Yesterday, Saugatuck Technology caught up with Daniel Saks, Co-CEO of AppDirect – and discussed the future of AppDirect as well as the evolving landscape around APIs, Platforms, and the emerging software category often dubbed the “API Economy.”

For those not familiar with AppDirect, it was founded in 2009 as a way to create an aggregated marketplace for SaaS applications that can potentially alleviate some of the API Economycomplexity inherent in using multiple best-of-breed and point solutions, rather than integrated single-vendor suites. AppDirect accomplishes this through the use of their platform, which enables a one-stop-shopping experience where standalone applications can be purchased, provisioned, and managed from a central location. This includes aspects such as single sign on (SSO), multi factor authentication, and data integration. Additionally, their platform is constructed of many fully accessible APIs that enable complex exchanges of information both with their platform, or from application to application to facilitate data sharing and flexibility in complicated use cases.

We discussed the following possibilities around the evolution of the API economy:

As it stands, APIs offer the ability to decouple user interfaces entirely from application logic, which has tremendous ramifications when applications are available in a marketplace. In many cases, if the application logic were to be exposed by APIs to the intermediate platform it would enable more agile, flexible workflows where certain capabilities from SaaS applications might be used in combination with others to build business specific capabilities. These capabilities then would either integrate with one central interface, or would allow the creation of an altogether new interface dependent on the precise business logic needed. Obviously, there would be some possibilities here around the ownership of the interface, and its capabilities, as well as the more complicated nature of debugging problems between multiple interfaces and solutions. But overall, it also promises an interesting solution to building functional suites out of multiple products from different vendors.

If the above scenario evolves / plays out, it speaks to the need for more robust billing solutions, where specific API addressable functionality could be individually metered or subscribed. This currently would put significant strain on many SaaS application billing capabilities, as the simple subscription logic embedded in many SaaS solutions does not address use-based billing for multiple different services within existing products. The broader industry is already evolving here – some heavier weight while others are clearly lighter weight (e.g., Metratech, Aria, Zuora, Stripe and AppDirects own Jbilling platform) – which are beginning to enable greater flexibility with how services can be delivered and monetized.

The API Economy has the potential to become a boon to traditional software channels, if OEMs, SIs and VARs are capable of transforming their businesses quickly enough. Marketplace platforms offer a way for channel partners to take advantage of the economies of scale that the platform can deliver, while still tailoring the exact mix of applications in the marketplace to their existing customers, whether they be verticallly-oriented or otherwise. These platforms not only allow access to multiple, managed solutions for their customers, but through the exchanges of APIs and their associated services make it possible for VARs and SIs to more easily build targeted services at a lower cost. This in turn may enable the channel to open up to traditionally underserved markets made available by the lower cost of development that accompanies the use of existing API driven services.