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Internal vs. External APIs Does it Matter - Document360

Internal vs External APIs – Does it Matter?

Category: API Documentation

Last updated on Jun 8, 2023

Internal and external APIs differ in their audience and usage. A company’s internal stakeholders use internal APIs as part of their job role. The goal is to increase productivity and efficiency internally. External APIs generate revenue, build a company’s brand as an open-source product, or improve the API.

This article discusses the differences between internal and external APIs.

Public APIs/External APIs

Businesses use public APIs to provide a standardized and secure interface for the public to access their data to build applications. They are exposed to public stakeholders such as external developers, third-party vendors, and customers and accessed over the Internet using HTTP protocol. External APIs provide specific functionalities or services, such as accessing data or performing transactions.

Some takeaways for external APIs:

  • exposed to the public
  • used more than internal APIs to create user interfaces
  • generate revenue or increase brand awareness
  • gather usage metrics to improve the API
  • manage interactions between backend components
  • helps to integrate with other business applications

Internal APIs

Internal APIs increase operational efficiency. Companies use internal APIs to access sensitive internal systems and data that the company doesn’t expose to the public. Unlike public APIs, internal APIs’ functionality is highly-specific and not meant for general usage. Internal APIs are rarely used to create user interfaces.

Companies use internal APIs as an interface for components built by different organizational dev teams that work on separate components. In addition, they use internal APIs as the interface that allows communication between components. Companies also create APIs as standalone components that fulfill a specific functionality rather than only being ‘connectors.’

Some takeaways for internal APIs:

  • not exposed on the Internet
  • created and used inside of a company or dev team
  • may provide access to sensitive data to internal stakeholders
  • focuses on discreet functionality rather than ‘general usage.’
  • used to connect components in microservices architectures
  • deal with connecting backend services rather than creating user interfaces

Public APIs/External APIs – Pros

Revenue

Public APIs have the potential to generate revenue by exposing data to third-party app developers.

Brand Awareness

Businesses can improve their brand awareness by making their APIs public, whether the API generates revenue or not. Furthermore, since APIs are fit for a general audience, their reach can extend beyond developers to business stakeholders and citizen developers.

Community Building

Companies can foster a growing company around their public API. The community can suggest new functionality and provide a continuous feedback loop for every release.

Innovation

By exposing your data publicly, third parties can innovate in ways not initially intended by the API developers. Third-party developers can integrate your product with other business apps, thus enriching your application ecosystem.

Scalability

APIs provide a standard interface for third parties to access a company’s data. A standard interface allows companies to scale without spending significant resources to support new users. A unified interface also means that companies do not need to create custom solutions that are hard to maintain.

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Public APIs/External APIs – Cons

Security Risks

Public APIs are a security risk if they are not adequately monitored and secured. While necessary security could be in place, there is always the risk that a user can exploit vulnerabilities in APIs to gain access to data. Therefore, companies should have a transparent process for reporting security vulnerabilities and performing security screenings.

Dependence on Third Parties

The popularity of the applications built using an API determines if the API is successful. When more customers use the API, its value and adoption increase.

Increased Complexity

Internal APIs are tailored to a company’s internal needs, while public APIs must cater to a general audience and support many use cases and third-party applications.

Support and Maintenance

Public APIs require ongoing support and maintenance to ensure stability, security, and reliability.

Legal and Regulatory Compliance

They must follow legal and regulatory compliance requirements that internal APIs are not subject to. Remaining compliant adds complexity to the maintenance of API.

Internal APIs – Pros

Enhanced Security

Unlike public APIs, companies host internal APIs on an internal network behind a firewall. As a result, you can restrict access to only authorized users within the company and applications used by the company.

Better Control

Internal APIs give companies control over who has access to what functionalities and data in an organization.

Flexibility

You can focus on creating APIs that meet the company’s specific needs.

Reduced Costs

Internal teams can create APIs to solve their problem and save money by not adopting a third-party API.

