What is API management? The practical guide

API management is the process of controlling the ways in which application programming interfaces (APIs) are used in an organization. API management covers the full API lifecycle including the process of designing, publishing, deploying, managing and retiring APIs. With the right API management strategy, your organization can manage your internal use of APIs as well as control the way the APIs you publish are used by customers and partners. This enables you to generate new products and sources of value faster, gain insights into API usage, and maintain control over access and security.

API Management basics

APIs are a standard set of protocols that enable applications to communicate with each other and exchange information. They act as the gateway between applications, offering a set of defined rules which allow applications to ‘talk’ to each other and share information.

Having a common definition for interacting with APIs means they can essentially act as building blocks to extend new services across the enterprise and create innovative products faster. Developers can use APIs to make their application call other products and systems without knowing how those products and systems are implemented. As a result, APIs make it easier for businesses to create new user experiences and leverage third-party solutions.

An effective API management strategy empowers you to manage API integrations across an increasing number of systems and applications, whether they are on-premises, on the cloud, hybrid cloud, or multi-cloud. The right approach helps you deploy and reuse integration assets quickly, securely and efficiently.

By avoiding the need to rebuild integrations for every new application, you gain agility, speed and cost efficiency. As the use of APIs grows, it’s more important than ever to have a holistic approach to managing the way your organization uses APIs—and the way you share them with third parties such as customers and partners. 

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Why APIs are more important than ever

APIs have long been the programmer’s tool of choice for communication between applications. Now, they are the basis of new services and business strategies, and the new distribution channel for products and services.

Organizations are using APIs to connect software and services in new ways that boost productivity, enable new customer-facing services and deliver new insights. According to Software AG’s Annual APIs and Integration Report 2022, leading businesses are using APIs more frequently in a range of scenarios. Companies are using APIs in all, or the majority, of projects for digital transformation and modernization, including connecting cloud applications to back-end services. APIs are central to innovation projects that advance new customer services and deliver new insights. They are also core to most projects focused on sustainability by linking data from disparate systems in ways that improve transparency and efficiency.  

Percentage of organizations using APIs

APIs for value creation

With APIs, companies can turn products into platforms, which act as force multipliers for value creation. Business ecosystems can exchange goods and information, creating network effects that lead to greater value. But this only works with an API management strategy that encompasses the full lifecycle of your APIs, everywhere they are in use.

To study the value of APIs used to build platforms, Marshall Van Alstyne, a research fellow at the MIT Initiative on the Digital Economy, analyzed the way an API-driven strategy affects companies’ opportunities for growth. Unlike a traditional growth strategy where an enterprise creates value from inside its own walls, an API-driven strategy unlocks opportunities for firms to open digital services to third-parties and capture part of value generated.

The results were striking: public firms adopting public APIs grew an additional 38.7% relative to similar non-adopters over a 16-year period.

An API management solution is an essential part of creating value so you can take full advantage of opportunities in the API economy. 

Public firms adopting public APIs grew

What is an API management platform?

An API management platform is a tool that allows organizations to launch new products and services faster. It provides centralized management and visibility of all the components of your applications so you can build innovative, dynamic, and customer-centric apps in the cloud—and deliver updates faster so your apps stay secure and reliable. Because APIs provide the building blocks that developers can use to build a competitive edge, API management is more important than ever.

An API management platform offers the visibility and control you need to take on transformative projects with confidence. It delivers a single place to manage APIs as applications, so you can understand what your customers are doing, control your apps with policies and deliver app changes faster.  

2022 Gartner® Magic Quadrant™ for Full Life Cycle API Management

The right API management platform can help you get the most value from your data, whether you’re looking to accelerate innovation, improve efficiency or open new revenue channels. See how the recognized platforms compare in the 2022 Gartner® Magic Quadrant™ for Full Life Cycle API Management and why Software AG is positioned as a Leader yet again.

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API management platforms provide a core set of capabilities that help you follow API management best practices, including:

  • API design. Gain the ability to design APIs with feedback and collaboration.
  • API publishing. Share your APIs in a central location with related documentation and onboarding processes to encourage usage.
  • API deployment. Make your APIs publicly available and apply rules to manage how clients interact with them.
  • API protection. Control access to API services and data through API keys, authentication, authorization and encryption.
  • API traffic management. Ensure network reliability and scalability through effective traffic management at runtime.
  • API monitoring. Collect analytics about how your APIs are being used and how they are performing.
  • API monetization. Create and manage contracts for usage of APIs to generate additional revenue.

These capabilities enable you to leverage your API management platform to support an ecosystem of users and developers that is stronger than the sum of its parts. 

The benefits of API management

APIs are becoming critical to every facet of business. Popular applications of APIs include building new mobile applications, creating omnichannel experiences, improving e-commerce and development of more efficient business processes.

Effectively managing your APIs and microservices gives you the opportunity to drive differentiation and business growth, as well as move quickly so you can turn disruption into opportunity.

