Boston University professors have quantified the value of APIs, the software fueling digital platforms for the likes of Apple, Facebook, Google, Uber and Airbnb. However, few companies recognize the value of APIs.
The success of digital platforms can be measured by many metrics, including increased customer adoption, network effects and revenue, and profit hikes. Less clear, however, is how much value the application programming interfaces (APIs) underpinning such platforms contribute to the calculus.
New research suggests the use of APIs to facilitate digital transactions increases annual net income by more than $250,000, with potential profit boosts growing as platforms generate and exchange more data, says Boston University professor Marshall Van Alstyne, who co-authored "The Impact of APIs on Firm Performance" with colleagues Seth G. Benzell and Guillermo Lagarda.