Digital Transformation for Businesses Using APIs

  • By Chamin Dias
  • 14 May, 2019

With the advancement of the Internet and its infrastructure, businesses can easily expand their boundaries and customer bases. For example, in the finance sector, almost all banks now provide digital banking services that go beyond simple online banking. In the healthcare industry, new facilities such as e-channeling and mobile consultations have been introduced. With these options, patients can book an appointment with the doctor, and, in some cases, they can contact the doctor for a mobile consultation. Even smaller businesses use the Internet to help promote and sell products and services.

In addition to this, cloud computing has advanced in leaps and bounds. Many services are now hosted in the cloud, providing access to many users simultaneously. Users can access their data, accounts, and digital assets from anywhere in the world. This is another avenue that most businesses use to expand boundaries and maximize profit.

Given these facts, companies have to leverage digital transformations in order to survive in modern and competitive marketplaces, become stable entities, and dominate in their industries. This article will explore how digital transformation can be achieved using APIs and WSO2 API Manager - the leading open source API management solution. We will discuss how to:

  • Transform your business with APIs
  • Manage digital services for various users (internal and external)
  • Enforce security on APIs
  • Associate service level agreements (SLAs)
  • Make effective and proactive business decisions based on API usage patterns

Digitizing Business Contracts

Most businesses today operate based on contracts, which can be written, verbal, or implied. Either way, there is a contract between the business or service provider and their customers. These contracts are typically formalized so they can be transformed into digital contracts.

In order to transform a business digitally, business activities and business processes should be mapped to support digital business models. This is important because, in any business, there must be a negotiation between consumers and service providers (irrespective of the nature of the business). Sometimes, these contracts are between internal parties of the same organization. This negotiation is performed using a contract (verbal or written) as a well-structured agreement. This is common for digital contracts as well. Therefore, to achieve digital transformation, there must be a way to define and maintain this type of contract.

At the same time, these contracts should be managed and stored in the system when transforming the business digitally.

These types of contracts can be considered as APIs. At a high level, when you consider an API management solution, APIs are the contracts between service providers and consumers. Services can be offered to customers through APIs in a user-friendly manner. WSO2 API Manager helps to maintain the segregation of duties by using role-based restriction; this is important to establish communications between internal parties within the organization.

Modern consumers demand to access their data and services anytime, anywhere using a variety of devices. On the other hand, to become more profitable, businesses need to reach as many users as they can and serve them. To facilitate both these cases, we need a well-constructed interface between the business and end users (customers). Most of the time, the way of consuming the service differs from one customer to another. In these scenarios, the interface should be flexible and extendable to fulfill the aforementioned use cases. If we consider all these facts collectively, it can be observed that APIs are the best option to address these challenges. In addition to the above facts, many novel market segments have opened up owing to the internet's expeditious improvements. Businesses can take full advantage of these new market segments and maximize customer bases.

API management is critical for digitally transformed businesses. According to The Forrester Wave™: API Management Solutions, Q4 2018 report1 - “An API management solution anchors an organization’s strategic API platform”. Based on the facts mentioned in that report, we believe it is clear that the foundation of digital transformation starts with APIs.

Service management for different users/groups and service evolution

Services have to evolve over time as it is hard to define a comprehensive implementation at the very beginning. The evolution of the service depends on various facts, such as technological advancements, customer requirements, and system updates. However, we cannot guarantee that all users will move to the latest service, as it might take some time to update their systems and procedures. Therefore, it is critical to support old (at least for a short time) and new versions of the service.

This will effectively manage the relationship between API users and API providers. The Forrester Wave™: API Management Solutions, Q4 2018 report2 highlights this - “API management solutions are central to managing the relationships between API providers and API users; AD&D pros should treat them as business applications that are critical to digital business success.”

In businesses, it is not recommended to modify existing contracts after both parties (service providers and consumers) have agreed on the specifics. If there’s a need for a change in the service, the best option would be to define a new version of the same service and promote it. This way, existing customers can consume the service, while allowing new customers to subscribe to the new (refined) service.

Securing Digital Services in a Digitally Transformed Business

In The Forrester Wave™: API Management Solutions, Q4 2018 report3, the API policy and security criterion has a weight of 15% within the Current Offering category. The report says "vendors that can provide API user engagement, deep API security, API design, and governance, and operating models for federated partners and organizations best serve customers with multi-pronged API strategies". In our view, this represents the importance of API security. Hence, in the API management arena, API security is one of the most vital aspects.

With WSO2 API Manager, API security is not a nightmare anymore as the solution has support for API security mainly based on OAuth 2.0. This guarantees that only authorized parties can access the APIs (services). Therefore, service providers can make sure their services are exposed securely.

