Why Every Business Needs Custom APIs to Transition from Legacy to Digital

• By Nathan Smith
• 09-12-2024
• Mobile Apps

Introduction

With the API management market set to reach $16.9 billion by 2029, businesses are embracing APIs to modernize legacy systems without complete overhauls. APIs are pivotal for cloud adoption, microservices architecture, real-time data sharing, and seamless platform integration.

No longer just interfaces, APIs now drive digital transformation, enabling partner collaborations, automation, and scalability. Adopting API-first strategies positions companies for ongoing innovation and growth in today’s interconnected market.

The Impact of Custom API Development on Legacy Application Modernization

Custom API development and integration are key to modernizing legacy applications by securely exposing app/software data as APIs for seamless communication with target systems, enabling digital transformation.

The Possible Impact?

• Faster DX: Using custom APIs instead of a 100% overhaul enables a phased approach to modernization and allows businesses to integrate legacy systems with modern solutions incrementally.
• Cost Efficiency: Custom API integration can help you repurpose functionalities from existing systems, reducing the need to re-develop services.
• Increased Security and Simplified Governance: With custom API development, businesses can apply modern security frameworks (e.g., OAuth and token-based authentication) on top of legacy applications.
• Easier Cloud Adoption: Legacy systems often struggle to adapt to cloud and microservice architectures. APIs act as connectors, allowing legacy apps to work with cloud-native applications.

How do API Development and Integration Enhance Business Performance?

New Revenue Streams

APIs enable monetization by offering data or premium features to external developers. For instance, Salesforce has long generated over 50% of its revenue from APIs.

Faster Product Launches

Custom APIs speed up launches by reusing core functionalities and integrating third-party tools, reducing development time and accelerating ROI.

Reduced Operational Costs

APIs automate processes, seamlessly connect systems, and provide real-time monitoring, cutting down manual efforts and costs.

Minimized Downtime

APIs ensure continuity during upgrades by enabling modular changes and reducing disruptions. For example, DB Schenker saved 40 hours of annual downtime with API-based cloud setups. (Source)

Post-Development API Integration vs. API-First Development

Custom API development and integration has a lot to offer. But you may encounter the following dilemma: should you go for custom API integration after the core software is built, or should it be embedded from the start of development?

Post-Development Custom API Integration

This approach adds APIs to existing systems post-launch to connect with third-party providers, extending legacy infrastructure. However, retroactive integration can complicate workflows as more systems are added.

API-First Custom API Development

API-first development embeds APIs into the software's foundation, creating modular, scalable systems. This method ensures easier integration with modern platforms, offering the agility businesses need to adapt and grow.

Exploring Beyond Connectivity: APIs as a Catalyst for DX

As per Postman’s State of API Survey, over 75% of respondents agreed that developers at companies with an API-first approach and mindset are happier and more productive; the companies create better software and are positioned to eliminate security risks more proactively.

This brings us to the following conclusion: APIs are not just technical tools—they are the backbone of modern digital transformation. When companies treat APIs as assets, all systems and services are developed with interoperability in mind from the outset. This approach catalyzes digital transformation by:

• Accelerating innovation cycles,
• Expanding business ecosystem,
• Making it easier to scale operations or integrate emerging technologies like AI and IoT without disrupting existing workflows.

Stripe’s API-First Success: How the Company Transformed Digitally with an API-Focused Approach

Stripe, a leading payments platform, is a prime example of an API-first business model. The company internally developed a developer-friendly set of APIs, allowing businesses to integrate its payment solutions quickly and easily. This approach has allowed Stripe to capture a significant market share (32.6%) in the FinTech space by offering scalable payment processing for startups and enterprises alike.

API-First Development Trends

Over the last few years, many companies have shifted to an API-first mindset. This transition has resulted in many new trends.

API Marketplaces and Developer Ecosystems

As businesses lean toward API-focused development, API marketplaces are emerging as hubs for innovation, offering third-party developers ready-made APIs. A notable example is Infosys’ API marketplace, designed to streamline integration and foster collaboration.

Low-Code/No-Code API Integration

The rise of low-code/no-code platforms has extended to custom API integration, empowering non-technical users. Companies like SAP now provide LC/NC API solutions, making custom APIs accessible without extensive technical expertise.

Multi-Cloud API Management

The multi-cloud market, expected to exceed USD 50 billion by 2030, is driving demand for advanced API management solutions. Providers like Google offer robust multi-cloud API tools that avoid vendor lock-in, enabling seamless platform integrations.

API Monetization Models

APIs are evolving into revenue streams, with businesses adopting monetization models like pay-per-use, subscriptions, and tiered access. Companies such as Stripe and AWS lead the way, showcasing how APIs can function as technical assets and financial contributors.

Adopting an API-First Strategy

1. Start by determining your key goals for adopting APIs, such as enhancing integrations, improving customer experiences, or building partnerships.
2. Before developing (or outsourcing API development), map out how they will provide value across systems and processes. Tools like OpenAPI can be used to design specifications.
3. Develop APIs as independent modules, ideally following a microservices architecture, so they can be reused across multiple projects.
   Instil security from the very first step. Implement security measures such as OAuth and token-based authentication.
4. Do not compromise on API documentation. Clear and concise documentation ensures the APIs are reliable and easy to adopt for internal and external developers.

End Note

APIs, when implemented securely and smartly, can unlock endless possibilities. Whether you integrate them post-development or design them from the beginning, they pave the way for new services and features. As businesses increasingly adopt API-first strategies, APIs are becoming the backbone of modern ecosystems.

Shifting to an API-first model requires strategic planning, but it sets the stage for scalability and innovation. If the process feels daunting, professional API development services can make it easier. Remember, the goal is to make the most of this technology without having to build your entire system from scratch.