While each organization may have a slightly different perspective on the results they expect from successful API management, most aim to achieve a combination of the following:

  • Accelerating digital transformation
  • Maintaining data integrity and data security
  • Improving the customer experience
  • Protecting security of proprietary data
  • Generating new sources of revenue 

Why do you need an API management platform?

An API management platform provides a core set of capabilities to help you accelerate delivery of new products and services. It also helps you overcome challenges of API management so you can operate with greater speed, agility, security and efficiency.   

API monetization

API monetization is a way that businesses can use APIs to make money—either directly or indirectly. Monetization is essentially the creation of a business plan for your APIs. The monetization models range from pay-as-you-go to monthly/annual billing to “bucket” purchases of API transactions to be consumed over time.  One thing that stays constant: you need to deliver high-quality, consistent value to your API users.

API monetization requires an API management solution that not only handles the development and implementation of APIs but streamlines authorization, billing and payment for API usage. 

API security control

All APIs need to be securely managed to shield your data and other resources from attack. An API management platform allows you to implement security best practices to protect APIs, data and services using policies enforced by an API gateway. By securing the exposed layers of an API using API security solutions and API management best practices, you can mitigate attacks and protect your organization, customers, data and bottom line.

Ensure your API management platform offers robust security authentication and access control, vulnerability testing, and security policies. It should also integrate with other API security products you might want to use based on your cybersecurity priorities.    

API developer services

An API portal is a place where developers can go to access a company’s APIs. An API portal enables companies to easily share information and data across real-time, distributed cloud and mobile applications. By exposing APIs to a broader community of developers, an API portal can unlock access to new customers, create new sources of revenue and unlock the business value of existing corporate assets.

A developer API portal—sometimes known as an API marketplace—is essentially the storefront for customers and partners to find, try and buy your APIs. Equally important is the information your business can get from an API portal. Your product managers need visibility into any reasons developers aren’t adopting APIs so they can invest in features that drive value. API portals help you gather feedback from developers so you can help improve the quality and desirability of your APIs.   

API consumption monitoring

An API gateway is a management tool that serves as a single point of entry into a system, sitting between the application user and a collection of backend services. It receives requests from an application user, routes the request to the appropriate services, gathers the appropriate data, and combines the results for the user in a single package.

An API gateway standardizes the way applications and users can access your data, business logic or functionality from your backend services. Because the API gateway controls an application’s inbound traffic, it can monitor and produce reports that highlight trends about and statistics around API usage—which is critical for any business looking to monetize APIs.   

API governance

API governance reduces risk for organizations by improving control over and consistency of APIs. Effective API governance enables you to align services with business objectives, limit the incidence of rogue APIs, ensure that users can find APIs when needed, and monitor and report on decisions and results. API governance addresses internal, external, partner, and even 3rd party APIs.

An API governance solution ensures APIs are built the right way, tested, consistently documented and appropriately secured through rules relating to standards and security policies. An API catalog or registry/repository promotes the re-use of assets and can identify dependencies early in the lifecycle to prevent conflicts.

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API management and microservices: how do they relate?

Microservices are an architectural and organizational approach to software development in which software is composed of small, independent services. These services communicate over well-defined APIs to create the desired functionality. Compared to traditional monolithic architectures, microservices architectures make applications easier to scale and faster to develop.

The right API management platform is critical for microservices to communicate reliably and function efficiently. As APIs and microservices reshape the needs for IT, businesses need a flexible, open platform that can help everything connect and work together without investing in an entirely new IT infrastructure.

API gateways are used to establish secure communication among microservices. As more businesses embrace distributed microservices architectures, an API gateway can also serve to manage API access to microservices and, together with service meshes and microgateways, prevent main API gateways from overloading. 

Accelerate innovation with the webMethods API management platform

The webMethods API management platform includes everything you need to manage APIs and microservices so you can go to market faster. Our API platform gives you the visibility and control you need to take on innovative cloud initiatives with confidence.

Centralized management and visibility of all your application components is the foundation for building and launching innovative, dynamic and customer-centric apps. The webMethods API management platform provides a single place to manage APIs and related microservices as applications, so you can understand what your customers are doing, control your apps with policies and deliver app changes faster.

We’ll help you:

  • Build APIs in 1 click. Instantly create APIs from existing services with a single API management tool. Don’t define the API or define the structure, just identify it and webMethods does all the heavy lifting.
  • Access open standards. Work with the latest standards without lock-in. Our platform enables you to build different types of APIs while ensuring compliance and protections are in place.
  • Protect your data. With webMethods API management, you can securely provide access to your enterprise data and services to the outside world.
  • Gain agility, without chaos. Deploy microservices and manage them with confidence to move at the speed of innovation. You’ll operate with newfound agility, without the risk of chaos that can accompany service mesh architectures.
  • Reduce latency. Store large amounts of transactional data in-memory to improve performance, reduce latency for data access and scale your APIs for any volume. 
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