An API is one of those words that us "tech bros" (can I say "tech sis"?) just throw around mindlessly, with disregard of the huge idea behind it. It stands for "Application Programming Interface' and the formal definition of an API goes as:
API n. a set of functions and procedures allowing the creation of applications that access the features or data of an operating system, application, or other service.
But that's not that helpful, especially if we are referring to an "open" API. Until recently, most of our computer systems have been closed boxes. We had to open the box to feed stuff into it, "things" would happen inside, and then the box would open and give us the results. An open API is like having a small hole on the side of the box where we can pass pieces of paper with messages written on them.
Ok, so that's cool. What's the big deal? Couldn't we just open the box and pass the piece of paper? Well, imagine now that we place two boxes side by side. To make them work together, in the first scenario, we would have to open the box, feed it, wait, open the box again, take stuff out, open the second box, ...etc. Under the second scenario, there may be a way to align the holes on both boxes, and have them pass on pieces of paper among them.
So that's what open APIs have done for computers. It has allowed individual apps, built to do specific purposes, to stay contained, specialized, but at the same time communicate among them and take care of increasingly complex processes. When your Amazon Echo allows you to turn your lights on and off, is thanks to an API. The Alexa folks did not have to develop the software to communicate and control the lights, and the lighting folks didn't have to bother with voice recognition or with developing Alexa's sometimes quirky character. Separate, but works together.
So enough of that.
What would be the scenario if we could put in place something analogous for businesses? Today, most businesses function as our sealed cardboard boxes. There is no way to fluidly issue commands from one to the other.
Granted, in some very specific situations, two independent companies engage in more fluid operations, but not before going through a complicated arrangement of contracts that impossibly attempt to outline all the "what ifs" and some equally complicated integrations like EDI systems. There's got to be a better way, after all the original EDI was developed in the 1960s.
Part of the issue is that in an information system's API, everything that is exchanged is contained in the API. In the real world, not so much. Money usually doesn't follow automatically through the same path than supplies, instructions, etc. Today's blockchain and smart contract technologies offer the opportunity to tie it all together.
Make no mistake, the fluidity that today's supply chains have achieved is remarkable. Even in the face of this quasi-disaster that has made supply chain a breakfast-table term. But developing new technologies in these lines can, not only make current operations among juggernauts more efficient, but it can make possible to incorporate smaller, specialized manufacturers or service providers into the chain, and even make it possible to orchestrate these relationships dynamically.
I know, my head is spinning too.