Internal APIs – Cons

Limited Exposure

By not exposing APIs to the public, companies cannot take advantage of opportunities to generate revenue, increase brand awareness or gather usage metrics that feed back into improving the API.

Limited Resources

Private APIs usually need more resources to support and grow them because they do not generate revenue. A company’s profit-generating products typically take priority over them, which results in an API not being maintained and updated.

Unsupported internal APIs lose effectiveness over time as internal developers stop trusting their output and may choose a better-maintained third-party API that performs the same function. That is why internal APIs should be as simple as possible so they are easier to maintain.

Low visibility

Another factor contributing to the low resources is a need for more visibility, particularly to business stakeholders. Internal developers need to communicate the value of an internal API to business stakeholders and managers so they can provide the necessary resources to maintain it.

Limited Use Cases

They usually connect backend resources that are less valuable to non-developer stakeholders. However, with the support of business users, the internal API can evolve to support other kinds of users in the organization.

Lack of Innovation

Internal APIs not exposed to the public may never achieve their full potential by allowing third parties to use them in new and creative ways. Non-innovative internal APIs may motivate developers to adopt a comparable public API.

What is API Management?

API management is designing, publishing, monitoring, and securing application programming interfaces (APIs) that developers, customers, and other stakeholders use to access a company’s software and data.

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Why is API Management critical?

API management is essential for both internal and public APIs. However, before we show how to manage them differently, let’s review why API Management is critical.

Security

API management helps implement authentication and access controls, encrypt data, and monitor for security. These factors protect sensitive data and prevent unauthorized access.

Reliability

API management ensures that APIs are reliable through analytics that provide real-time data on usage patterns, user behavior, and performance metrics. As a result, companies can identify potential issues, such as performance bottlenecks and errors, and address them before they become significant problems.

Scalability

Developer tools and documentation make using the API easy for third-party developers. In addition, it’s scalable because, with proper resources in place, the API becomes self-service.

Cost savings

Providing standardized APis is cost-efficient because you do not need to maintain custom integrations for each customer.

API Management Best Practices

API management involves several key steps that can help ensure APIs’ security, reliability, and scalability. The following are some best practices for managing APIs.

Effective Design APIs

It would be best if you designed APIs that are reliable and scalable. Defining endpoints, data formats, and authentications is part of effective API design.

Document APIs

API users need resources to help them understand the API, including reference documentation, conceptual documentation, code samples, tutorials, and other development tools.

Test APIs

You must subject APIs to rigorous testing to ensure it functions as expected. Testing includes functional, performance, and acceptance testing.

Publish APIs

Publishing exposes the API to its intended users, whether internal or external. Public APIs are usually published using an API Management platform that exposes the API to customers. These platforms provide customers access to resources like documentation and developer tools to help them understand and experience the API.

Discover APIs

There is a misconception that discoverability is only essential for public APIs. However, APIs must be easily discoverable to internal and external stakeholders. Unfortunately, creating user interfaces to search and filter APIs requires resources that internal APIs usually need more. Therefore, a business should consider if an internal API has the potential to become ‘public’ in the future and, if so, invest in its discoverability appropriately.

Secure APIs

It would help to implement proper authentication and access controls for an API to be secure. For public APIs, API gateways manage API security by authenticating users, encrypting data in transit and at rest, and monitoring security threats.

Manage access

You must implement authorization policies that control who can access your API and what privileges they are assigned.

Monitor APIs

For public APIs, you can leverage an API management platform’s analytics to gather real-time usage data on how the API performs. Such platforms identify issues preemptively, such as errors, performance bottlenecks, and security threats.

Gather Analytics

You should capture and analyze data to gain insights into usage patterns, user behavior, and performance metrics. As a result, you can use these insights to optimize performance and improve the developer experience.

Update APIs

To build trust with your API users, you should update APIs regularly to signal to users that your API is well maintained and incorporates feedback.

