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Explore the API Economy of Infrastructure Services

by Rene Buest  |  October 22, 2018  |  Submit a Comment

“There is an API for that!” is a common answer talking to digital-savvy organizations today. Indeed, according to ProgrammableWeb.com, there are almost 20,000 public APIs available. Digital-savvy organizations rely heavily on private, public or partner APIs to work in the current state. Companies like Salesforce generate 50% of the revenue just through APIs, eBay generates 60% and Expedia even 90%.

By 2023, 65% of global infrastructure service providers’ revenue will be generated through services enabled by APIs, up from 15% in 2018.

APIs can dramatically transform the digital operations of infrastructure service providers as well. However, since APIs are not new they are largely seen as just a kind of integration “glue” or they are published without any business thought.

Mashup Deliverables as a API-powered Infrastructure Platform

However, APIs have significant benefits both for internal and external operations of infrastructure service providers and enable them to become a customer of its own services, driving integration, automation, as well as speed and agility. This is all imperative to be able to create an ecosystem around customers and partners based on existing and new products and services. APIs are the essential technical resource to build those ecosystems. From another perspective, turning into an API-powered infrastructure platform is changing how IT consumption is managed. IT consumption is shifting away from reactive behavior, where an infrastructure provider delivers services based on a predefined process. It is moving toward proactive behavior, where a customer or even a technical resource can purchase services based on the current needs and have them delivered in an automated way.

An API-powered service platform, letting customers leverage their infrastructures, is the fundamental success factor of hyperscale service providers such as Amazon Web Services (AWS), Microsoft Azure or Google Cloud. Besides basic infrastructure resources like compute, storage and network, this provider category offers:

  • Platform services for using basic infrastructure resources and other services
  • Developer-related services for creating, testing, deploying and running applications
  • Administrative services for infrastructure management, operations, monitoring and security
  • Enterprise-related applications and services — self-developed and via partners

This well-structured API ecosystem is very powerful and the moneymaker for hyperscale providers. Every time (minute or second) a customer calls an API to use their basic compute, storage and network infrastructure resources or other services, hyperscale providers are earning money. For this reason, they continuously introduce new services that are related to other services or that needs to be connected to the basic infrastructure services to provide a value to the customer. None of the basic resources alone provide a real business value to customers. However, connecting basic resources with higher-level services via APIs helps customers to create new applications and services that provide a value to their digital business initiatives.

Younger generations of infrastructure service providers already move toward more comprehensive API utilization and maximize the value of APIs because it is simply part of their DNA. The more startups that enter the infrastructure market, the more creative usage of APIs concerning automation, consistency and efficiency we will see. Hence, it is important for infrastructure service providers to stay ahead of the market and competition by fully utilizing the potential of an API-powered infrastructure platform.

In the research note “Find Revenue Opportunities by Transforming Into an API-Powered Digital Infrastructure Platform”, we discuss in detail how infrastructure service providers can find growth opportunities by leveraging APIs for their business.

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If you want to engage with me, feel free to schedule an inquiry call (inquiry@gartner.com), follow me on Twitter (@ReneBuest) or connect with me on LinkedIn.

I am looking forward to talking to you!

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Rene Buest
Research Director
1 years at Gartner
20 years IT Industry

Rene Buest is a Research Director in Gartner's Managed Business and Technology Services team. Primary research coverage is infrastructure services and digital operations.. Read Full Bio




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