An estimated 80% of organizations with APIs have some form of strategy in place, emphasizing the importance of a deliberate approach to API management. These organizations aren’t just adopting strategies arbitrarily; there’s a clear business benefit. Those with an API strategy experience 17% higher productivity compared to those without one – leading to the rapidly growing popularity of API gateways.

“The data underscores a compelling insight: having an API strategy, in any form, results in significantly better business outcomes than not having one at all.”

An API Gateway is a system used within businesses to oversee and direct the communication between multiple software applications and services. Whenever an application requires data or a specific operation from another service, it sends a request. The API Gateway processes this request, ensuring it adheres to established protocols and security measures. Once verified, the gateway routes the request to the appropriate service.

Business value of API gateways

Cost efficiency

In connecting key systems, from Salesforce to AWS, businesses have reportedly seen a 20% increase in operational efficiency and a reduction of up to 30% in IT-related costs.

Reduction in redundant tasks:

By integrating systems like Salesforce, Slack, and ERP platforms via API Gateways, businesses can automate data sharing. This reduces manual data entry and eliminates errors, freeing up staff to focus on strategic initiatives.

Better resource allocation:

API Gateways, such as Amazon API Gateway, provide efficient API development and performance at any scale – but can get expensive if not expertly managed. Depending on how it is used and optimized, costs can be kept very low. This optimization can free up budgets from maintaining old systems to new growth-driving projects.

Streamlined operations

Centralized management: One place for many tasks:

API Gateways allow companies to interface with multiple applications, such as SAP, Oracle, or HubSpot, from one centralized dashboard. This offers executives a unified view of business operations, facilitating quicker and informed decisions.

Improved coordination between different parts of the business:

When your marketing uses Marketo, sales uses Dynamics 365, and support uses Zendesk, API Gateways ensure data consistency across these platforms. This ensures different departments are aligned and working from the same data sets.

Enhanced security

According to new research by Kong, API cyberattacks are expected to increase by almost 1000% by 2030, with total costs of attacks expected to exceed US$500 billion.In a survey conducted by MarketSplash, 59% of developers saw application rollout delays due to API security concerns, so it’s a multi-faceted issue that needs an holistic approach to effectively manage.

Single point of entry for easier monitoring:

Incorporating security platforms like Okta or Duo with API Gateways ensures a consolidated security checkpoint. This allows businesses to easily monitor and audit data access, ensuring compliance with standards like GDPR or HIPAA.

Better control over who accesses what:

By integrating with identity and access management tools like Active Directory, API Gateways give businesses precise control over data accessibility, ensuring only authorized personnel have access to sensitive business data.

Leveraging API gateways for centralized management

Monitoring and analytics

API Gateways offer centralized monitoring for all integrated services. This means a consolidated view of activity across platforms like AWS, Azure, or Google Cloud. Decision-makers can quickly gauge the performance of different applications, measure the ROI of digital initiatives, and spot areas for improvement. Tools integrated with gateways, such as Google Analytics or Splunk, can offer insights into customer behaviors, traffic sources, and potential bottlenecks. This level of oversight is crucial for managers aiming for operational efficiency and informed business strategy.

“Decision-makers can quickly gauge the performance of different applications, measure the ROI of digital initiatives, and spot areas for improvement.”

Rate limiting and traffic control

Businesses often run multiple applications simultaneously, from content management systems like WordPress to database services like MongoDB. An unexpected surge in traffic or requests to any of these platforms can impact service quality. API Gateways manage this by implementing rate limiting, ensuring that all systems remain responsive and stable even during peak usage times. This capability is essential for businesses that prioritize uptime and user experience, especially in sectors like e-commerce where website performance directly translates to sales.

Consistent policy enforcement

API Gateways ensure that policies, such as access controls and authentication, are consistently enforced across all business applications, be it CRM systems like Salesforce, ERP solutions like SAP, or eCommerce platforms like Shopify. This means that business protocols and security measures are uniformly applied, ensuring that compliance standards are met and reducing potential vulnerabilities. While this typically is more beneficial for larger enterprises that are better suited to leverage API gateways, SMEs can still benefit from centralizing their API management and building standards and policies around that. 

Tangible benefits for managers and executives

Managers and executives play a key role in steering a company’s direction. This decision-making process for managers and executives is often complex, requiring tools that offer clarity, efficiency, and risk mitigation. An API Gateway offers precisely this, catering to vital business-level interests:

Clearer oversight

Effective leadership is dependent on clear information and rapid insight. Quick and informed decisions directly influence a company’s ability to launch products and seize market opportunities ahead of competitors.

  • Easy-to-read dashboards and reports

    Tools like Apigee or AWS API Gateway offer intuitive dashboards that present essential data, and tools like Grafana or Kibana can also integrate with API Gateways, presenting data in a digestible manner. Managers can assess key performance indicators (KPIs) and make immediate decisions.

  • Quicker identification of problem areas

    Monitoring tools such as Prometheus or New Relic, when coupled with an API Gateway, can immediately highlight inefficiencies or issues, enabling proactive management. These platforms often come with alert systems, notifying managers instantly when metrics deviate from set standards, ensuring rapid response.

Faster Time-to-Market

Staying competitive often hinges on a business’s agility – and the speed at which you can deploy and update digital services directly impacts market position and customer satisfaction.

  • Speed up the launch of new services/products

    API Gateways seamlessly integrate with CI/CD pipelines (like Jenkins or GitLab CI) which ensure rapid and consistent deployment cycles, keeping businesses ahead in market races. Moreover, by centralizing the management of multiple services, API Gateways eliminate bottlenecks and streamline the entire release process.

