6 Best Practices for Productizing APIs

Web APIs are an integral piece of the development landscape today. According to a 2021 survey, top industries such as Digital Banking, Retail, and Financial services have experienced significant year-on-year API traffic growth with 70%, 51% and 50% increases since February 2021, respectively.

The economic impact of APIs is significant and vast. Recent funding rounds of API-focused companies have seen millions of dollars go to companies precisely because APIs appeal to developers. The ability for APIs to integrate easily across many systems yields tremendous value.

The industry is seeing a shift in how APIs are used by businesses. Beyond just using APIs to build their own products, many companies are opening up their APIs as productizable streams of revenue in their own right. These companies are turning their services into platforms by way of their APIs. In doing so, they tap into an entirely new base of customers and source of revenue.

In this blog post, we'll look at how you can take advantage of these trends to treat your APIs as important products rather than merely as tools for use by your developers. We'll consider how to build upon what is likely already happening within your development teams. Equipped with this information, you'll have a strong sense of how to make sure you stay at the cutting edge of this exciting wave of innovation.

Let's begin with a simple truth overlooked by many organizations today.

Guess what: APIs are already your key products

When an organization builds APIs that are available more widely than solely for private or internal use, then these public or partner APIs can bring a whole new business potential. Yet, most organizations don't realize that these APIs are products, too.

If your organization is developing a new public API, then you can look at that pending API release as a new product release!

Central to digital transformation

Given the widespread use of APIs, your development teams are certainly already using APIs (both third-party and internally developed ones). But you may not realize this because they could be invisible and operating in the background. APIs are essential for many aspects of digital transformation.

Whether it's to accelerate innovation, integrate systems, create new value opportunities, or be a product of your company directly, APIs connect digital capabilities to form digital processes, products, and services.

Potential streams of revenue

As more companies look for new streams of revenue, they're recognizing how their APIs—and the data that flows across them—can be monetized.

One key to this strategy of building a data platform is to ensure ease of integration with your system. This is accomplished by providing standardized APIs. You may even have subscription tiers that include API access as a normal part of the plan your customers have chosen. In doing so, you have made your API one of your products!

Want to learn more about API monetization? Check out how to get started with API monetization and our overview of API monetization technical best practices.

The risks of not treating APIs as products

Perhaps you aren't already thinking of APIs as products. Maybe you are doubtful that it's in your company's best interests to provide APIs for developers to build on. But approaching APIs with this mindset means your company incurs certain risks.

Ignoring a potential base of developer evangelists

Neglecting the developers who would otherwise integrate with your systems—if only they were given the opportunity—is bad for business.

If you treat APIs as some kind of technical debt, without the importance of a product or feature of your system, then developers won't see that you have any concern for their needs. Instead of building up a strong contingent of champions for your system, you'll lose an important base of advocates. Since development is usually closely aligned with IT departments, this approach may even endanger the adoption of the rest of your system by potential customers.

Apathy or opposition from customer developers

If you have made your APIs available to developers, but you're failing to carefully monitor the quality of those APIs, the negative impact can also be significant. At best, you might simply generate apathy from your customers' development teams. At worst, providing a low-quality API might produce opposition to the use of your systems.

Low adoption of your APIs can be a sign that they aren't well cared for and are difficult to use. This is true for externally available APIs as well as for internal APIs. It can also be useful to understand how your developers view your company's internal APIs—which ones they feel are easy to use, and which are difficult. Your company may benefit from further exploration of these insights. It's not only your public-facing APIs that deserve attention as products!

Unknown resource costs and untapped revenue

When APIs are considered more as afterthoughts than as advantageous investments, organizations suffer from other risks.

When an API is simply tacked onto your "primary" products, it can be incredibly difficult for customers to know what APIs are available and how they can be accessed. Of course, if you don't know what's available, then external developers certainly won't know either.

It is also nearly impossible to measure the effectiveness of any particular API if they are thrown together and made available without any serious planning. Without intentionality, your organization will have difficulty assessing the value of any development time or system operation costs associated with your APIs.

Developer users are also likely to complain of lack of versioning, abandoned APIs, and API sprawl—all of which result in adoption and integration challenges. Most importantly, neglecting the design and care for your API footprint means losing customers, forgoing new routes to revenue, and limiting business opportunities.

It's clear that you encounter significant downsides when you fail to design and maintain your APIs strategically and intentionally. How can we make sure your APIs are getting the prioritization they need? It's time to treat our APIs as first-class products for your business.

Let's reflect on what that means by considering best practices.

6 API productization best practices

APIs play a significant role in your internal development operations. Your organization may even make some of your APIs available to partners, customers, or the general public. When you're ready to join the API Economy by making a strategic shift toward productizing your APIs, the following six best practices will help you get started.

1. Build with purpose

Before you begin building your API, it's important to define what value that API can bring to your existing products. If you're building an API just because you know APIs are popular, then you won't have much of a value proposition that will benefit your customers. Instead, consider the following critical questions:

• Why are you creating this API?
• Who are the target consumers for this API?
• What operational and value metrics will you use to determine the success of this API?

