APIs are an essential component of today’s digitalization and digital transformation efforts. But how can you define and measure the status and success of individual APIs, API landscapes, API programs, and API platforms?
Over the years, as we have consulted with large organizations, we’ve identified several real-world key performance indicators (KPIs) they use for their API initiatives. No organization would create and offer products without having a plan for how to manage them, and the very same thing is true for APIs.
Enterprises need to know if their digital initiatives are moving the needle for their business. Let’s dive into the different types of KPIs to measure for APIs and share examples for each of the categories (as well as data from a recent study on enterprise API maturity). I will also share some advice on when and how to avoid KPIs that may not measure the right things.
What are KPIs for APIs?
In order to manage APIs effectively, it is important to treat them as products, or rather, to make APIs part of the product management practice. And while KPIs are not the only thing necessary for managing APIs as a product, it’s important to have them so that there are clear objectives about what should be achieved, and clear ways of how to measure progress and success.
Key Performance Indicators (KPIs) for APIs are metrics that measure both the technical performance and business impact of APIs as strategic assets. These KPIs focus on driving API adoption, revenue generation, customer satisfaction, and developer engagement, ensuring APIs deliver measurable value to the business.
We’ll share examples of the most common types of KPIs enterprises measure later in this article.
See also: What are API metrics and how do you measure them?
KPIs for APIs can be used to sustain and grow your platform because they show the value of your APIs to your stakeholders and to your API core team.
The API execution imperative
Virtually every enterprise decision-maker (98%) surveyed in the new State of Enterprise API Maturity report anticipates the number of APIs used by their organization to increase over the next 12 months.
Meanwhile, today’s sprawling architectural landscape has introduced additional complexity:
- Different tools and management based on environment (AWS, Azure, MuleSoft)
- Independent development teams have developed different tools and processes based on deployment choices
- Lack of common metric approach to show value of different API programs and teams
- Different portals for each technology stack – no one source of truth
There will be clear winners in this context, depending on how companies address multi-cloud for API management – namely, whether they are able to unify their IT landscape and treat APIs as products for building digital businesses.
All API teams have the responsibility to execute on ambitious API programs, faster and better than ever before. For any program, KPIs facilitate execution in three ways:
- KPIs allow your team to recognize where they stand when reaching their key objectives. Further, they know how much progress to keep on making while working to meet their objectives.
- KPIs allow each contributor to focus on what matters most to reach a common goal and prioritize activities that contribute the most.
- KPIs are a notable tool to drive better data and facilitate better dialogue with your stakeholders. This provides better transparency and visibility of what’s going on in your team and its contribution to your organization’s success.
See also API product intelligence: 10 KPIs to support your strategy
The different types of KPIs for APIs
In our experience, the KPIs that enterprises use can be broken down into ten different types:
- Revenue growth
- Consumption of revenue is what drives revenue growth
- Choice
- Availability
- Compliance
- ROI
- Cost Avoidance
- Productivity
- Efficiency to drive costs down
- Developers in the API team
Ultimately, these KPIs can be gathered into three overarching categories that correspond to key stakeholders’ most pressing concerns – revenue, cost, and risk. So, let’s look at them through the following lens:
- KPIs for measuring revenue and growth, and for measuring the consumption of services.
- KPIs for controlling cost, measuring cost savings, and for improving efficiency.
- KPIs for risk mitigation and for improving resilience.
Different types of consumption KPIs
What KPIs should you use when talking about API consumption?
Revenue growth. Companies can demonstrate how much revenue they have generated thanks to APIs. Or sometimes, companies track revenue growth thanks to their API program.
- For example, Robert W. Baird & Co., a leading Wisconsin-based investment bank and financial services company, was able to track its growth rate at 50% thanks to the API program.
With Customer Acquisition, enterprises track the number of customers you have acquired thanks to their API program. (Customer Acquisition KPI equals the Lifetime value of customer times the number of customers in an API program.)
- PermataBank in Indonesia was able to quadruple (x4) their customer acquisition. Thanks to APIs, more customers are joining or opening accounts with PermataBank, a huge success to be reported to shareholders.
Adoption. Probably because this one is relatively straightforward, companies often report on adoption using metrics like the number of API calls or the volume of data exchanged with their customers.
While an API call is useful for tracking the trend of adoption of your program, it’s not necessarily something that shareholders would understand as creating value for the company.
That is why some API teams have taken the time to establish a link between their Customer Lifetime Value (CLV), and the number of calls for that customer. The more they engage with your API, the more they get value, the more you get value!
This also applies to growth rates from channels: once you’ve linked how much revenue is generated by how many partners are available in your ecosystem, along with how many calls are necessary on average for partners to transact, then you’ll be able to report on the growth rate via usage of your partner API.
Marketplace Choice. How much choice do you provide to your customers and community for a platform? The more the better! Here, you want to ask yourself, what can people do on your platform?
- For example, Groupe Henner, a health insurer that covers 200 countries with 49,000 health partners and provides services to 10,000 companies. They were able to provide the choice of all those health partners with their API program.
- Another example is ATPCO, a leading company in the airline industry in distribution, monetization, and pricing of air tickets. They provided the choice of up to 220 distribution channels for airline tickets to their customers.
When it comes to choice and the number of APIs or providers available, if you cannot link this choice with citizen choice or revenue growth, most of your stakeholders won’t understand the value of the efforts you are making to provide them with better opportunities.
Percentage of business on APIs. Finally, the fourth area of consumption that we can see in KPIs is how much of the business is being conducted by the company with APIs. Some traditional businesses get over 80% of revenue supported by APIs – meaning that, thanks to their API program, they have quintupled (x5) their business!
