Files have been the preferred format for exchanging data between two companies for several decades but is it still the most effective way of exchanging data? Companies have evolved to a point where they need more than a file based information exchange. An alternate model is emerging; APIs present a new model different from file based B2B data exchanges.
Exposing APIs(Application Programming Interface) to Partners presents a model which has several benefits over a file based exchange. There is no need to extract data in a file and send the file to Partners, the system of record can invoke the API directly to send the data over to suppliers or customers.
Files are used widely as they provide a structure to capture data, give it a name and process it downstream. Every operating system understands 'files' and is able to handle information contained in files. Moreover files are flexible, they can be of different sizes and contain information, media or even encrypted data.
The rules of the game are changing and everyone needs their systems to become more responsive and agile. Once you send the file out (say Purchase Orders) to Supplier and keep waiting for their response (again a file)to see if they can fulfill the order or not. In the API world you can just invoke the Supplier's API programmatically to send Orders and see to see if they can fulfill them or not. Some benefits of using APIs compared to file oriented B2B exchanges:
1. Companies have more control over how API works. Partner can keep using the same interface but you can change the behavior internally as needed keeping the changes transparent from the Partner.
2. APIs are easy to monitor and their lifecycle is easier to govern. Moreover you control who gets what kind of access users get which helps in broadening the usage and widening the audience. An API for example can be used both by internal users and external partners but the usage and behavior can be slightly different depending on who is invoking it.
3. APIs are a better citizen in BPM (Business Process Management) driven world. Companies trying to automate and orchestrate processes can tie in Partner APIs and invoke them just as they invoke their internal APIs. This takes the Partner collaboration to a whole new level.
There are scenarios where using APIs for B2B Integration makes more sense and there are cases where it does not. But APIs do provide a viable alternative to file based exchanges. APIs can also be used to exchange files as payload and can actually improve file oriented B2B exchanges. With the files so engrained in the B2B exchanges, it may take time for API based B2B Integration to catch up but it is definitely here to stay.