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This content is part of the Essential Guide: The API lifecycle: A look at planning to production
Definition

API economy

Contributor(s): Maxine Giza

API economy is the exposure of an organization's digital services and assets through application programming interfaces (APIs) in a controlled way. In this context, the word "economy" refers to the careful management of available resources and the term API economy can be used as a synonym for API management.

APIs ensure that the data extracted from one software application is formatted and passed to the next application without change, even if the associated app's feature sets have been updated. While API tools have always played an important role in software development, today's demand for data integration has been encouraging vendors of all sizes to "go modular" and break complex software components down into smaller, containerized components called microservices.

By exposing the interfaces that allow microservices to communicate with each other, vendors are able to meet the needs of specific groups of customers without having to rearchitect software; it also gives customers more control over vendor applications.

Experts predict that as software developers see the economic advantages of integration, many large, monolithic software systems currently supported on premises will decompose into highly-organized sets of microservices available in the cloud.

The ultimate goal of API economy is to facilitate the creation of user-focused apps that support line of business (LOB) goals and improve workforce throughput. As managers look for creative ways to monetize services and assets through APIs, it is expected that vendors will need to make API management simpler to accommodate the needs of the citizen (non-technical) developer in low-code software development environments.

This was last updated in August 2018

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Dear Margaret,
 why you ask us to use another bogus term - "API Economy"? Why "API Management" is not enough?

What economy in management?

This is another confusing, misleading and ambiguous term that allows totally unrelated development claim that they lead economy. They did not and will not lead anything because API management misses the major economy part - business trust based on business (not technology) contracts.

The IT language shifts more and more toward the language concept created in Russian prisons and labour camps last century - it allowed convicts to talk among each other in the way that their guards did not understand. 
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I understand the need to have a superficial approachable definition, but the claim that API management and API economy are synonyms is absolutely bonkers. 

The "API Economy" as a phrase refers to the entirely new market of business capabilities exposed via programmatic interfaces.  The APIs create a technical interface to capabilities as diverse as insurance underwriting to point of interest mapping.  There's no shortage of material on this from consulting firm and tech vendor white papers to university press articles.
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