The Star Entertainment Group, which owns and operates several Australian hotels and casinos, quickly discovered just how much the API layer was an enabler to generate revenue.
“We designed our new websites to be responsive and we noticed that 33% of bookings were handled entirely on a mobile device,” says a spokesperson.
Efficiency KPIs: examples of ways to measure value of your API program
When exchanging with stakeholders to define then adjust activities towards KPIs, the easiest KPI to cover efficiency is ROI (Return On Investment).
If we invest $1 in our API program, what return will we get two years from now? This is the question an API team must document for itself and its board.
- The team at AIFE, the platform used by millions of suppliers to the French government, decided to track their success based on their payback period. They achieved a two-year payback period, investing €1Bn and cutting cost by €500m every year.
- A similar indicator is a cost saving over a period of time, such as the Danish Defence reducing their costs by 96% over six months. In both cases, the main stakeholders are citizens and their representatives, and such Efficiency means freeing up tax money.
Velocity. This KPI has the characteristic of impacting not only efficiency but also consumption: I go faster with the same amount of fuel as before, and my API consumers enjoy their experience as it is faster than before.
Even if most traditional boards do not immediately get the importance of such metrics, some will – especially if they are laser-focused on putting their customer journey at the center of everything.
The KPIs that can be achieved here with a federated API platform are mind-boggling, from reducing duplication of developer efforts to drastically cutting time-to-market for new products.
- By offering its developers a catalog of APIs — all managed on one platform to ensure consistent governance and security — Germany’s Commerzbank is empowering its developers to cut development effort by up to 80 percent and build customer-facing services faster than ever.
Another smart metric to engage stakeholder is time-to-onboard new customers:
- KGI Bank reduced theirs from three hours down to two minutes. Think about how many busy people would open an account with a bank in just two minutes when their competitors still take three hours!
Cost avoidance. By definition, APIs are a contract between a team and their audience to provide services given some entries. They are driving efficiency by replacing 1-to-1 integrations with partners or other IT assets with a one-to-many contract.
Simply by applying this principle with discipline, some teams have eliminated redundancies and therefore saved on costs.
- Consider for example, ENGIE, a leading energy utility company in Europe with global activities. They were able to measure the fact that one of their third-party APIs for weather data was used by many groups and divided their cost by three in that scope.
- Another example is BNP Paribas, one of the top 10 banks in the world. Their Personal Finance division looked at their inventory of APIs and was able to generate efficiency by just identifying duplicates and governing scopes for each group.
UX reactivity. This is a good illustration of your efficiency: if you can ship data faster, or accelerate a process for your customers, you are rightly seen as more efficient.
This KPI complements the velocity KPI: you do things faster, and users can experience it.
- For example, B3, the leading Stock Exchange in Brazil, can now ship data 50% faster with its open platform.
Understanding resilience KPIs
The resilience category of KPIs for APIs accounts for the risk reduced by an API-first architecture.
Availability KPIs. A good example of resilience is when a company tracks the availability of their platform as a key success metric. We often see the availability metric with API teams managing large and established platforms, such as Groupe BPCE in banking or AIFE in public services.
Compliance. Another element of resilience is the ability of businesses to ensure they keep or obtain the right to do business. This could range from compliance with FSI regulations like PSD2 (and soon, PSD3), open data for government agencies, or standards like FHIR® APIs in the healthcare field.
Skillset. A great way to manage the risk of your digital platforms is to grow the size of API resources in your organization. If you are ramping up the number of developers in your program, it’s a good sign that you’re attracting new talent and growing your API program.
Security. The last category of resilience KPIs revolves around cybersecurity.
- For example, a leading digital media company we worked with in the USA wanted to improve on the time it took them to address security threats. They defined a KPI based on the delay taken to design and deploy security policies and managed to improve it tenfold (x10).
- Thanks to a single point of control for API security, the dedicated cyber security team of Germany’s social security agency, Bundesagentur für Arbeit, prides itself in defeating some 5 million cyber threats daily.
Define the value of your APIs by negotiating KPIs with your stakeholders
For your API program to benefit from the attention, recognition, and budget it deserves, you must negotiate and agree with your stakeholders on KPIs for APIs, the link between the money you generate or save, and the metrics you track:
- Monitor the attribution of revenue generated by your program. By keeping track of revenue that is generated, it’s basically revenue by proxy.
- You should be doing the same with the allocation of cost savings: make sure the savings you generate are allocated to your API program. This requires designing proper cost accounting with your finance department.
- Make sure your stakeholders understand that direct monetization is not the most important driver for API programs.
Most of the monetization of APIs is made indirectly, by facilitating services already accounted for in contracts other than API contracts.
A strong focus on direct monetization would be perilous, as it could draw your efforts away from getting recognition on the value you already bring to the business. Truly direct monetization is an exception (<5% of APIs).
Accelerate your digital journey with KPIs for APIs
KPIs for APIs are essential tools that not only measure the technical performance of your APIs but also align them with your broader business objectives. By defining and tracking KPIs across revenue growth, cost efficiency, and risk mitigation, you can more clearly demonstrate the value of your API program to stakeholders.
Whether it’s driving adoption, streamlining operations, or improving customer experiences, the right KPIs provide transparency, guide decision-making, and ensure your API initiatives are contributing to your organization’s success.
With a thoughtful approach to selecting and managing KPIs, you can elevate your API strategy and help your business thrive in the digital economy.
Are you getting the maximum value from your APIs? Download our enterprise API strategy guide to make sure you do.
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