5 Models for Building a Platform Strategy

Our report demonstrated that more than half of organizations today would consider
themselves to offer a platform or to be on the path to offering a platform. Of those that don't, it's
important to have made a conscious decision in regards to this.

Hope is not a strategy, and many product organizations are being disintermediated for moving too slowly in this regard.

In answering the ultimate question: are you a product company? Or are you a platform provider? We are really looking to address the theme that many product companies are migrating to a platform, meaning that they are creating an app that plays nicely in their respective ecosystem.

That said, there are several ways by which your application can play nicely with other applications. Here are 5 different approaches you can take as a platform provider to deliver value to your customers.

5 MODELS OF BUILDING A PLATFORM STRATEGY

[1] BASIC USAGE METERING

This is the most obvious method of generating revenue from your API — directly charging for it. This strategy works best if your organization provides access to data or services that people want to pay for. E.g. Dun & Bradstreet is a data provider, and expose data as a service via API. In this case, customers are willing to pay for programmatic access to D&B's services to enable new business processes and products around the D&B platform.

[2] UP-SELLING API INTEGRATION

SaaS providers use this model often, as customers have become increasingly demanding of integration capabilities for any product they buy. Adding API integration to a subscription offers a strong motivator to upgrade to a higher package, and creates a stickier relationship with customers by allowing end users to customize their experience and workflow more easily.

E.g. Concur provides pre-built integration options with their product so that
subscribers of the service can easily synchronize expense management data with
an ecosystem of apps used in their back-office processes, such as accounting and ERP
systems.

[3] APIs AS A PRODUCT

APIs that are themselves the product can be the most complex monetization models, but they also often provide the highest value, collecting some revenue share or service-based fee for the product delivered via API. E.g. Paysimple — a leading payment gateway provider — offers API access to their payment services. Customers of this service will then be charged a percentage of the payment amount for each API transaction.

[4] Distribute Value through Partners

Organizations can scale the reach of their product by integrating their API with strategic partners. This has the potential to open your business to existing application ecosystems, which you may not be able to reach alone.

E.g. Sage works with various ISVs to distribute their products and services as part of
a broader offering. This network effect has enabled them to achieve the scale and
growth that would be difficult in a direct sales model.

[5] IMPROVE OPERATIONAL EFFICIENCY

API integration can help you build end-to-end solutions more efficiently. They help you
innovate faster, engage customers and partners faster, and perhaps most importantly, they allow
you to iterate (and even fail) faster. The time taken to build or automate business processes can
easily improve from a couple months to a couple hours solely because of the efficiency gained
from an API integration.

E.g. Microstrategy — a leading business intelligence platform — provides pre-built
integration to several leading enterprise SaaS applications so their customers can
quickly access and integrate the data they care about without needing to build
anything from scratch.

While these are only examples, each describes a path towards revenue growth and a strategy for expanding your app's ecosystem. We expect that leading platform providers will
leverage more than one (if not all) of these models as they grow.

Ultimately, a move toward "best-of-breed" is on the rise — meaning that every product
in every vertical is better served by enabling integration to the ecosystem of apps
around them rather than remaining a hermetically sealed environment. Over the
coming year, we expect to see more of the world's successful software companies
continue to make the leap from selling products to selling a platform.

The 2018 State of API Integration Report

Last year, the State of API Integration Report was our first inaugural research report that sought to sort through the proliferation of APIs setting the benchmark for our research on API integration. This year’s report builds on observations from 2017, with the help of over 400 API enthusiasts who took the State of API Integration Survey at the end of last year.

With over 60% of the respondents agreeing that API Integration is critical to their business strategy, our report focused in on four key trends:

1. When building a platform strategy — how can you drive new revenue opportunities or deliver value through API integration.
2. By understanding drivers of adoption, you can change how developers and end-users consume APIs and integration services.
3. The strategic shift of integration has widely been driven by enterprise applications like Enterprise Resource Planning (ERP).
4. An evolution of B2B integration has organizations evolving the way they share and synchronize data with partners.

The comprehensive research covers sections including a breakdown of the data, trends, common API business models, and event-driven integration. Download it here to receive the report directly to your inbox.