APIs (application programming interfaces) have become an indispensable part of software architecture and development today. As a data extraction expert with over a decade of experience, I have witnessed the rising prominence of APIs across industries.
As per Gartner‘s 2022 CEO Survey, 97% of enterprise leaders indicate that APIs are mission-critical to their operations. It is estimated that over 90% of developers currently use APIs in their projects and applications.
So why have APIs become so popular? In my experience, APIs provide immense strategic value to businesses in areas like:
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Improving user experience: APIs enable seamless and real-time data transfer between applications and databases. This allows for responsive and unified user experiences.
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Accelerating innovation: By giving developers easy access to data in different formats, APIs foster innovative new products and solutions.
Given these benefits, it is no surprise that APIs now form the backbone of digital transformation initiatives for most enterprises.
In this comprehensive guide, we will explore what APIs are, their lifecycle from planning to retirement, different types of APIs, use cases across industries, and best practices for leveraging APIs based on my decade-long experience.
What is an API?
API stands for Application Programming Interface. It enables communication between two or more separate applications and allows seamless data transfer between them.
APIs essentially act as intermediaries that connect the front-end UI/UX layer of an application to the back-end database and business logic. They enable movement of data across systems.
Some key functions of APIs:
- Connecting front-end apps to critical back-end functionality and data sources
- Providing standardized access to data for internal users as well as external third-party developers
For example, the Twitter API allows developers to access user profile information and tweets to build complementary apps and services on top of the core Twitter platform.
APIs enable interoperability between applications, which ultimately improves customer satisfaction. They also facilitate B2B interactions as companies can easily collaborate by connecting through APIs.
According to Mulesoft‘s 2021 Connectivity Benchmark Report, 97% of IT leaders say APIs are critical to their business strategy today.
To learn more on what APIs are and how they work, watch this short video:
Now that we understand what APIs are let‘s look at the different stages in the API lifecycle.
API Lifecycle Stages
There is no formal consensus or standard for the API lifecycle framework. However, as shown in Figure 1 below, we can explain the API lifecycle using 5 main stages:
Proper implementation of each stage leads to successful API adoption and usage. Let‘s look at each stage in detail:
1. Planning
The planning phase is the initial stage where the key requirements and capabilities of the API are defined:
- Services offered: What core services will the API provide? E.g. user data lookup, payment processing, etc.
- Capabilities: Functional scope of the API. What can consumers do with it?
- Functional requirements: Detailed API functionality specs.
- Non-functional requirements: Scalability, performance, security needs.
This is the blueprint stage where the API is strategically aligned with business goals and customer needs.
As an expert, I recommend considering API management platforms like Apigee, Mulesoft, or AWS API Gateway in this phase. These solutions can accelerate API development.
2. Development
Next comes the development phase where the API is coded and built based on the specs documented in the planning stage.
Popular server-side programming languages like PHP, Python, Java, and JavaScript are commonly used during API development.
It‘s important to define metrics and KPIs for tracking API performance, efficiency, and other parameters at this stage.
Adopting agile development best practices and encouraging collaboration between teams is key for accelerating development. Frequent iterations and continuous integration will help avoid pitfalls.
3. Testing
Once the API is developed, rigorous testing is done to identify bugs, security vulnerabilities, performance bottlenecks and other issues prior to deployment.
API testing tools like Postman and SoapUI are extremely useful here. Testing early in the lifecycle is also cheaper – finding issues in later stages costs exponentially more to fix.
As per my experience, the focus should be on test automation to reduce time, cost and achieve wider test coverage. Unit testing and monitoring APIs in production is also advised.
4. Deployment
After successful testing, the API can finally be deployed and launched for consumption by intended users.
Of course, issues and imperfections will still emerge after deployment based on real usage. Having a feedback channel to track issues is important.
Supporting versioning allows smoothly rolling back API changes if major problems arise. Communication on updates will minimize disruption too.
5. Retirement
Over time, APIs may no longer be necessary and need to be retired or replaced.
As per research by WSO2 in 2021, API retirement is becoming a rising concern as the number of APIs keeps growing exponentially. A carefully planned retirement is essential to avoid disruptions.
The key is to map out an end-of-life plan and properly notify consumers to ensure a smooth transition to new solutions. Support should be provided during the transition as well.
