Leveraging APIs to Accelerate Insurance Industry Transformation, Part 2: Key Components of a Sound API Strategy
Organizations who are serious about digital transformation must have a solid API strategy, as this lays a strong foundation for realizing your transformation vision. It is prudent for organizations to accept that an API strategy is not just an IT initiative. Rather, its success and larger value proposition is attained when business teams embrace this strategy and use it as a competitive advantage, often uncovering next-generation business capabilities.
An effective API strategy defines a clear pathway for APIs to be created and managed as ‘products.’ These API products should be recognized as fundamental parts of the digital asset library as organizations push toward digital transformation at scale. However, for an API strategy to take hold within an organization, it is vital to stay true to established transformation objectives. Each organization should define (and center) their API strategy around a composable set of business capabilities; the innovators in the industry have created APIs focused on exposing (providing) or enriching (consuming) these capabilities.
In the world of large and complex ecosystems, the most effective way to communicate value with participants in the ecosystem is through APIs.
“Creating APIs only to address the technical integration agenda, or solely to serve specific user experiences, is a futile effort.”
Utilizing an API Product Approach
When treated as products, APIs have greater staying power, offer better reuse potential, and provide a wider set of capabilities within and outside the organization’s boundaries. Just like a traditional product, APIs would provide a set of features and benefits to a wider set of consumers. And despite the fact that every consumer (internal partner, customer, broker and third-party provider) is using the same underlying API, via productization, each will uncover benefits that are unique to their organization and needs, such as applicability across multiple areas of the business, and the ability to serve various distribution channels. Yet another inherent advantage of maintaining an API product approach is that it will help your organization to break line-of-business (LOB) silos.
Here are four ways to maximize your outcomes with APIs as products:
If you are truly adopting your APIs as products, there are two additional facets that cannot be overlooked: the API consumer journey and a defined commercial model for API products. When considering these details, apply a design-thinking approach to identify various consumer personas, develop use cases and create detailed consumer journeys. Once you know the consumer, as well as the impact that API products have on them, you should be able to identify a viable commercial model or combination of commercial models that will resonate with your audience.
Walk before you run is a good strategy for many programs, and the API strategy is no exception to this philosophy. Thus, a pilot program can allow your organization to manage the risk of a novel idea and identify any deficiencies (internally or externally) before considerable resources and money are committed. Collaborate with core teams to create a short list of prioritized API use cases for further exploration, definition and execution.
Finally, in order to truly maximize the value of APIs, a solid governance model should be established which manages all aspects of API enablement. This begins with a well-defined API program that accounts for the adoption of scalable architecture, the continuous development of API culture and awareness, the feasibility of leadership buy-in, need to offer world-class developer experience and the sustainability of operations.
An API framework consisting of current capabilities, processes, standards and tools ensures that APIs are created to support, enable and expand operational capabilities. However, it is ever-important to remember that APIs must be published as true products, which allows for easy consumer adoption, ensures that they are operated smoothly and optimizes for the total cost of ownership. By accounting for this early in the strategy development process, you will be better positioned to reap the benefits that APIs have to offer.
Read part three of our blog series on insurance APIs to learn more.