Open APIs bring business opportunities

Open, high-performance APIs bring third-party developer interest -- and new revenue opportunities to your bottom line

It's been argued that developers are increasingly becoming kingmakers in the software industry. The impact of this can be seen particularly in the middleware market, where software vendors have reconsidered pricing and source code availability in an effort to attract developers to their platforms. But vendors are by no means alone in courting developer interest. Luckily, enterprises seeking to attract developers to their platforms can learn valuable lessons from the software industry.

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Community building requires a low barrier to entry
Forrester's Jeffrey Hammond and RedMonk's Stephen O'Grady have highlighted the importance of developer awareness, preference, and adoption in the growing success of open source software. Yet as O'Grady sees it, making your source code publicly available is far less important than reducing the barriers to entry for your particular technology. O'Grady writes:

Available Code: This isn't necessarily about source code per se, although that's related, but rather removing the barrier to entry for potential users of your application. I'm often asked what I believe to be the most critical success factor in projects such as JBoss or MySQL, and while the technical merits are important I believe that neither one of those projects would be where they are today without being freely downloadable. In competing with their commercial counterparts, JBoss and MySQL can differentiate simply by being easily obtained. When beginning a project, the choice is often download and get coding or head to procurement, and unsurprisingly the former is generally the preferred option. While this is certainly not a prerequisite for success, it's a very effective means of encouraging participation in your particular community, because there's no barrier to entry.

PHP provides a strong example of how easy access to a technology encourages community growth, as the ability to find answers to questions about PHP, whether through peers or a simple Google search, played a significant role in the technology's explosive growth.

These lessons apply equally to closed source software, where proprietary vendors are increasingly investing in developer outreach and community building efforts. The mantra is simple: Make entry easy, and the developers will come.

Attracting third-party developers with open APIs
Of course, the term "platform" means something very different if one compares Microsoft's .Net, IBM's WebSphere, or JBoss's Enterprise Application Platform to the software platform at Sears, FedEx, or Netflix. For enterprises, a platform comprises the application software that codifies core business processes. For example, Sears' platform consists of a product catalog, inventory management, and a sales component at the minimum; it also supports both Web and physical presences. Until recently, Sears' main developers worked directly for the company, but that is changing.

Today, the push to expand indirect sales channels has many enterprises turning to free and open APIs to allow third-party developers to utilize their platforms. I covered this trend earlier this year in a post titled "How to use open APIs for business growth."

In that post, I discussed Sonoa, a provider of API management solutions for enterprises. At the time, Sonoa had two somewhat separate endeavors: Sonoa ServiceNet, a priced set of offerings for enterprises, and Apigee, a free Web offering for developers.

Sonoa's success with Apigee has prompted management to rebrand and refocus the company around Apigee. Now called Apigee, the company sees developers as the key, not only to its business, but to its clients' businesses as well.

According to Apigee, 3 to 5 percent of Apigee Free users convert to paid customers, a somewhat remarkable rate. What prompts the conversion? Users of Apigee Free wanted, among other features, to offer third-party developers higher performance and the ability to differentiate quality of service based on the type of third-party developer using the enterprise's open API.

Apigee now offers a gradual path, with increasing capability, for companies that wish to expose their APIs to third-party developers.

  • Apigee Free: A free Web-based tools platform for developers and providers to learn, test, and debug APIs; get analytics on API performance and usage; and apply basic rate-limits to protect their services.
  • Apigee Premium: Provides advanced features on top of the Apigee Free platform, including unlimited API traffic, advanced rate limiting and analytics, and developer key provisioning.
  • Apigee Enterprise (previously Sonoa ServiceNet): An industrial-grade API platform that provides API visibility, control, management, and security.

From a third-party developer, or "kingmaker," point of view, using an API from a retailer that is using Apigee has benefits that reduce the barrier to entry.

  • First, using an open API as a third-party developer is free. With cost off the table, developers can turn to other criteria such as ease of learning, developer community, and performance.
  • Second, the API is presented in a way that is simple to understand, test, and learn. For instance, compare the Twitter API as presented on Apigee Free versus the Twitter documentation on
  • Third, enterprises that use Apigee are able to protect their internal systems from overload even while the number of third-party developers using the API grows. This is critical to developers whose applications rely on the third-party API being high performance.

Enterprise IT departments will be asked -- if they aren't already -- by the line-of-business teams to expose a larger portion of the enterprise software platform to third-party developers. Doing so in a fashion that lowers the barrier to entry can help drive widespread adoption of your APIs. This, in turn, can help your company increase indirect revenue channels faster than your competitors.

Follow me on Twitter at SavioRodrigues. I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."

This article, "Open APIs bring business opportunities," was originally published at Read more of Rodrigues et al.'s Open Sources blog and follow the latest developments in open source at


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