APIs as a Product: How invisible heroes drive business value

In digital transformation, APIs (Application Programming Interfaces) play a crucial role. An API is an interface that enables communication and data exchange between different software applications. APIs are often the invisible heroes behind innovative business models and efficient processes. They allow companies to develop new services, integrate existing systems, and facilitate access to data. With the upcoming FIDA regulation (Financial Data Access), the release of data via provided APIs will soon be mandatory for many insurance companies and intermediaries. To fully harness the potential of APIs while efficiently meeting regulatory requirements, adopting an “API as a Product” mindset is the key to success.

What does "API as a Product" mean?

The “API as a Product” approach means that APIs are designed, developed, and managed iteratively to provide maximum value in clearly defined use cases. Instead of viewing them purely as technical interfaces, APIs are strategically planned and tailored to the needs of the target audience. This approach requires a product-oriented mindset throughout the entire lifecycle of the API.

Essential steps for implementation:

  1. Define the value: What benefit does the API offer? It should solve specific problems and provide relevant functions for those issues. If multiple problems need to be addressed, it might be best to split them into separate APIs.
  2. Identify the target audience: Who are the potential users? These could be internal developers, external partners, or customers.
  3. Establish product orientation: What resources and roles are necessary to successfully design, develop, and operate the API? Specialized roles like API Product Managers are increasingly important here.

The four API use cases

To optimally manage each API step-by-step, every API can be categorized into one of four use cases:

  1. Inside-In: Sharing and scaling internal APIs within the company, for example, to reduce silos and increase efficiency.
  2. Inside-Out: Providing APIs to external customers and partners to foster partnerships and enable new business models. This is particularly relevant with the upcoming European FIDA regulation, which mandates financial companies to offer these APIs.
  3. Outside-In: Integrating external API services into the company’s infrastructure to develop applications faster and more efficiently. Due to the Digital Operational Resilience Act (DORA), which has been in effect since 2023 and must be fully implemented by January 2025, there is significant urgency in this area.
  4. Outside-Out: Building industry-wide API marketplaces and ecosystems to standardize and simplify data exchange.
Figure 1: The four API use cases

Roles and responsibilities involved

Traditionally, developers were solely responsible for “their” APIs. However, the “API as a Product” approach shows that success increasingly depends on the collaboration of various stakeholders. The integration of essential corporate functions is crucial to understanding and contributing to the success of the API offering. Two key functions are:

  • (Partner) Sales and Marketing: They present the API professionally, handle documentation, pricing, and lead generation, and play a crucial role in positioning the API in the market.
  • Controlling and Accounting: They monitor API usage and manage internal charging and external billing.

Other roles include Procurement, IT Architects, Product Owners, Legal, Support Teams, and Compliance, especially in light of FIDA. Involving all these stakeholders is essential for the efficiency of the “API as a Product” model.

Additionally, building two specialized roles is recommended. An API Product Manager is responsible for the entire lifecycle of an API product, including customer feedback and performance. They ensure that the API aligns with business objectives and is continuously improved. An API Program Manager oversees the development of the entire API ecosystem, empowers teams, and ensures adherence to governance standards.

Time to First Call (TTFC) as a key metric

For an iterative “API as a Product” approach, clear KPIs (Key Performance Indicators) are crucial for iteratively developing and improving the API in the right direction. A highly relevant metric is Time to First Call (TTFC). This measures the time between discovering the API and making the first successful API call. It can be measured regularly through simple user tests with a developer.

A short TTFC indicates:

  • Efficient iteration: Rapid API testing under real-world conditions helps eliminate uncertainties and prepare for integration.
  • High documentation quality: A short TTFC reflects excellent API documentation and a well-thought-out onboarding process.
  • Reduced manual efforts: A short TTFC means automated processes, saving resources and minimizing errors on both sides.

Overall, a short TTFC is a strong indicator of high acceptance and a good user experience with the API. Interestingly, the range of TTFC values varies widely. While API leaders like Twilio or Google’s Google Maps API achieve values below 15 minutes, many companies take days or even weeks. Key factors driving these differences are optimized API discovery, ordering/requesting the API, and automated provisioning—three processes covered by apinity’s marketplace solution.

Tips for improving TTFC:

  • Offer self-service subscription: Minimize manual steps in onboarding and speed up the process. Think of self-service like ordering in an online shop—select APIs and receive access credentials.
  • Use standardization: Using standards like the OpenAPI Specification and OAuth2 makes understanding easier.
  • Provide sample files and values: Help developers clearly understand the required input data for APIs.
  • Define clear use cases: Make it easy to grasp the API’s benefits.
  • Set up demo APIs and playgrounds: Offer a risk-free environment to try out the API.
Figure 2: Self-service subscription of an API service plan

Conclusion

An “API as a Product” mindset is key to unlocking the full potential of APIs. By clearly defining the business value and use cases and involving all relevant stakeholders, companies can optimize their APIs. The Time to First Call metric helps assess the current state and drive continuous improvement. Regulations like FIDA and DORA make providing APIs and managing them efficiently a necessity for every insurance company. For businesses seeking support in designing and building internal and external API marketplaces and portals, apinity.io offers tailored solutions.

Author: Fabian Kolbe, Senior Solution Engineer, apinity

This article was originally published in German in the Versicherungsforen-Themendossier Nr. 19/2924.