What does API mean?

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What is an API

The opportunities for companies to network their own business model comprehensively are becoming increasingly diverse. The Internet of Things with sensors and scanners, apps and the mobile devices of employees and customers alike enable completely new options for data mining. Without APIs, this networking of companies would not be possible. We explain what APIs are and why they are also important for your company.

API explained

As is often the case in the IT sector, API also stands for an abbreviation. API means Application Programming Interface. Nowadays, the abbreviation API almost always means a modern web API, although there are also other types of API.

As the name suggests, APIs are interfaces. In fact, you can think of these programming interfaces as the connectors between the myriad components of a larger network. In an enterprise, for example, the network might consist of mobile apps, cloud applications and a point of sales connection. And it's through APIs that these systems could be connected into a single system.

In addition, APIs have also proven to be the best tool when it comes to providing external partners and users with potentially partial access to one's own system. Especially in the logistics, retail and software sectors, APIs have emerged as accelerators or triggers of completely new and highly successful business ideas.

This is why APIs are so important

Increasingly comprehensive networking is gradually becoming one of the most important competitive requirements for modern companies. Firstly, increased connectivity allows business operations processes to be captured and evaluated faster and better than ever before. For example, warehouses can operate much more effectively and retailers can ensure that there are always enough goods available at each location.

But networking is also important for optimizing business processes. Logistics companies can improve and scale routes and driver times, among other things. At production sites, processes are optimized through ever greater networking, and the work of authorities is also simplified by ever better connectivity.

Lastly, of course, increased connectivity allows companies to gain more and more customer data. This data has not only proven to be the most important and successful tool for marketing departments, but also plays a crucial role when it comes to optimizing customer experiences.

And all of these things are only possible through the use of APIs. For example, imagine the enterprise network mentioned above, where a POS connection needs to be connected to cloud applications. Both areas have been implemented in a completely different way, so they can't actually communicate with each other. An API now acts as an intermediary between the two areas and ensures that the applications work together without errors.

The API only determines the format in which the files are transferred between the different systems or networks, i.e. it defines the functionality. What happens to the data before or after that is irrelevant. This means that an API can be used to loosely connect a wide variety of systems and even data silos without requiring any changes to any of the systems.

Connection from external sources

By using APIs, however, companies can not only connect internal systems without much effort, but also give external networks and applications uncomplicated access to parts of their own network. In this way, processes with partners can be optimized and completely new business models can be gained.

For example, a retailer could give its logistics provider access to parts of its own inventory management system in order to optimize reorders and deliveries. But integrating other systems into their own products, such as using the Google Maps API, also creates entirely new revenue streams for companies.

The three different types of APIs

So there are countless different possible applications for APIs. Depending on what the API is to be used for, three different types of these interfaces are implemented.

These types of API exist:

  • Private API: A private IP is intended for internal use only. Therefore, such an interface can be customized to the maximum extent and offers the company the greatest possible control over the API.
  • Partner API: A partner API is shared only with selected business partners of the own company. This allows process optimization and new revenue streams without losing control over the API as a company.
  • Public API: As the name suggests, a public API is available to the entire public. This option has proven to be particularly conducive to innovation, as it allows companies to access the expertise and ingenuity of the entire community or, as with Google Maps, to further increase their own brand reach.

API and cloudnative apps

Cloudnative apps are undoubtedly the future of apps. However, in order to be able to implement concepts such as microservices and DevOps, APIs are indispensable. This is the only way to combine the individual services or containers into a single functioning system. APIs will therefore play an increasingly important role in the future. As in other areas, however, users can only benefit if the structure is carefully set up and managed.

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