The fact that the modern supply chain is incredibly complex may be the understatement of the decade. For those not familiar with supply chain or logistics organizations, let me paint a picture for you. Every company that relies on the supply chain exists as part of an ecosystem of dozens of other companies – partners, customers, suppliers, vendors, and numerous other organizations working within a single system. Within this system exist hundreds if not thousands of individual data flows carrying vital information for the performance of the entire system. In short, modern supply chains are not linear – rather, they are multidimensional ecosystems comprised of end-to-end business processes with many integration points, both internally and externally.
Get the picture? Now, for organizations working in logistics or that rely on the supply chain, electronic data interchange (EDI) has been the standard for making sure business information gets where it needs to go, when it needs to be there. But as business processes move faster and become more complex, there are aspects of business-to-business data flows that require real-time interactions. Over the years, application programming interfaces (APIs) have emerged as a perceived sure-fire way for these organizations to “digitize” their business. Those adopting APIs started internally and moved to digitally connecting external stakeholders (customers, partners, etc.). These external-facing APIs have powered mobile apps for consumers to buy directly and opened up connections to marketplaces.
But, while APIs may have helped solve the problem of connecting with customers, there are barriers to realizing the full potential of APIs and their real-time processing capabilities across the entire business ecosystem. Here are the three key barriers to API adoption that must be considered when evaluating your partner digitization strategy:
Barrier #1: Standardization
It may come as a surprise that there are currently no widely accepted API standards that parallel those of EDI, making the promise of APIs and their real-time processing capabilities slow to realize, even though there are clear use cases where APIs outperform traditional EDI models.
Standardization can also be a chicken-or-egg situation. A lack of standardization impedes widespread adoption, but at the same time, adoption tends to be a forcing function of standardization. When you look at EDI adoption, standards have indeed increased overall use of the technology; however, the EDI standard is monolithic and requires extensive upfront implementation projects. The complexity of implementing EDI likely would have greatly limited its adoption had it not been mandated by the automotive industry in its infancy.
API standardization may face this same conundrum, but the fact remains that without standardization, APIs in the supply chain world will be slow to grow.
Barrier #2: Lack of strategy
So, you’ve bought into the API hype and you’re ready to turn your business into an API-savvy innovator. Where do you start? Unfortunately, the second significant barrier to the API revolution is that APIs are not, in fact, a standalone digitization strategy.
While it’s true that at first APIs may be used primarily for internal processes, the key to extending APIs beyond internal needs to use cases involving business partners is to have an API strategy. A strategic mindset will quickly expose various B2B use cases for APIs, but without the required forethought, whatever ghost of a “strategy” that once existed will surely sputter to a stop.
One example: A company I worked with had built out a number of internal APIs for integrating business systems. These APIs were fairly granular, and using a single one would require making 10-15 API calls to complete a business transaction. This organization wanted to make these capabilities available to their partners through an external B2B version of the APIs. They secured the internal APIs by making it possible for a partner to modify only the orders they owned and exposed them to partners. When presented to partners, however, the design was so granular and difficult to use that it wasn’t adopted. It just goes to show, if you want to engage your partners through APIs, you need to have a strategy based on understanding your partners’ needs and creating APIs that fulfill those needs in a simple, easy-to-use way.
Barrier #3: No one-size-fits-all approach
The third barrier to API adoption is one we’ve heard before with other technologies – there’s no such thing as a one-size-fits-all approach when it comes to an API strategy. Remember when early cloud adopters found themselves moving workloads back on premise because they hadn’t determined which applications would perform optimally in the cloud? Similarly, APIs are not appropriate for every situation, and without determining appropriate use cases in advance of deployment, some organizations may resort back to traditional techniques and processes. Sounds like a whole lot of wasted time and money to me.
You need to look through the lens of business problems that can be addressed using APIs to determine whether they should be a priority for your organization. We are looking for the classic win-win, where both you and your partners are going to put in the effort to implement the APIs and reap the benefits.
The reality of the revolution
I’ll be the first one to say that APIs are inevitably going to be the standard for B2B integration because they help businesses create more value by leveraging their broader ecosystems. However, there are some serious barriers associated with APIs adoption that need to be addressed in order for companies to achieve the next phase in their digitization evolution. By keeping an eye on the communication needs of your partners, customers and suppliers, and offering a small set of APIs that address these needs, more companies in your ecosystem will see their value and move to utilize them.
Simply put, organizations that solely remain on the EDI train and don’t invest in APIs will be left in the dust, so don’t let these barriers dictate your digitization efforts and take the steps to develop an API ecosystem for your business.