landscape, organisations need to unbundle and build a plug-and-play ecosystem around their core value.
APIs — application programming interfaces — have emerged as crucial software building blocks that help organisations unbundle their complex application real estate. According to the 2019 Connectivity Benchmark Report, 43% of organisations reported more than 1,000 applications are being used across their business, but only 29% are currently integrated together. With APIs, organisations can unlock core legacy systems and empower developers internally and externally to build value on top.
With over 22,000 public APIs on the web, the new economy these APIs are driving is changing the way companies of all sizes are built and operated. A recent report found that 22% of Australian organisations experienced revenue growth as a direct result of APIs — compared to 28% globally. With the API economy gaining steam globally, how can Australian businesses catch up?
The opportunity for Australian businesses
The explosive growth of companies undergoing digital transformation has fuelled the growth of the API economy. Technology has become so critical to business success that 91% of global organisations believe revenue will be negatively impacted if digital transformation initiatives aren’t successfully completed.
APIs can help companies overcome the mammoth challenge of integrating together a vast array of applications, data sources and devices spread across different environments to streamline business processes and introduce greater speed, agility and cost-effectiveness. What’s more, APIs bring disjointed digital experiences together by creating a single view of the customer that allows companies to offer more tailored products or services.
The real opportunity of an API-led economy, however, is in extending its reach to traditional companies not built as software companies. As more industries, from healthcare to the public sector, become disrupted by digitisation, companies are embracing the important role APIs play in enabling data sharing.
For example, the not-for-profit provider of residential care BaptistCare leveraged APIs to improve the aged care experience for employees and patients. Through its strategic use of APIs, BaptistCare was able to integrate its YouChoose platform with its CRM, thus giving seniors and their carers access to personalised care and support based on their unique needs.
In addition, by moving to a more integrated tech stack through APIs, BaptistCare was able to increase the number of projects it takes on annually by approximately 300%—meaning the organisation is better positioned to lead the industry in terms of providing trailblazing solutions for its members.
The API economy in action
The API economy is really about the exchange of value between those providing APIs and those consuming them. For example, open banking has been slowly introduced on Australia’s shores, following regulators and customers calling for greater transparency in the financial sector. The Big Four now must make customer data more readily available and easier to consume for trusted third-party developers via APIs.
It’s important to note that legislation by itself won’t turn companies into hives of innovation. A? With application networks at the heart of their IT infrastructures, companies will be well-positioned to join more value chains and ultimately drive revenue through being able to introduce new products and services much more quickly.
For example, several established UK banks have already adopted API strategies to unbundle and create an application network that third parties and fintechs can tap into. HSBC, in particular, is unlocking its backend systems with APIs to develop a range of new customer-facing services, such as an app that aggregates data from 21 rival banks into a single view. HSBC also announced the launch of its Digital Partner Platform that uses APIs to expose its business capabilities to a digital ecosystem that invites partners to participate in the co-creation of value.
Building blocks for the future
The past decade has seen a plethora of disruption led by agile startups that shook incumbents, many of which were still relying on outdated legacy technology. As we come to a new decade in just a few short months, it’s an apt time to consider where the market is moving towards and how Australian companies can keep up with disruptors, both homegrown and global contenders like Uber and Amazon.
What’s clear is businesses must adapt to compete in this new economy driven by APIs or risk falling behind at a time where speed and agility are mission-critical. Integration challenges, exasperated by legacy systems, are perhaps one of the biggest issues facing established companies today.
Yet, it also presents a great opportunity for businesses: democratising innovation through modern APIs opens systems and insights up so everyone, including developers and third-party partners, can drive the innovation agenda forward.
If companies can overcome integration challenges and unlock the decades of valuable insight and capabilities that are trapped in legacy systems, then even large incumbents can move like nimble startups to spin out innovative products and services for customers.
What are you doing today to ensure you have the building blocks in place to democratise innovation in your business?
Rob Thorne is the VP of APAC at MuleSoft.