Management Strategies: Internal vs. Public APIs/External APIs

Now that we know the basics of API Management, let’s discuss how internal APIs are managed differently from public APIs.

Authentication and Access Control

Public apps have more stringent authentication and access control. Public APIs need to integrate a service like OAuth 2.0 for authentication and, in many cases, require users to register API keys to identify their requests.

Documentation and Developer Tools

Public APIs require more resources for developers, like extensive documentation and developer tools. In addition, public APIs often need to cater to non-technical business stakeholders, whereas private APIs are usually for backend services.

Monetization

Public APIs, if used to generate revenue, need a monetization model, which requires another management layer. Usually, charging occurs based on API usage, tiered pricing plans, or taking a part of the revenue generated by third-party apps.

Performance and Scalability

Public APIs must be highly performant and scalable to handle many platform users simultaneously. Internal APIs, on the other hand, are usually limited to a small number of users compared to public APIs so that they can accommodate less stress.

Analytics and Monitoring

Gathering analytics is essential to improve a public API, but it adds another layer of complexity. Internal APIs benefit from analytics but less so. Internal APIs are more predictable and controlled.

Also, check out our article on API Strategy

Documenting Internal and Public APIs/External APIs

Writing Internal API documentation is slightly different from writing public API documentation.

Internal API documentation usually includes more detail since it is specific to the skills and knowledge of internal dev teams.

A broad audience reads external documentation. Businesses consider their users’ varying technical competencies when writing public API documentation. Topics included in public API docs (and not included in internal API docs) include authentication requirements, rate limits, data formats, and error codes.

Public API documentation provides more security considerations like user authentication and storing sensitive data. On the other hand, internal APIs are more secure and do not require an architecture for interfacing with the public. As such, the focus is more on how to use the API to connect internal system components.

Businesses publish public API documentation to a dev portal that gives online resources for understanding the API available to the public. Internal API documentation is traditionally published using a tool like Swagger and is only available on the company’s intranet.

Public and internal API documentation differ in the amount of detail they provide, the security information provided, and how the documentation is accessed.

Also, check out our article on SwaggerHub Alternatives

Wrapping Up

Whether an API is public or internal is determined by its audience and usage. Each has advantages and disadvantages that businesses must weigh when developing an API.

Public APIs have the potential to generate revenue, improve brand awareness, promote community building and innovation, and increase scalability at the expense of security, increased complexity, and ongoing support and maintenance.

Private APIs offer enhanced security, increased operational efficiency, more access control, and more flexibility at the cost of limited exposure, reduced resources, limited visibility, and less usefulness to a broader audience.

Ultimately public APIs have the advantage of a feedback loop with the general public to improve them.

Overcoming the ‘cons’ of internal APIs requires companies to prioritize the maintenance of these functionalities and how the products that generate revenue rely on them. Internal APIs need advocacy that they are worth spending resources on to get buy-in from business stakeholders and managers. Companies should consider when assigning resources whether the API has the potential to become public in the future.

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Frequently Asked Questions

  • What is an external api?

    An external API is a software interface provided by a third-party service that allows developers to integrate their applications with external systems. It enables access to functionalities and data of the external service, facilitating seamless integration and expanding the capabilities of applications by leveraging external services and resources.

  • An internal API is a set of protocols and tools that enable seamless communication and data exchange within an organization’s internal systems. It facilitates integration between internal applications, allowing them to share functionalities, access shared data, and streamline processes, ultimately enhancing overall organizational efficiency.

  • Examples of external APIs: PayPal, Stripe (payments), Facebook, Twitter (social media), Google Maps (mapping), Open Weather Map (weather), SendGrid, Mailchimp (email). These APIs enhance applications with external functionalities and data.

  • Examples of internal APIs include microservice communication APIs, CRM-ERP data sharing APIs, and integrations with internal tools like authentication systems, analytics platforms, and communication channels. These APIs enable efficient communication and streamline processes within an organization’s internal infrastructure.

Mark Wentowski

Apr 30, 2023

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