Sometimes, customers might demand to have third-party identity providers for API security. This will be useful to extend the security of APIs using an identity provider of their choice. In such scenarios, features relating to API security should be extended. WSO2 API Manager is capable of handling these use cases as well.

Accordingly, we can see that almost every security aspect of digitalized businesses can be achieved with WSO2 API Manager. In addition, the throttling and threat protection mechanisms add an extra layer of security. For comprehensive details, refer to the official documentation.

SLA Association for Digitalized Services and API Monetization

Optimal resource allocation and resource consumption are essential for businesses to become profitable. This should be adhered to with the aid of well-structured service level agreements (SLAs). When it comes to digitalized services, these SLAs provide different service layers for customers, so that they can choose the best plan for them.

The importance of SLAs in digitalized services is highlighted in The Forrester Wave™: API Management Solutions, Q4 2018 report4 as well. “API management products enforce the usage parameters that API providers and API users agree upon in a variety of ways, including the use of ... quotas and rate limits for how many API calls an API user can make”. We believe it is clear how SLAs need to be aligned with the APIs (services) to provide a better user experience for customers while maximizing the revenue for service providers.

Using well structured SLAs ensures optimal revenue generation for service providers. Hence, for an API Management solution, it is a must to have this capability. As a leader in the API Management arena, WSO2 API Manager provides options to facilitate this requirement out of the box.

Making an API, application or a resource available to a consumer at different levels of service layers (usually for monetization purpose) and regulating traffic according to infrastructure availability are some of the advantages of having SLAs in an API Management solution.

When it comes to monetizing APIs, WSO API Manager is capable of providing the required data to charge the subscribers. WSO2 API Cloud is a real-world application of the API monetization functions in WSO API Manager.

Customer-focused Business Development

Managing the relationship between API users and API providers is another crucial requirement in modern API Management platforms. This is mentioned in The Forrester Wave™: API Management Solutions, Q4 2018 report5 as well. Understanding customer needs and obtaining their feedback will assist service providers to offer better customer service and increase revenue. Eventually, it will be beneficial for both parties (service providers and customers).

To achieve this, the API management solution should have community features. This helps service providers improve services based on actual customer needs (in an interactive manner). Owing to the massive expansion of social media platforms during the past few years, it is wise to leverage these channels by introducing community features, such as a rating system, forums, comments, social sharing, and widgets. Since WSO2 API Manager has these features, it is one of the most feature-rich API management solutions in the world.

Proactive Decision Making for Business Optimization

Analytics is one of the most pivotal aspects of any business. This fact is backed by The Forrester Wave™: API Management Solutions, Q4 2018 report6 as well. It states - "Analytics are important to understanding who's using APIs and how." In our view, this statement illustrates the importance of having a solid analytics solution for API based digital businesses. It will help service providers to offer a better customer experience while exposing their services in the most optimal manner.

To address this need in the modern business world, WSO2 API Manager supports both real-time analytics and batch analytics. API providers (i.e., service providers) and API consumers (i.e., consumers) have access to a variety of informative graphs, tables, etc. so that they can take proactive decisions to carry out the tasks in the most optimal manner. In addition to that, WSO2 API Manager is capable of sending alerts to identify various abnormal activities once it is integrated with WSO2 API Manager Analytics. This alerting mechanism plays a vital role when it comes to real-time analytics.

As a global API Management leader, WSO2 API Manager analytics can be used to generate insights to make effective decisions. This is explained in a previous article as well. It explores how we can ensure the growth of the business and address user requirements through business insights. More information about WSO2 API Manager Analytics can be found in the official documentation for further reference.

Conclusion

During the past few years, the world has transformed into a global village. In this context, businesses need to serve a large number of customers to survive in a competitive environment. To do this, most business owners have transformed their businesses using digital transformation, and a majority of businesses have used APIs and API management solutions to achieve this transformation.

As one of the market leaders in the API management arena, WSO2 API Manager facilities businesses to take maximum advantage of the digital transformation in today's competitive business environment.

  • 1Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” by Randy Heffner with Christopher Mines, Allison Vizgaitis, and Diane Lynch, October 29, 2018.
  • 2Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” October 29, 2018.
  • 3Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” October 29, 2018.
  • 4Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” October 29, 2018.
  • 5Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” October 29, 2018.
  • 6Forrester Research, Inc. “The Forrester Wave™: API Management Solutions, Q4 2018,” October 29, 2018.

About WSO2

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About Author

  • Chamin Dias
  • Senior Software Engineer
  • WSO2