More than 60 API-first companies in 2022 raised $50 million in funding or more, while API-first businesses raised $14 billion in general. Interest and investment in this field is quite visible and will continue to increase. Industry experts predict an ongoing surge in the adoption of APIs. There are forecasts that by 2030, there will be approximately 1.7 billion active APIs. All these facts prove one thing: APIs are dominating the market and present clear value for many businesses, especially startups considering adopting a SaaS business model.
As a design agency working on SaaS products exclusively, we at Eleken always watch for promising trends closely, and API-first approach is one of them. But what is API-first approach and why is it important in today's development landscape? And what advantages does it provide to businesses? Let's get into it!
API-first development and its advantages
Let's start with the basics: what does API first mean?
In a nutshell, an API, or Application Programming Interface, is a set of rules that allows different apps to communicate, exchange data and work together. The most simple example of an API you encounter on the daily basis is the social media login. When a website allows you to log in via Google, Facebook, Apple, and so on with a click, that's the case of an API connecting social media with the website you're trying to access.
The API-first approach has two perspectives, a technical and a business one. Let's look closely at both.
Technical perspective
From a technical perspective, the API-first approach ensures various software components' seamless integration and interoperability. APIs are modular building blocks of modern software. Some of the key benefits of API-first development include:
- More effective connectivity, communication, and integration between different microservices and systems. With APIs, you can easily create a multi-component software system that will share data and expand functionality.
- The API-first approach promotes cross-platform compatibility. APIs are designed to work seamlessly across multiple platforms and devices, allowing for greater flexibility in delivering services to a diverse user base.
- APIs are essential for the applications' scalability. When you adopt an API, your company can design the systems to be modular, allowing to add or update components without disrupting the entire system. This flexibility is crucial for accommodating growing user bases and evolving business needs.
- APIs gather data and features from various sources, ensuring better user experiences.
But what are the benefits of API-first from the business perspective?
Business perspective
Such examples as Stripe, Twilio, and AssemblyAI not only prove that user-centric approach can help you achieve success, but also demonstrate the effectiveness of an API-first strategy.
There are various advantages to API-first types of SaaS software that businesses can capitalize on:
- Building a solid portfolio of APIs opens up diverse monetization avenues. Companies can charge for API access, create premium features, or even establish partnerships and revenue-sharing arrangements with other businesses that rely on their APIs.
- APIs empower businesses to expand their reach by allowing third-party developers to build applications and services on top of their APIs. This can create a vibrant community of developers and partners, effectively increasing the company's market presence.
- Companies prioritizing API-first development can gain a competitive edge by providing superior integration options to their customers. This can be a critical factor in attracting and retaining clients.
- API-first companies tend to be more agile and flexible to changing market conditions. They can quickly iterate and innovate by building upon existing APIs.
- API-first startups can reuse the existing software components and infrastructure when building new solutions. This significantly cuts down on development time, reducing time to market. As APIs are modular and can be easily integrated, development teams can focus on building unique features rather than building everything from scratch.
In the SaaS industry, the API-first approach plays a vital role. It empowers SaaS providers to offer comprehensive solutions that can integrate with various tools and services, making their offerings more valuable to customers. Let's take a closer look at specific sectors where it's especially true.
Key industries for API-first development
While the API-first approach can bring value across various domains, here are sectors where this approach is especially beneficial.
Healthcare
In healthcare, APIs are crucial for bringing together multiple players and ensuring the data is shared between them in an accessible and secure manner.
- Healthcare organizations must securely transmit electronic health records (EHRs) and patient information among various providers, insurers, and systems. API-first integration ensures the seamless and secure exchange of medical data, improving patient care coordination.
- More than that, APIs enable the integrating of disparate healthcare systems, such as electronic medical record (EMR) systems, telehealth platforms, and diagnostic equipment. APIs also empower developers to create innovative healthcare applications, including mobile health (mHealth) apps, remote patient monitoring solutions, and telemedicine platforms. These applications can transform the way patients access care and manage their health.