Now let‘s explore the major API design paradigms.
Key API Protocols: REST vs SOAP
There are two predominant standards used for designing APIs – REST and SOAP:
REST
REST or RESTful APIs conform to specific architecture principles:
- Client-Server separation: Clear distinction between client and server.
- Stateless: No client session data persisted on server.
- Cacheable: Responses indicate cacheability.
- Uniform Interface: Uses HTTP protocol for all communications.
- Layered System: Requests/responses must be standardized.
REST APIs focus on being lightweight, fast, and scalable. They gained mass popularity due to their simplicity.
SOAP
Unlike REST, SOAP is a protocol that uses XML for all information encoding and transmission.
SOAP APIs can support multiple transport protocols apart from HTTP.
They include built-in layers for security and transaction management. This makes SOAP suitable for internal enterprise APIs.
This short video explains the key differences between REST and SOAP API architectures:
Understanding the trade-offs allows selecting the right approach per API requirements.
Next, let‘s examine the different classifications of API types.
4 Major API Types
There is no single "best" API type. The appropriate type depends on the specific goals and intended consumers of the API.
The 4 main API types are:
1. Public/Open APIs
These APIs are openly available for any external third-party to use and build upon. For example, the Twitter API.
Some may require registration and use of an API key for access. Monetization is done via tiered plans based on usage quotas.
2. Internal APIs
These APIs are exclusively for internal usage within an organization. They enable smooth data transfer between internal systems.
Internal APIs improve efficiency by streamlining connectivity.
3. Partner APIs
These APIs provide controlled external access to pre-approved third-parties such as partners and vendors.
Access requires proper authorization and permissions approved by the API owner.
4. Composite APIs
These APIs amalgamate capabilities from multiple internal or external APIs into a single unified endpoint.
For example, an API that combines payment, shipping, and order data.
Composite APIs simplify complexity and reduce chattiness between client and server.
Now let‘s explore some of the leading API use cases by industry vertical.
Key API Use Cases By Industry
APIs enable digital transformation across practically every industry. Here are some major examples:
Banking & Finance
- Accessing customer identity/transaction data
- Retrieving investment portfolio information
- Integrating with fintech apps
- Powering open banking initiatives
According to McKinsey, 75% of banks plan to expand API usage by over 50% in the next 2 years:
Major examples include:
- Plaid API – aggregating financial data
- Moody‘s Analytics API – financial analysis data
- Blockchain.com API – crypto data
For more details, read our Guide to Banking APIs.
Healthcare
- Providing standardized access to electronic health records
- Securely sharing patient information with care providers
- Building personalized wellness apps
- Consolidating varied health data formats
Top healthcare APIs include:
- Epic EHR API – accessing EMR data
- Human API – health data exchange
- Microsoft Healthcare API – healthcare app development
See our Healthcare API Guide for details.
Retail & Ecommerce
- Enabling voice assistants for shopping
- Building recommendation engines
- Managing supply chain and logistics
- Unifying payments across channels
Leading retail/ecommerce APIs:
- Shopify API – manage stores
- eBay API – marketplace integration
- Walmart Open API – product data
For more retail API examples, see our dedicated retail API guide.
Transportation & Logistics
- Integrating route optimization engines
- Connecting with carriers for real-time tracking
- Automating paperwork and customs processes
- Calculating accurate shipping rates and ETAs
Notable logistics APIs include:
- UPS API
- FedEx API
- FourKites API – supply chain visibility
And many more – APIs are ubiquitous across domains!
Key Takeaways
Based on my decade-long experience as a data extraction expert, here are the key points to remember:
- APIs enable communication between discrete applications
- The API lifecycle spans planning, development, testing, deployment and retirement
- REST vs SOAP are leading API design paradigms with different strengths
- Major API types include public, private, partner, and composite
- Finance, healthcare, retail, transportation, and practically every industry leverage APIs heavily
- Well-designed, properly tested, and managed APIs provide immense strategic value
As APIs continue to proliferate, having expertise across the API lifecycle will be crucial for enterprises undergoing large-scale digital transformation.
I hope this guide provided you with a comprehensive overview of APIs and sets you up for API success in your organization. Let me know if you have any other questions!
