Exclusive: ‘Has COVID pushed the button on APIs?’ – Lucas Tempestini, Sensedia in “The Paytech Magazine”

Sensedia’s Lucas Tempestini on how the API economy is boosting retail – from payments to packaging – by banishing backlogs and bottlenecks

Last month’s COVID-19 vaccine announcements, with pharmaceutical companies tumbling over one another to share their final-stage trial successes, saw the needle jump once more on the pandemic debate.

Talk of super-spreaders, epidemiology, and the R-rate was replaced by a new point of focus: distribution – getting hundreds of millions of vials of medicine shipped across the world.

Cue supply chain wonks quipping about ‘bottleneck bottlenecks’, the global shortage of medical-grade glass that’s set to hold up the roll-out of life-saving jabs. Experts have identified hundreds of similar distribution pinch points, many of which were exposed earlier in the pandemic when supermarket shelves lay bare for weeks on end.

In a sense, the handling of the pandemic is being passed on, from the doctors and scientists to logistics experts and end-to-end delivery management teams. As with all big projects, the success of these new actors will depend on how they interact, integrate, and cooperate.

On this front, vaccine distributors might take inspiration from the digital-first firms that pulled through during the early months of the pandemic, the likes of Amazon – the pandemic’s biggest winners. Despite global GDP falling by 5.2 per cent this year, Amazon has seen 40 per cent more sales, eye-watering profits, and a robust reputation for on-time, end-to-end delivery. Why did Amazon keep delivering, where the likes of Tesco, Sainsbury’s and Argos were left scrabbling around desperately for stock? To answer this, you’d need to look at Amazon’s huge market advantage: its expert use of integrated application programming interfaces (APIs), linking the point of sale with real-time demand calculators and concurrent, automated stock-ordering software.

Lucas Tempestini is global marketing manager at API management firm Sensedia. He’s seen firsthand how smart API deployment – integrating dozens of crucial software solutions – can help companies scale and adapt during peaks in trade. He sees no difference in approach between the pandemic’s peak in online commerce, and the industry’s usual seasonal surges.

“Seasonal peaks are very important for ecommerce in general,” says Tempestini, “yet they can be a double-edged sword. Many retailers are excited to round up revenue for the year, but at the same time they need to be very well-prepared, or they’ll miss out on trade.” Ecommerce sites routinely crash during Black Friday and Cyber Monday, even after months of planning and IT investment.

“Preparation is key,” says Tempestini. “To be successful, you need to stress-test all of your architecture  – and understand if and when your APIs are going to play a major role in the strategy you’re adopting for seasonal peaks.”

APIs are now both well understood and well regarded. A landmark report back in 2017, produced by McKinsey, estimated that the widespread use of APIs would add $1trillion to the global economy by 2022. The following year, open banking helped pave the way for quicker and more collaborative API integration in the UK, laying the path for open finance.

Nevertheless, the technology’s effective adoption remains relatively low. According to one report  published this year, the average company uses 900 applications – but, on average, only 28 per cent of them are integrated. A recent PwC study, meanwhile, found that only nine per cent of firms have ‘real-time, end-to-end integration and planning platforms’. Put another way, that suggests 91 per cent of businesses operate with sub-optimal API architectures.

The Connected Culture

Founded in 2007 in São Paulo, Sensedia is an API apostle, and evangelises with fervour about integrated, mutually-reinforcing IT ecosystems. The firm provides ‘full lifecycle API management and professional services’ – which is another way of saying they have their fingers in every single API pie: their deployment, their management, their omnichannel interaction, and their global governance.

“Establishing a good digital presence with smart APIs is not only a matter of growing your business – it’s become a matter of survival for businesses,” says Tempestini. “Even the more traditional retailers are now using APIs to tap into the power of their legacy systems, connecting and leveraging information out of them. It just takes an internal cultural shift – in the way you think about your own solutions.”

This culture shift has already taken place for API-enabled ecommerce payments, driven by the increasing importance of varied and accessible digital payments options. This year’s Capgemini World Payments Report notes that global non-cash transactions had surged by 14 per cent between 2018 and 2019, setting a new record at 708.5 billion transactions for the year. The booming ecommerce sector, using new payments APIs, helped facilitate this growth.

Of course, the pandemic has poured jet fuel on this growing inferno of integrated online payments. The number of consumers who made over half of all their purchases online doubled during the early months of lockdown, according to Capgemini. As a result, Sensedia reported a 34 per cent increase in API consumption by its retail customers during the first two quarters of 2020 as they scrambled to invest in their online stores.

Better ecommerce is certainly one silver lining of the coronavirus pandemic – like our collective realisation that ‘just-in-time’ order fulfilment is unsustainable under stress. And yet, for too many firms, APIs are still not being optimised as they are at Amazon. As Tempestini argues, integrated APIs can achieve so much more than they currently do at the digital checkout.

“APIs can be a single source of truth – all your information about your inventory, or about your partners,” he says. “If you have a solid API strategy, then you’re connected and integrated with your single source of truth, so you know where everything is.”

The implications of integrated APIs – delivering what technicians like Tempestini would call ‘omnichannel experiences’ – are astounding. From the point of a single sale, integrated APIs ripple in contented recognition of a new data point, feeding one another instant information that’s conveyed to warehouses, logistics and transport planners, and production facilities. The result, real-time supply chain agility, has become a top priority of retailers in 2020.

No wonder Amazon – with its advanced Amazon Web Services infrastructure – keeps its Prime next-day delivery promise. Over in China ‘super app’ Alibaba is another example of smart digital data management across retail and payments. The firm processes five billion data exchanges every day, through a mind-boggling array of 1,500 interwoven APIs.

Sensedia is working to make such bristling API armouries the norm. One of the firm’s first customers, the Panvel drugstore chain in Brazil, now uses an integrated, API-enabled sales system across all its 600 stores – hugely helpful in responding efficiently, and nationwide, to the novel medicinal demands of the coronavirus. Panvel also use lockers – in airports, gyms, and colleges – for ‘click-and-collect’ style deliveries. Thanks to smart APIs, the average delivery time to these locations is just 35 minutes.

It’s mind-boggling achievements such as these that have prompted surging interest in the wonderful world of APIs. At the start of this year, 71 per cent of the 200 US organisations interviewed for an IDC report said they planned to triple their use of APIs in 2020. Since then, supply chain bottlenecks and order backlogs have emerged from the shadows of the back office to command centre stage in our pandemic-panicked world. Smart APIs have found their moment in the spotlight.

Still, Tempestini is clear that each API integration requires a sound business case. “What we know for a fact is that your API strategy must be built upon your business strategy,” says Tempestini. “It’s your business strategy that is going to dictate where APIs are going. You need to build your API strategy on top of your business strategy to generate value out of your API strategy.”

When utilised right, there’s no limit to the richness of the API ecosystems that firms might build. “We’re seeing retailers integrating with financial services – being able to provide loan services or credit,” says Tempestini. “That’s going to transform, big-time, the way that businesses are interacting with each other.

“We’re creating bigger ecosystems; retailers are no longer competing only with other retailers, but ecosystems compete with other ecosystems, and the competition becomes much, much bigger in the process.”

Sensedia maintains a vision of the world that has APIs swirling energetically at its core. For these API experts, data should move at the speed of light – not the speed of fingers on a keyboard. For Sensedia, every digital payment should be its own ‘super-spreader’ of internal information: pinging between interlinked applications – from supply chain management to delivery agents – to optimise business efficiency, banishing the bottleneck to retail’s manual past.

This article was published in The Paytech Magazine #07, Page 76-77