How APIs become building blocks for software

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The API has been around for decades, but it’s only in the last few years that we’ve seen it API Economy come in full force. To understand the critical roles APIs play today, it’s important to understand their history and the context in which they were created.

The early days

During the 1970s, companies like IBM dominated the relatively small market by developing and selling mainframes. They created and sold the entire system – fully integrated hardware and software. However, as the market grows, more and more companies specialize in creating operating systems – separate from those that develop hardware. As a result, the market divides into operating system companies and hardware companies.

With the maturation of operating systems and market expansion, new companies emerged developing applications for these operating systems. The market is large enough to support independent software vendors creating specialized applications. This era led to the creation of many apps that we still use today and application development a profitable business.

As you can see – a clear pattern emerges. As the market expands – the unit of product gets smaller. Where once companies have created an entire computer with hardware and software, the companies just develop the software and then just small pieces of that software – the individual applications.

API now, in a mature market

Now, APIs are emerging as a new, smaller unit of product. The market has reached a large enough size that there are companies focused on creating and selling APIs that support applications. Billion-dollar companies have filled the nooks and crannies of software development by creating APIs to handle specialized tasks, like payment processing, messaging, or authentication. This phenomenon is not unique to the software industry. As industries grow, demand expands and can support more specialized vendors. For example, consider the car industry.

The original car companies created every car part from scratch and ran every step of the production process. As the industry matured, other companies were formed to manufacture specific products such as windshields, tires, or paints. Today, a complete supply chain exists for the automotive industry. Automakers essentially just put all the parts together and can invest more resources in design and innovation when a third party supplies those parts. This reflects the trend we are seeing with software and APIs.

Why use API and why now?

APIs have been around in one form or another for several decades – so why is this transition happening now? As application demand grows and developer resources are limited, APIs enable companies to bridge the developer gap by using APIs as a building block to accelerate and simplify the process. software development. Additionally, resources that were once spent creating basic functionality can now be spent on other initiatives. This shift to APIs allows software companies to be extremely agile and enables rapid innovation and iteration.

The advent of technologies such as service grid, dockerization and serverless – along with new API standards like GraphQL, gRPC, and AsyncAPIs (Kafka) – also contribute to the way APIs are being used and managed. In fact, RapidAPI Status of APIs Surveys show that the types of APIs that companies are using continue to diversify. The REST API is the most popular, with almost 60% of developers using REST in production. Newer types of APIs are on the rise, with GraphQL usage tripling over the past three years and asynchronous API usage quadrupling.

APIs are important for all companies (not just tech companies)

Most of our discussion focuses on how tech companies create and use APIs. However, as the API economy has evolved, APIs have become vital for companies across all industries to speed up their business, streamline processes, and deliver customer experience. better overall.

For example, consider how APIs have become essential for the insurance industry to unlock new revenue streams. Modern customers expect services to be integrated into their existing purchasing flows. For example, imagine how a property management company could use an insurance company’s API to provide a rental insurance policy when a new resident rents out an apartment.

By integrating the insurance API into the existing rental process, residents can customize the details of their insurance plan without leaving the property management website or rental portal. . Behind the scenes, an insurance company’s partner API ecosystem supports this process and enables this revenue stream.

The insurance industry is not the only sector turning to APIs to extend business services. Retail brands are also relying on them to deliver seamless and personalized digital experiences to the needs of the modern consumer. The shift to e-commerce has been noticed and amplified by the COVID-19 pandemic. Additionally, consumers expect digital communication with businesses, including chatbots, emails, and even text messages. These channels allow companies to quickly provide updates on customer orders and resolve any issues.

Future of APIs

More than 20 years have passed since the development of modern web APIs. Since then, the API economy has grown and matured at an amazing rate. Companies and developers are managing an increasing number of APIs. We’ve also seen new partnerships and business models unlocked through the API.

This strong growth of the API economy is expected to accelerate through 2022 and beyond. The State of APIs survey found that 68.5% of developers expect to rely on the API more in 2022 than in 2021. An additional 22.1% also expect to rely on the same API. Only 3.8% expect to use them less and the remaining 5.6% are uncertain.

To manage the growing complexity and number of APIs, companies across all industries are looking at next-generation API hubs. An API hub makes it possible for you to grant access and enable sharing across teams and organizations. This type of foundation is also important for the creation, maintenance, and adoption of partner APIs. As these partnerships grow in popularity, we predict that more organizations will turn to API hubs to address the challenges of the next era of APIs.

Iddo Ginno is the CEO and Founder of RapidAPI.


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