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April 11, 2017

How APIs are Taking Over the Enterprise

Companies who might have owned the entire technology stack a decade ago embrace microservices today -- where programs are decoupled into simpler, reusable components that communicate through APIs. Instead of taking a jack-of-all-trades approach, microservices master one key function.

Lob is no exception, with our suite of APIs providing the building blocks for developers to automate the offline world. But how exactly did APIs take over the enterprise?

Why Microservices are Gaining Popularity

Traditionally, applications were built with a monolithic architecture, where all an application’s logic is contained in a single codebase (a “monolith”). This development methodology meant all the programmers on a project would be contributing to a single code base. Over time, this practice can reduce development speed and collaboration efficiency.

Microservices have transformed how software is built. With microservices, developers are working with several small programs each with a single responsibility. As a result, collaboration and maintenance becomes much simpler. This has allowed for the creation of more sophisticated applications. By separating all the components of an application, developers ensure that choosing a different language, rewriting services, or adding new services comes at a much lower development cost.

The Rise of APIs

In 2017, we’re seeing a rise in the number of companies specializing in APIs. The upshot of this specialization is that products become functional more quickly than if developers had taken a monolithic approach. The result is developers integrating services at a much lower cost than developing those services themselves, as in the examples below.

Twilio

You can’t discuss API companies without mentioning Twilio. Have you ever received a text from Uber saying your driver was around the corner? The text probably also gave you the make and plates of the car. Uber could have built that service themselves, but it represented a huge sunk cost. Instead, they used Twilio’s SMS API.

If Uber built SMS capability in-house, they would likely have had to spend hundreds of engineering hours just to build it. By using Twilio, Uber can focus on building the possible version of their product.

Stripe

This is another prime example of an extremely popular API. Stripe focuses on one aspect of business: payments. It offers an API that is developer friendly and easy to implement. Instead of developers having to integrate with CC providers and maintain payments within their architecture, they can quickly connect to Stripe and set up a payments module in a fraction of the time.

Because Stripe focuses solely on the payments API, they can build in nice-to-haves. For instance, if you start using a new American Express card, Stripe will automatically link to American Express on their back end and update your payment information.

Popular ride-sharing app Lyft uses Stripe to power its customer payments at a global scale. Lyft even created Express Pay with Stripe, allowing drivers to receive payment instantly. If Lyft had attempted to build their payments service in-house, they would have to spend countless hours building and managing it. However, because they use Stripe’s API, Lyft could access the functionality Stripe had productized.

Zuora

Everywhere you look, there seems to be something else being sold on a subscription model. While Stripe helps you handle payments, Zuora helps you manage complex subscriptions and recurring revenue.

The Zuora API supports multiple pricing plans, which can get complex. But it gives teams flexibility, like updating individual accounts, offering extended trials, or discounts, without disrupting the rest of the pricing and subscriptions of other customers. As a bonus, it also works with Stripe.

Zuora’s API offers sellers a full feature set to control subscriptions, with much less time invested to get up and running. When an API is a company’s sole focus, it will receive more attention that ultimately leads to a superior product.

Final Thoughts

Consider an eCommerce store launching its site today versus ten years ago. Instead of building a large team to build everything in-house, they can run leaner and focus on their core competency. For all the other major functions, they can leverage APIs. Stripe can handle payments, Twilio can handle SMS, Sendgrid can handle email, and Shippo can handle shipping.

Previously, these were all barriers to entry. Development timelines were longer and more engineering resources were needed to build the functionality APIs have made readily available. Time compression and cost-efficiency are the real upshot of APIs, and why they are taking over the enterprise.

Because companies are embracing the use of APIs, we are seeing a new wave of API-focused companies that offer reliable, performant building blocks for the next generation of software.

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