How APIs can break up your company’s ball of mud

I spoke on the Collision Conference stage with Steve Rosenbush, editor of The Wall Street Journal’s CIO Journal, earlier this month around the importance of the API economy and my different take on it: gazing inward.

For those unfamiliar with the API economy, it is simply the exchange of value between providers and consumers through APIs. For example, Google provides Google Maps, which a company like Airbnb can plug into its applications without having to build its own mapping system. This exchange of value is what makes the economy. What organizations are trying to figure out now is how to plug themselves into that economy to add more of their own value.

You can watch our full discussion in the video below and read a brief recap of our conversation directly under.

Steve: Think about the API as an outward facing mechanism that connects companies or a piece of software to the broader world. You have a completely different take on the API: You are gazing inward. Is that correct?

That’s correct. Anyone in the audience who is a developer and has written any apps in the last few years would have used the open APIs on the web. There are over 17,000 APIs that are building blocks for doing everything from facial recognition to telephony to deep learning algorithms. They are all available through these public APIs.

Where enterprises are really struggling is they have a treasure trove of assets and capabilities within their organization, but they’re using people to leverage those assets. Our focus on APIs is really to help every organization open up their value and create internal API economies, so they can start freeing up the data and assets that they have. These assets want to be free, and they should be there and available for driving innovation. It’s just not there today.

Steve: Is this really about making the organization itself more agile?

It is. Almost every CIO I speak to, the first thing they say is they want to move faster and be able to make changes more quickly. They can’t do it. If the core of your business is a ball of mud and all just mushed together, it’s pretty awful. They’re dealing with that and trying to make changes with a very opaque view of what they have available and what’s in the organization. And APIs start to break down that ball of mud into composable services. The key to it is how do you break that down and make those assets more available so people can build value on top of those building blocks, those APIs.

Steve: You’ve been at this a while. Can you give us a few examples of what this looks like in practice?

We had our conference a couple weeks ago and had Wells Fargo up on stage. They’re a 150 year old bank. They’re radically changing their capital markets business. For things like foreign exchange and personal loans, instead of having people and big heavy-weight processes to go and originate loans or perform foreign exchange transactions, they’re breaking up those systems into small component pieces. If I want to verify a transaction or I want to verify a consumer for a loan, rather than having to go through this one big ball of mud, I have different services I call to make that transaction happen. For Wells Fargo, they started to break this down, and it wasn’t to open up APIs externally. It was actually to open up the capability internally, so they could offer more products and services and cross-sell more capabilities within their own organization.

Steve: If you get these systems up and running and the ball of mud is decomposed, what happens with the business model a little bit further down the road after companies experiment with this?

There are some really interesting things that happen with your business once you start to unlock the value. One is you can actually accelerate existing business models and disrupt the competition. An example is Unilever, which is a big CPG company in Europe. They’ve always worked as a B2B company selling dishwashing detergents, soaps, ice cream and pretty much everything. What they’re realizing is they have about 13 $1B+ brands that they need to manage much more effectively, and they want to build more brands. One way they are looking to do it is to go directly to consumers for certain things. If you saw the acquisitions by Unilever of Dollar Shave Club or T2, which is a tea company in Australia, these are direct consumer plays. The way they are plugging those companies back into their organization; they are not trying to make them look like Unilever. They are opening up a set of capabilities–APIs–that allow these companies to plug into Unilever as a big SaaS platform.