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How API economy can enable vendor co-petition and better software products?

Posted by Bramh Gupta on May 12, 2019 8:07:38 PM

grand-bazaar-istanbul-2

In their 1996 book “Co-opetition”, Adam M Brandenburger and Barry J Nalebuff, professors at Harvard and Yale respectively, define Co-opetition as an act of cooperation between competing companies. Co-opetition, according to them is:

A revolutionary mindset that combines competition and cooperation
The Game Theory strategy that’s changing the game of business
Back in 1996, The API economy did not exist but the insights for the economy or business are as relevant today for the API economy as it is and was for manufacturing, retail, consumer goods or industrial sector. Business is often compared to games like poker or chess. To win at chess or poker someone must lose, a zero-sum game. In business long term profitability does not require others to fail. In business people are free to change the rules, the players, the boundaries, and the game itself.

“Co-opetition will revolutionize the way you play the game of business. And the API economy, like any other technology, will accelerate and accentuate the process and the collective gains from it.”

API economy, which is already having a good traction, can be considered akin to silk route, the bazaars, or large marketplaces where providers of specialized functionality and features (the goods) come together to sell to the buyers. This ability to use specialized functions, exposed as APIs, provide a unique opportunity for users or the businesses to mesh functionality together to create competitive advantages. For example, one could have CRM from Salesforce, Inventory from SAP and FP&A (Financial Planning and Accounting) from Microsoft Dynamics NAV combined with PagerDuty or ServiceNow for service and incident management. This combination might be the best option for the needs of that particular business. All of the above is possible because each of the mentioned vendors expose their functionality as open APIs that one could mesh together in his or her business workflow.


Istanbul Grand Bazaar (credit https://danaevasilaki.wordpress.com/2012/10/15/trendy-city-review/)Marketplaces or Bazaars not only create a place where the consumers can get all that they need from the best of the providers, but they also provide sellers an opportunity to evolve, grow and create partnerships to provide complementary goods and services.

In this spirit of co-opetition, the vendors do not compete in a zero-sum game like chess or poker, but they rather make the pie bigger and increase the value of the game by providing new value propositions through collaboration and specialization. This leads to more differentiated products and services. Over the long run it also reduces the competition to the bottom because it allows each of vendors to differentiate and create their own target segment which is bigger than if it was achieved in a zero-sum competitive game.

In the API economy, the APIs provides needed interfaces so that the users of the systems and the functionality can reap the benefit of increased collaboration and specialization provided by the software vendors. API economy also facilitates end goal of providing best of the breed functionality and tools needed by the businesses to compete in their own markets.

API availability is constantly increasing as more and more providers are opening to this concept and standardization is happening with initiatives like Swagger and OpenAPI. The evolution of iPaaS (Integration Platform as a Service) that provides simple intuitive user interfaces for businesses to use APIs are much needed facilitators in the API economy. The middleware or iPaaS can be considered as the exchanges or trading agencies that allows business users to discover, explore and use APIs from different CRM, ERP and SaaS systems in their business processes.

In summary, API economy must be seen as a co-opetition opportunity for the providers for SaaS, CRM, ERP and enterprise applications to increase the pie and create more value for all the players involved. Those that will open-up their functionality as APIs will reap the reach and the benefits of a worldwide economy that they may not be able to tap on their own with their marketing and sales efforts. The iPaaS vendors can play a critical facilitator role to enable this use and exchange of functionality by end customers of the API economy.


About author

Bramh Gupta is founder and CEO of RoboMQ, a leading iPaaS (integration Platform as a Service) that enables API, data, and application integration. With his background in large scale real-time manufacturing systems and telecoms, Bramh is passionate about real time integration and the value it brings to operations and critical decision making. He holds an MBA from Kellogg School of Business and an engineering degree from NIT, Jamshedpur. He combines his business insights and architectural skills to design and create highly scalable, integration platforms and tools that are needed to power the API economy.

Credits

  1. Inside the Grand Bazaar in Istanbul Photo credit KamrenB Photography
  2. Spice shop at Istanbul Grand Bazaar (credit https://danaevasilaki.wordpress.com/2012/10/15/trendy-city-review/)
  3. Co-opetition by Adam M Brandenburger and Barry J Nalebuff

Topics: Digital Transformation, API, API Economy