Open vs. Closed Programs – The Renewed Debate
For as long as APIs have been around there seems to have been a persistent question, “How do we best leverage these? Is it best to keep them internal, offer them to partners or open them up to everyone?” Deciding on who gets to use your API and the content they are allowed to access is one of the most important questions a company can ask itself when thinking about it’s API program. It is a pivotal question that has a cascading effect on all other decisions that go into the program.
This past month saw some notable API programs electing to shift their Open vs. Closed Program strategy with both ESPN and Aetna electing to shutter the doors on their Open programs. But it wasn’t all misfortune for the developer community as one highly anticipated program rolled into the Open market with Uber launching its API to open developers. That’s a lot to take in so let’s take a quick look at what happened.
In the waning days of August Aetna announced that it would officially be discontinuing its Carepass program by the end of 2014. Not surprisingly, this was deemed pretty big news, particularly within the healthcare space. Offering explanation to its users and the general public regarding the reasoning behind this decision, Aetna cited a number of different factors.
One of which was a lack of consumer buy-in from both Aetna users and those outside their network. Like any other product in the market it doesn’t necessarily matter how great a product is itself - if consumers aren’t interested, success is going to be a challenge. Unfortunately the lack of widespread buy-in permeated into the provider market as well with Forrester’s Peter Mueller citing a lack of integration with EHR (Electronic Health Record) systems as one of the primary contributors to a lack of traction.
The biggest culprit though may have had nothing to do with the outside world’s acceptance of the program but rather Aetna’s own internal view of it. According to Mueller, Carepass “didn’t have the buy-in from all parts of the organization.” When this happens it doesn’t matter what type of developer a program targets, the road to success is going to be an uphill battle.
ESPN Retires Its Open Program
Like Aetna, ESPN has elected to discontinue its Open developer program. ESPN announced its closure in July noting it will no longer be issuing 3rd party developer keys. December of this year has been targeted for full shutdown. ESPN cited a re-alignment of resources to core ESPN products as one of the primary reasons behind the closure.
Your Uber API Has Arrived
But don’t worry developers it isn’t all, “Farewell (insert API program), we barely knew thee.” Uber is opening up its API to third party developers giving you a chance to integrate its functionality directly into your applications. For Uber, this new phase in its API program is designed to help expand its reach and attain new customers - allowing end users to access and try Uber from outside its own application. And there is of course something in it for the developer too as Uber is giving developers that integrate the API some free credits. The amount thus far is undisclosed but hey cab fare isn’t cheap, it’s a nice little perk for sure.
What do these closings and openings mean for the Open vs. Closed debate? Well, very little in the grand scheme of things. What the two closings represent is a shift in how the two relevant companies view their APIs and where they see the most value. Strictly speaking, just because Aetna and ESPN do not think it is in their best interest to continue offering Open APIs does not mean that no company should. And just because Uber wants to offer its API to the world doesn’t mean that would be the right choice for your company.
These instances show is how important it is to take a step back and really look at the value proposition behind your API keeping in mind that the value proposition is a two way street. Sure third party developers may get a ton of value from what you have to offer but there has to be something in it for your company as well. If there isn’t, that is where the problems start to arise and getting the overall organization to support the program is going to be exceptionally difficult.
There are plenty of arguments to be made for Open, 3rd party developer programs. They can be a great way for a start-up to gain recognition. They can expand the reach of a company’s customer base integrating into new apps and ultimately reaching more people. They can be a great recruiting tool; if someone designs a killer app using your API, wouldn’t you love to contact and possibly hire that person? You can go to hackathons, particularly college hacks and find the best and brightest, picking up great interns and hopefully great new employees. There is so much you can do but the real question is what should you do? All these things are great but when asking, “Does doing this bring me some sort of value?” is answered with a “no” then simply put, an Open program may not be for you. And that by the way is fine; as noted previously opening up your API is a two way street- if everyone does not benefit then ultimately no one wins.
Particularly with the closings people seem to be asking, “What does this mean for APIs in general and within the relevant industries?” Ultimately it means very little. APIs or APIs within healthcare is too general and widespread of a topic for one company, even a massive one to have a uniformly indicative effect on the entire industry. The value proposition for an API, just like any other product a company offers, is specific to a certain market and determining what that market is beforehand and aligning the strategy accordingly is pivotal to success.