THE BLOG
07/27/2016 12:58 pm ET Updated Jul 27, 2017

The Biggest Tech Innovation That You Never Notice

The most successful technological innovation should feel so natural to the user that it's almost completely invisible. We only notice things when the user experience is awkward or clunky, or when it simply doesn't work.

By that definition, APIs -- or application program interfaces -- are one of the most successful technological innovations in recent history. These small bits of code are responsible for the time you save when you see a Google map embedded in reviews of the newest restaurants in your neighborhood and the money you keep when shopping websites point you to the nearest store carrying your favorite products at the lowest price. Those are just a few examples of how APIs improve our lives without our even noticing.

To understand the true potential impact of APIs on businesses and technology, think back to the days when each company had its own internal software development workshop. Every application, every platform, even full networks were essentially custom products. It was a slow, pricey, and painstaking process.

The world of APIs has upended the old way of doing things. Today, companies open their assets to each other, share data sources with outside vendors and consume data from others, and invite customers and suppliers to participate. The pace is exponentially faster, and with the proper measures of standardization and interoperability that are now available, APIs can enable businesses to innovate and do so with security and at scale. In fact, a recent study from Freeform Dynamics found that 61 percent of companies that fully implemented both APIs and the proper methods of management were able to significantly extend their digital reach, compared with 21 percent of companies who were basic API users with limited API management. Companies like Facebook, Netflix, and PayPal wouldn't exist in their present form without them. Sixty percent of eBay's revenues now flow through APIs, as do 90 percent of Expedia's, and Google makes money every time other businesses use its map data via its APIs.

The benefits of API proliferation can be seen across industries. Airlines, for example, compete against each other across countless dimensions that change according to customer preference, such as flight times, ease of the booking process, and of course price. Despite this cutthroat environment, multiple airlines have opened their APIs to outside developers to help them innovate. And taking it a step further, they've also used APIs to open their data to other businesses, which in turn are able to create new offerings thanks to the airline's data.

Beyond building more open collaboration among businesses, APIs also are creating new ways for businesses to integrate data. One automotive company recognized early that it needed to connect with the consumer even when not in the vehicle. So, because of the APIs and management tools implemented by the company, customers now can access information such as the current fuel level or can program the auxiliary heating system -- from anywhere.

CNN also recently used the power of API management to power a new app that allows users -- including its own journalists -- to find the stories buried in the mountains of data available in the 2016 U.S. presidential race. By managing API use, CNN is aggregating data from a number of sources into a single place for political information.

As new computing power and next generation technologies take center stage, APIs will continue to open doors to new collaborations and business models. They'll serve as the connective tissue that new computational engines will use to make sense of huge amounts of data, and will be the gateway to new ecosystems that join companies, outside developers, suppliers, and customers in new combinations we can't yet imagine.

The future of APIs isn't more of the same. It's a radically different way of configuring business, and it's one that's just beginning.