When was the last time you received a letter? It’s no surprise that the amount of mail sent through the postal service each year is declining dramatically. For traditional postal services, like the New Zealand Post, this could represent a terminal crisis. But instead of trying to hang on to outdated business models, NZ Post is using APIs to enter the e-commerce, package delivery, and logistics markets, transforming its business and providing new sources of revenue.
Can APIs provide revenue for a business? Without question. A recent MuleSoft survey revealed 50% of large companies generate $10m or more in revenue through their APIs. Examples include Expedia, a $4 billion company that makes half of its revenues from APIs, or eBay, which makes 60% of its revenue from APIs. Clearly, the API economy is serious. And with 72% of businesses reporting they have an API strategy, it’s clear that many organizations are recognizing the role that APIs can play in creating operational efficiencies as well as new revenue streams.
For NZ Post, participation in the API economy simply became a matter of survival. Through a partnership with MuleSoft, the postal company was able to develop numerous APIs that allow external users to integrate with its shipping, addressing, and postal systems. Last year, ZDNet reported, parcel delivery overtook mail delivery as the largest source of NZ Post’s revenue in 2014. And the reinventions and new business models keep coming. NZ Post is using a commercial version of its addressing API to assist with identity verification on credit card applications.
But it isn’t enough just to build the APIs and then sell them – the exposed data needs to be able to work with existing legacy systems. To make this architecture work, there needs to be a layered approach – which we call API-led connectivity – to ensure that the API layer is abstracted away from the legacy systems to create workable, sustainable interfaces. This loose coupling allows users to create new business processes easily. What API-led connectivity enables is access to the data held in on-premises core systems and then the ability to create processes on top of the core.
New Zealand Post is meeting the challenges brought on by changing consumer behavior by using APIs to make its core competencies valuable. Thanks to APIs and a flexible enterprise architecture, they’re realizing revenue streams in all sorts of new and innovative applications. To find out more about how this approach to integration can help your business, take a look at our resources on API-led connectivity.