Blog 74: What is an API product?

API products are popular with the emergence of the microservices architecture. Earlier, an API was just an endpoint URL. However, now APIs can be a mature product with a subscription pricing model etc.

Microservices is an approach to building an application that breaks its functionality into modular components. An API (Application Programming Interface) is a communication mechanism with these modular components. Microservices expose functionality via APIs so other microservices can use them when required. Developers also use APIs from third-party vendors and partners (https://aws.amazon.com/compare/the-difference-between-microservices-and-apis/).

An API product can be an internal API (for developers within the company) or an external API (for the wider developer community).

Google Maps is offered as an API, where other products (such as Uber) can integrate it into their own product. The same API can have multiple use cases. Refer to Google Maps platform to learn different use cases (https://developers.google.com/maps).

Loyalty API offered by Square Developers allows developers to integrate it into third-party applications, such as eCommerce websites, mobile applications, and POS solutions. Loyalty programs help drive repeat visits by allowing customers to earn points that can be redeemed for future discount (https://developer.squareup.com/docs/loyalty-api/overview#). Refer blog 42 to understand the different marketing funnel stages. Loyalty falls under the fourth stage ‘Action’.

According to an IBM study, companies prioritising API based products can boost their revenue by 34%. McKinsey & Company estimated that APIs can unlock up to $1.3 trillion in economic value by 2030.

There are multiple benefits for leveraging API products. They include i) reduction in development time ii) shorten time-to-market cycles iii) avoid distraction and be focussed on core offerings (for example, it would be better for a new ride sharing app to leverage an existing external API for its navigation feature instead of developing this navigation feature from scratch).

All product management concepts (discussed in previous blogs) hold good for API products. However, there is one major difference.

The user of an API product is a developer or a programmer, who integrates the API into the company’s product (refer blog 75 for more on B2B and B2C product management).

If you are building an API product, keep in mind a few elements:

Firstly, an API product can be successful if it caters to the needs of developers. Developers will use APIs that provide good documentation, faster development cycles, easier onboarding, etc. Well-designed APIs are generally built on frameworks such as REST (representational state transfer architectural style). Due to which the API products can be scalable and repeatedly accessed.

Secondly, if a product leverages a certain API, then there is a significant dependency on the API. Hence, the developer community will analyse several relevant metrics (such as API response times, its stability etc.).

Thirdly, APIs need to follow industry best security practices. Such as being protected by OAuth, API key verification, XML/JSON threat protection, access control, etc. Also, we need to leverage machine learning /artificial intelligence to analyse user behaviour and identify threats from bad actors.

In conclusion, a well-designed API must solve problems for the developer community.

Jump to blog 100 to refer to the overall product management mind map.

All the best! 😊