How you answer these questions will make a huge difference for customers using your API as they consider their own development or business needs.

You might sense that these questions are similar to questions you would ask before pursuing a new product or feature. You're absolutely right. APIs are products too. These product management questions are essentially the same, though slightly adjusted for the API context.

2. Focus on design

Once you've established your purpose and laid the groundwork for building this API, it's important to focus first on the API design—before the functionality.

For a new product or feature, your team would spend time determining the ideal user experience. Before a single line of code is written, you should engage in the same process, this time considering the experience of developers consuming this new API.

From the viewpoint of mechanics, Insomnia is a great tool to help with the API design process. Design documents are a core feature of the popular API client, and you would do well to adhere to design specifications and guidelines. By writing a design document upfront, you'll start with an API that is already documented for potential integrators—and this is a major win.

3. Follow the entire API lifecycle

An API, just like any other piece of software, has a lifecycle. This lifecycle includes design, implementation, testing, deployment, publishing, maintenance, troubleshooting, and updates. As you begin building your API, consider the entirety of the API lifecycle.

Start with design, but prioritize testing to proceed parallel to implementation. Insomnia is an excellent tool for automated and robust testing of APIs.

Once some portion of the API is built and tested, you'll be ready to deploy some API endpoints. A declarative configuration tool, like decK, can simplify this task to make it more manageable.

Whether or not you use a declarative configuration tool, managing the API through Kong Gateway, in concert with its rich set of plugins, is a great idea—especially as your team builds more and more APIs.

Keeping an eye on the health of your API is extremely important too.

Lastly, you need to close the loop, ensuring that developers can find your API to begin consuming it. If you put in all of this work to make your API amazing, it would be a real shame if nobody knew it existed. Whether you publish your API to Kong Dev Portal or the ServiceHub, it's important to make sure your API—and this includes completely internal APIs—is discoverable in some way.

4. Assign a product owner to your API

With any product you might create, it's important to make sure it won't be forgotten or neglected once you hit the "finished" state that you defined in your design phase. Product owners ensure that products receive the attention and resources that they need and deserve.

Because APIs are products, they should be treated no differently.

Ensure that each API has a "product owner" that serves as the champion for that API in the organization. Remember, the end goal is to treat APIs just like any other product your company may sell. If managed well, an API can be just as valuable—or even more valuable—as a source of revenue.

5. Prioritize the API consumer experience

As your API product owner focuses on customer experience, the API "customer" is the developer that consumes the API. Your API customers will need you to think through the following processes:

• Discovery: Was your API easy to find?
• Onboarding: Is the process for initial API usage straightforward and seamless?
• Support: Where will your customers turn when they need help with your API?

Your API customers will develop an attachment to your API, looking for ways to derive and measure business value by leveraging your API in their products. Keeping your API consumers happy is just as important as maintaining the satisfaction of your other customers, especially since those two segments are evolving to become one and the same.

Your success at managing your API as a product can directly impact the commercial success of your API customers. A delightful API experience for your API consumers means more business, more customers, and more revenue for your company.

6. Reflect, learn, adapt

As with the building of any product, the process really never ends—especially if the product is to be a successful one. Your API is no exception.

Take on a posture of constant reflection. By reflecting on how well your API is being adopted, you will learn important lessons on how to adapt your API design and purpose to your customers' needs. Ultimately, your aim is to constantly push your API toward greater overall commercial success. Your API success metrics should provide clear insights into how your customers are using your API. Use that data to feed and improve successful APIs while sunsetting failed ones. This will help you to minimize technical debt and stay lean.

Conclusion

APIs are increasingly available for consumption by developers across all business verticals. The API has become a type of digital currency in business today. It's no longer sufficient for a company to provide an API for their systems as some sort of afterthought or side benefit.

Today's developers—along with their organizations—expect well-designed and meticulously maintained APIs that will bring their businesses tremendous value. Managing your APIs as products will enable you to stay competitive with other players in almost every space.

Admittedly, it's a challenge to go from understanding the theory to putting it into practice. Treating APIs as products is just as much about a mindset as it is a process. Keep returning to these best practices we've covered to make sure you're headed in the right direction.

Once you get on the road to building and deploying great APIs, make sure to create an adoption strategy. Consider who will be your early adopters. How will you manage changes to your APIs over time? Will you introduce mandates that require the internal development of more APIs? How will you support, evangelize, and celebrate positive outcomes? All of these things are great opportunities for building better rapport with the entire developer community and can help bolster your position in your market, whatever that market may be.

Along the way, remember that you aren't alone. When you're ready to embrace this transformative approach, let Kong know. We're ready to run alongside you, just as we have with every single one of our customers on this journey.

Set a foundation for API productization success — check out Kong Gateway, the world's fastest and most adopted API gateway.