Inflation and API economy

Many CTOs choose to put their heads in the sand when it comes to finances. “Oh, it’s our CFO’s problem, not mine!” And then the day comes when the CFO comes with huge cost-cutting scissors and the shouting and crying starts. According to Eurostat annual inflation in the EU is up to 10.9% with the Baltics sitting on the top with annual inflation rates of more than 22% and enterprises need to find long-term cost-cutting solutions.

When it comes to IT costs you can expect:

1. Annual license support cost increase
2. Salary increases
3. Increases in maintenance costs
4. Recruitment freezes
5. Decease in new projects and paused ongoing projects

All this and in most cases you will be expected to keep up with the same service as before and retain the talent. So you are stuck. For the short-term solutions: go to your leadership team. For mid and long-term solutions you should strongly evaluate enterprise grade API platforms as one of the mechanisms to ensure flexibility, cost savings and retain existing service with changing environments.

API economy to the rescue

Every coach, trainer, tech article and book keep repeating the same again and again: your enterprise must become and stay as flexible as possible to quickly adjust to any new business requirement. So many choose to implement 2-week sprints and hire some agile coaches to run around while nothing else changes in the company and even the smallest changes require months and an army of managers to be approved.

As a crucial part of the organization you can invest in API economy to actually make your enterprise flexible. 

Environment agnostic

Your cloud provider or on-prem data center shouldn’t dictate which operating system can be used for your API Gateway. If it does, you are losing a huge opportunity to become flexible. You should concentrate on API platforms that can be set up on the majority of operating systems. There might be a case when you can have huge savings by moving to a different environment. If you have to migrate to another API platform as well, all your savings will be gone.

System agnostic

This is one of the most important points. It used to be the case when you deployed a new system you created many integrations with other systems directly making the new system strongly coupled in our IT stack. All changes in integrations came with many negotiations and delays and changing out the systems was (and sadly still is) a huge project for many years. 

With API Gateway you have one central platform that does what its name says: acts as a gateway for APIs. Now you can manage your integrations from one single place and most importantly each API is simply that – just another API. As long as the systems keep using the same API specifications and doing what they were doing (and in long term you can slowly replace them to different versions or add functionality) you don’t care what system is running in the background (e.g., end customer doesn’t care if for billing purposes you are using system A, B or X a long as the service is provided). 

In the long-term you will save a lot of time as you don’t have to replace one system with another and change all integrations, and change all connected systems. Now you can create a new API for the new system, make mapping rules for the APIs (e.g., send to one return to other, send to one, return to the same, but via 3rd API that sends part of the information to the new system, etc.). If these savings come together with lower licensing costs – you’re on a roll. By hiring an external team to do the API implementation your teams can continue to concentrate on their work and fully invest their time on the transition between both systems, cutting overall time/costs down.

Building blocks

Once you build your APIs to fully reflect your business process and you are no longer tied to existing systems (unless you want to) you can start to look at your entire landscape as building blocks. Each business function that you might need is built as a microservice. Independent, possible to chain, high performance with built-in circuit breakers. Small building blocks that a junior configuration specialist can chain together in minutes. With this approach your process will shift to:

1. Business can come up with new products or even request to replace systems
2. Configurator creates basic product with space for “special features” which will be the essence of your new product
3. Developers quickly deliver these features. In the rest of the time they keep improving the system and making building blocks – fast, simple, durable.

Now there is no more need to wait weeks or even months for new features to be delivered. You are flexible and free to innovate.

Imagine chain which is configured in matter of days by your team member and then documented basing on API documentation from developer portal:

Get client data -> Get subscriptions -> Get invoices -> [New feature from development: optimized subscription offering] -> Display on self-service -> Send notifications.

Conclusion

When it comes to IT costs you must develop a flexible approach to fight issues that will decrease your profit margins. With a flexible API landscape and API economy you can more easily manage annual license support cost increase by strongly evaluating ongoing and future costs versus implementing alternative solutions. Overall maintenance costs can be managed by both decreasing scope of any change (limiting to source system and possibly some mapping in API Gateway). With the right building blocks in place you would be able to innovate new products faster and with less effort which can cause a lot of pain especially during hiring freezes or when investments in projects/products are at a low point.

As you can see there are ways to optimize your costs in the long-term even with high inflation. To learn more, reach out to our expert and we will get you started. 

References: https://ec.europa.eu/eurostat/documents/2995521/15131946/2-19102022-AP-EN.pdf/92861d37-0275-8970-a0c1-89526c25f392