API Management has been touched upon by several articles in this weblog. To expand on this topic to help us understand its function and strategic importance to operators I’ve put together a whitepaper with Sonoa Systems, a leading provider of API Management to companies such as MTV Networks, Alcatel Lucent and Guardian Life Insurance. The API Management whitepaper is available here.
To set the scene on what is covered in the whitepaper: within and between enterprises APIs have been used for over two decades, from the early days of EDI (Electronic Data Interchange) to today’s rich RESTful protocols. The reason API Management arose is that delivering simplicity in APIs to developers involves significant complexity in operations for the provider, some of the issues include:
- Authentication and security from multiple providers;
- Multiple API calls and calls across multiple services;
- Different protocols, API versions, and interaction models;
- Variance in performance between different APIs;
- Composition of off-network APIs such as Facebook and Twitter
- Poor visibility into API performance;
- Limited troubleshooting and debugging capabilities for API calls;
- Limited bandwidth, connectivity issues over the wireless network;
- Scalability of the servers underlying the API endpoint;
- Limited memory, CPU, storage on the device limits the client-side API processing capability.
APIs are also fundamental to telecommunications; there is a very long history. Back in 1878 the world’s first commercial telephone exchange was opened in New Haven, USA. The switch exposed an interface that enabled people to make requests to set up telephone calls. Over 130 years later telephony switches are still exposing an API for exactly the same purpose. What has changed is the magnitude of types of requests and the sources of those requests – people, computers, private branch exchanges, credit card machines, and many other clients.
As waves of technology have followed the birth of the Internet 40 years ago, enabling the emergence of the World Wide Web about 20 years ago, driving widespread broadband access over the past 10 years. We have now reached a point where telecommunications and the web are merging into a powerful pervasive services platform.
Previous work has shown that capability exposure has the potential to raise average ARPU by 12-36%. There are many examples of operators today making money out of capability exposure such as Telenor’s Content Provider Access which generates $100M per year. Globe in the Philippines generates 1000 new value added services per year with over 1B transactions; that project had an ROI (Return On Investment) of under 2 months. And Telus was able to launch 40 rather than 4 applications per year to its small medium business segment and lower its cost to launch new services by over 75%.
However, operators’ networks remain surprisingly under-utilized by the millions of developers building the web; Apple shows the power of harnessing that community for just one proprietary handset. Critical factors in its success are providing direct access to a large engaged customer base; and of relevance to this discussion a rich, easy to use set of web-centric APIs within a common framework. Developers care about cash and/or fame – customers are necessary for both. Operators must reach a point where web developers consider an operator’s STB as easy to reach as an internet site is today for the delivery of their services.
Wholesaling capabilities is a core competence of operators since the emergence of the intelligence layer on top of the telephony switch. As an example, 800 (free phone) numbers are a capability that is applied to many business problems. Operators do not create “airline customer complaint toll-free phone services,” they enable businesses do that with the capability they wholesale. This is a critical point: APIs are not limited to consumer applications; rather, enterprises are major adopters of APIs. For example, in an enterprise workflow where a request to made for a new purchase, this triggers a message to the approving manager, who confirms the order is OK, and the order is placed. If the messaging and confirmation are done via an SMS or automated phone it can speed up a business processes from days to minutes – which is a very compelling business case.
As telecom and web merge the operator can wholesale a multitude of capabilities, including messaging, billing, click to call, mobile content, conferencing, location, single sign-on, address book, age verification, identity, profile, presence, call control, mobile lookup, IPTV content, connection status, quality of service, messaging short codes, video streaming, set top box APIs, mobile device APIs, to name just a few. All of these need to be provided under the secure policy control operators provide today for their customers. As these APIs are offered to web developers, most operators are struggling to provide the simplicity and scale necessary to gain adoption while maintaining security and reliability of these services. The figure below shows the role of API Management.
Operators are sitting on a gold mine of capabilities. A new generation of applications are being built by a rapidly expanding pool of developers. These developers are trained in web applications and services, searching for differentiation, and driving consumer demand for mobile internet service. Success will be driven by the population of innovative apps, which in turn will be driven by the simplicity and consistency of access to the operator’s capabilities. API management plugs a critical gap in an operator’s ability to monetize its existing capabilities and more importantly enable a rich, easy to use set of web-centric APIs within a common framework and a consistent security model to engage the millions of web developers building applications today.
I know it is frustrating for many in the telecom industry that have just persuaded their management team to invest in API exposure, that we must now step-up-the-game and invest in API Management. But we’ve got to try and increase our rate of innovation towards that of the internet to remain relevant to developers, partners and most importantly our customers. The API Management whitepaper is available here.