For example, Epic Systems, an EHR provider, offers APIs that allow healthcare organizations to integrate patient data seamlessly. This enables healthcare providers to access patient records, exchange information securely, and improve care coordination.
Banking and finance
The financial industry relies heavily on data and transactions, making the API-first approach beneficial for improving services and operations.
- API-first strategies are at the heart of open banking initiatives, enabling financial institutions to expose their services and data to third-party developers securely. This encourages the creation of new financial products, and enhances customer experiences.
- APIs facilitate real-time access to financial data, enabling customers to view account balances, conduct transactions, and receive alerts instantly. This real-time capability is essential for online banking and mobile banking applications.
- APIs can be used for fraud detection and prevention services, enhancing security in financial transactions, and enabling rapid detection of suspicious activities and help mitigate fraud risks.
The most notable example here is, of course, Stripe. Stripe's API-first approach revolutionized online payments. Its APIs enable businesses to integrate payment processing into their websites and apps seamlessly, simplifying the checkout process and enhancing the user experience.
Travel and hospitality
This industry relies on seamless customer experiences, making the API-first approach invaluable for improving services and expanding offerings.
- APIs allow travel companies to easily connect users with airlines, hotels, car rental services, and other providers, streamlining the booking and reservation process, and offering customers a one-stop-shop for travel arrangements.
- By leveraging APIs, travel companies can access customer data and preferences, enabling them to offer personalized recommendations, travel itineraries, and loyalty rewards. This personalization enhances the overall travel experience.
- APIs enable real-time access to pricing and availability information. Travel companies can adjust pricing based on demand and market conditions, maximizing their revenue and competitiveness.
Amadeus provides APIs for travel booking and reservation systems. Airlines, hotels, and travel agencies can integrate their APIs to offer comprehensive travel booking and management services, improving the traveler's experience.
API-first approach and UX design
When you think about launching a SaaS business, you should always keep user experience (UX) at the forefront. And going for an API-first design is no exception.
The API-first design and development allows for a more personalized and seamless user experience. For example, by combining API functionality with thoughtful UX design you can better address users’ needs and preferences. APIs provide the data and functionalities necessary for a feature-rich application, while UX design ensures that these features are intuitive and user-friendly.
UX designers can also leverage APIs to streamline user journeys. For example, integrating geolocation APIs can enhance the user experience by providing location-based services, such as finding nearby stores or restaurants, letting users achieve their goals much easier.
Finally, the collaboration between API development teams and UX designers promotes an iterative approach to product development. Developers and designers rely on user feedback, as well as on each other's insights to continuously improve the product.
To better understand the power of API-first approach + UX design combo, let’s consider Order Desk, an e-commerce order management app with 300+ API integrations for automating vendor workflow and Eleken’s proud client, as an example.
When OrderDesk came to us, their solution let users build "rules", automated actions to be done when an order comes through. These rules covered communication with printing houses or warehouses, dispatch, and sending receipts. Users could create buttons, which triggered various sequences of events and engaged various APIs. However, all of this had to be done manually. So, our designers turned it into a step-by-step sequence builder and added a drag-and-drop feature to make the user's job even easier.
Here’s how OrderDesk looked before:
And here’s after:
One of the major issues developers and designers try to solve with integrations is saving the users' time. So, it should be as easy as possible to engage these integrations and, when necessary, like with OrderDesk, when placing an order is supposed to trigger a response from a couple of different service providers (for example a printing house and shipping company) to build these integration action sequences.
Moreover, well-designed integration reduces human error, and that's exactly what we did with OrderDesk as well. In the previous version of the app's design, there were no safeguards against contradictory rules. We designed the sequence builder in a way that ensures only the first action is taken into account, which reduces the chances of mistakes and delayed shipments.
Final thoughts
Designing solutions when following an API-first approach might be tricky as it requires bringing together various data flows and action triggers in a structured, logical, and non-contradictory way. So the UX designer you are going to work with must have experience with complex, data-heavy apps, to ensure everything works smoothly.
If you're considering developing an API-first product and require reliable UI/UX design services, drop us a line!
