Benefits of Utilizing API’s for Acquisitions

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Benefits of Utilizing API’s for Acquisitions

People ask me all the time, “Isn’t it easier and quicker to write integrations from system to system rather than building an API infrastructure?” My answer is always, “Yes, it is… if you are integrating one system to another.” However, in today’s quickly evolving world, both technically and commercially, organizations hardly ever integrate only one system to another.

One clear example of this is when one company begins an acquisition strategy that involves buying and incorporating several other companies over a long period of time. This article explains the benefits of utilizing a well-designed API infrastructure to achieve flexibility and efficiency when acquiring assets.

In years past, it was a painful process to integrate or incorporate one company’s systems with another. Actually, not much has changed. It is still very painful and very costly. From a technological standpoint, nothing much helps us with this problem. From an architectural aspect, though, there is one major change. A well-designed and implemented API infrastructure can help organizations speed up that process and make it more consistent and reliable, especially for the acquiring entity. As an example, let’s look at the differences in the diagram below:

The top-half of the diagram depicts Company A acquiring four companies of a period of four years. The lower-half of the diagram show the same company acquiring the same four companies in a span of three years. While this timeline is obviously not scientific, it effectively demonstrates the efficiency that could be gained by utilizing API’s for the acquiring company.

Let’s say that Company A is planning a long-running acquisition strategy over the next four years. In the past, Company A would acquire Acquisition 1 and build point-to-point integration applications to incorporate their systems. When that was completed, Acquisition 2 would begin and another set of point-to-point integrations would need to be written for Acquisition. The cycle would continue, one after the other. With an API-led architecture, the Enterprise API layer would need to be developed, which takes some time, and then adapters are written for each of the acquisitions.

Speeding-Up Acquisition Integration

I will always admit that point-to-point integration applications are easier and faster to write than developing a proper API architecture. The ROI (return-on-investment) is never with the integration between Company A and Acquisition 1. It usually is not even with Company A and Acquisition 2, though it could be. The positive ROI is very evident with subsequent acquisitions. The initial investment is much greater when developing an API infrastructure. However, once the API’s are deployed, outside of some upgrades and enhancements, developers just need to use the API’s and develop one side of the integration, meaning writing an adapter for each of the acquisitions.

Consistent Integrations with Re-Use of Business Logic

A major problem with point-to-point integrations, when integrating acquired organizations, is that the business logic to integrate Company A with Acquisition X must be nearly rewritten for each acquisition. Back in the MVC (model-view-controller, for those of you younger than 30) days, IT was concerned with not writing business logic in the UI, in order to re-use that logic with different interfaces. The same concept applies to API’s. If business logic is implemented in the API layer, then the clients (acquisition adapters, in this case) just need to follow the contracts of the API’s by implementing transformers that convert their business objects into consistent enterprise model objects of Company A.

Other Advantages of API Infrastructure

There are a few other, not so realized advantages, of building an API infrastructure. One advantage is that the teams that would be utilized for building all of the point-to-point integration applications can usually be divided into separate groups to acquire more companies in a shorter period of time. Another advantage is that the API’s that were built for the acquisitions can be utilized for other internal or external clients, exposing a true enterprise data model with enterprise processes. Finally, and in some cases, a very large benefit is the management of the API infrastructure is much easier than with point-to-point integrations. With API version management, the acquired companies can implement changes to the API when they are ready for it.

Summary

There is one key take-away from this blog that I hope to expose. While API infrastructure can be costly and less efficient than building point-to-point integration applications, organizations should realize a more effective ROI over a longer period of time or at least compounding benefits in the long run.

By |2018-10-09T00:22:34-04:00October 9th, 2018|Uncategorized, Work Horse New|0 Comments

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