Risk management

Modern businesses face a multitude of risks, both digital and operational. Digital risks might include cyberattacks, data breaches, or software vulnerabilities, while operational risks encompass supply chain interruptions, compliance violations, or human resource challenges.

  • Proactive identification of issues :

    By integrating threat detection systems like WAF (Web Application Firewall) with an API Gateway, potential vulnerabilities or breaches can be flagged instantly.

  • Mitigation of potential issues :

    Implementing best practices, such as OAuth or JWT for authentication in the API Gateway, ensures that only legitimate users access the system, greatly reducing security risks.

Netflix – An API gateway success story

Netflix boasts over 238 million subscribers worldwide that stream millions of hours of content on a variety of devices including TVs, computers, smartphones, and tablets. This massive and diverse user base requires a system that can deliver consistent and high-quality streaming experiences, while also accommodating different device requirements, regional content differences, and user preferences.

Netflix implements an API gateway

To efficiently manage this vast and intricate web of requests, Netflix implemented an API Gateway into its system, which is a part of what’s known as a “microservices architecture”. In simpler terms, instead of having a single, large software application managing all of its operations, Netflix broke down its software into smaller, independent applications, or “microservices”. Each of these microservices has a specific function, like managing user profiles, handling content recommendations, or processing payments.

The API Gateway’s primary role is to serve as a central point that receives all incoming requests from users. Once a request is received, the API Gateway determines which specific microservice or microservices are needed to fulfill that request.

Netflix API gateway: Key results & achievements

Scalability:

With the adoption of the API Gateway, Netflix effectively scaled its services to accommodate its growing user base. The platform handles over 2 billion API edge requests every day, showcasing its robust capability.

Performance:

An optimized request routing process ensured that users experienced minimal lags or downtimes. According to Netflix’s own reports, their global streaming error rates remained below 0.1%, a testament to their system’s resilience.

Rapid feature deployment:

The API Gateway allowed Netflix’s development teams to quickly and securely introduce new features. This agility has been crucial in keeping the platform innovative and ahead of competitors.

Consistent user experience:

Whether a subscriber was using an old smartphone or the latest smart TV, the API Gateway played a key role in ensuring they received a consistent viewing experience. Features like adaptive streaming were implemented to match the viewer’s device and bandwidth.

Enhanced security:

With a single point of entry, Netflix could monitor and respond to potential security threats more efficiently. The API Gateway provided tools for encryption, authentication, and real-time monitoring, safeguarding user data and ensuring secure streaming.

Key steps to consider before adopting an API gateway

Needs assessment

Business integration:

Businesses today operate with multiple systems, such as Salesforce for customer relationship management and SAP for enterprise resource planning. An effective API Gateway bridges these platforms, streamlining data exchange and ensuring that vital information is consistently updated organization-wide.

Scalability requirements:

As companies look to expand into new markets or roll out new digital services, it’s essential to have a system that can grow with them. An API Gateway should not just cater to present needs but must be robust enough to integrate new applications and handle increased data traffic that comes with business expansion.

Security concerns:

Security stands as a paramount concern, especially for sectors handling confidential data or financial transactions. Industries such as banking or eCommerce, for instance, deal with sensitive customer information and payment details daily.

Vendor evaluation

Solution suitability:

Integration capabilities play a pivotal role in determining the suitability of an API Gateway. It’s essential to ensure that the gateway seamlessly integrates with leading platforms such as AWS, Azure, or Google Cloud.

Cost-benefit analysis:

Evaluating the total cost of ownership for an API Gateway is more than just the upfront cost. It’s vital to factor in immediate expenses such as licensing fees and hardware costs. Organizations must also account for long-term operational expenses, including maintenance, upgrades, and potential scaling needs.

Vendor credibility:

The reliability and reputation of a vendor cannot be overstated. Researching a vendor’s past deployments, especially in sectors similar to yours, provides insights into their expertise and reliability. Vendors like Apigee, AWS API Gateway, and Kong are renowned in the industry and often come up as trusted solutions.

Training and implementation

Skill development:

While the tech-team primarily handles the operational side of implementing an API gateway, all teams need a clear understanding of how the API Gateway can streamline processes, make data more accessible, and open opportunities for new business collaborations.

Strategic deployment:

By identifying vital business processes, you can prioritize where the API Gateway will be most impactful. For instance, if your business heavily relies on customer data, the API gateway can provide a centralized and secure access point, reducing data retrieval times and ensuring consistency.

Performance metrics:

Once the API Gateway is in place, its impact on business performance should be consistently tracked. This means looking at key performance indicators (KPIs) that reflect business goals, ranging from revenue growth, tracking & comparing time-to-market, and gauging customer experience improvements.

Key takeaways

Understanding and leveraging the full power of API management is both a technical requirement and a vital business strategy. API Gateways serve as the backbone to this strategy, centralizing control and streamlining operations. For decision-makers, the key takeaways are clear:

  • API management is not just a tech term; it’s a game-changing business strategy.
  • Centralized control via API Gateways streamlines operations and bolsters security.
  • Expertise in customizing and integrating API Gateways can be the difference between merely adopting a tool and transforming your business operations.

Building a custom API Gateway tailored to your business needs ensures that you’re not just following a trend but making a conscious decision to improve operations. This means your company can function smoother, faster, and more securely. Integration, on the other hand, ensures that this efficiency is felt business-wide, from internal teams to external partners and clients.

Thomas Charneau

December 14, 2023

10 Min read