Announcing the 2024 State of API Consumption Management Report (+ 5 main trends you should know)

I am thrilled to announce the release of our inaugural report, “The 2024 State of API Consumption Management: Challenges & Trends in Consuming Third-Party APIs.”

This is a major milestone for us at Lunar. It is our first report and the result of months of hard work, and it represents a significant contribution to the API industry.

Also, this report is the first of its kind, focusing exclusively on the consumer side of APIs and providing invaluable insights for businesses navigating the complex landscape of API consumption.

^{The First Comprehensive Study on API Consumers}‍

While many reports have delved into the provider side of APIs, our report breaks new ground by spotlighting the consumers.

We surveyed 200 companies, gathering detailed data on their experiences, challenges, and successes in managing API consumption. It’s a snapshot of the state of API consumption management from the consumers’ point of view.

This report offers insights for refining third-party API governance and management strategies, examining the entire API journey. We hope these findings advance innovation in API management practices for the entire API community.

The data shared is an essential resource for any organization looking to optimize their API strategies and stay ahead in the digital economy.

Why API Consumption Management is Critical in 2024

API consumption management is becoming increasingly important, and 2024 is set to be a pivotal year. According to Gartner’s Hype Cycle, APIs are integral to the adoption of AI and Large Language Models (LLMs).

The API market has evolved tremendously in recent years, with a primary focus on ingress traffic and API providers. As API usage matures and AI usage soars, software architecture needs to catch up. Consequently, more companies are becoming reliant on egress traffic and APIs, necessitating a more strategic approach to API consumption management and tools.

As businesses leverage these advanced technologies, efficient API consumption management is essential to harnessing their full potential.

APIs are no longer just a product-specific concern; they are integral to the broader company structure and scalability. This shift underscores the increasing involvement of architects in API strategies, ensuring that APIs are effectively integrated across the organization.

The Role of Architects in API Consumption

As APIs evolve from a product-focused issue to a company-wide structural and scalability concern, the role of architects has never been more crucial. Architects are now key players in ensuring that APIs are seamlessly integrated into the company’s infrastructure, supporting scalability and driving innovation. 

Their involvement is essential in addressing the complex challenges of API consumption and ensuring that the organization’s API strategy aligns with its overall business objectives.

However, the results indicate that organizations aren’t prioritizing the strategic monitoring and management of their APIs and lack the appropriate tools to do so. 

Consequently, too much time and effort are absorbed in the everyday work of developers, with 36% of companies reporting that they spend more time troubleshooting APIs than developing new features. While APIs drive innovation, the survey shows that without proper management, multiple integrations require significant attention and maintenance.

The complexity of maintaining third-party APIs often leads to security risks, hindered performance, and higher operational costs. This underscores the need for dedicated tools and strategic management to optimize API usage and enhance overall organizational efficiency.

Key Insights from the Report

API Troubleshooting Drains Time and Budgets

Besides the direct cost of API consumption, which is a major challenge for companies incorporating AI and LLM APIs, there is a hidden incremental fee associated with API maintenance and troubleshooting.

Sixty percent of companies claim they spend too much time troubleshooting APIs. Additionally, 88% of companies report troubleshooting API issues on a weekly basis, with 33% documenting issues a few times a week.

Furthermore, 36% of companies claim they spend more time troubleshooting than developing new features.

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This indicates a significant cost to company innovation and developers’ time allocated to addressing existing API issues.

The lack of governance and infrastructural solutions results not only in product vulnerability and inflated API costs but also in a substantial decrease in developer productivity and focus.

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The Need for Clear API Ownership (And Why Architects Should Be the Natural Candidates)

The way companies rely on and use APIs has changed and will continue to evolve over the next few years. With AI accelerating this process, managing and optimizing APIs will increasingly become a cross-company effort rather than the responsibility of a specific application or integration team.

There is already an increase in companies using the same API keys to cater to different environments and services across departments. However, in many companies, the ownership of these keys is not clear.

For example, when asked who is responsible for resolving API integration problems (Multiple choice question), platform team came up 36% of the time, similarly  36% said the integration team, and 32% indicated the application engineer. The bigger issue is that most companies chose more than one option, including team leads, DevOps, IC, etc., indicating no clear owner.

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API consumption impacts companies across the board, affecting product, business, and engineering productivity. In the future, building a full-journey API stack within a company will require a clear owner. The role of the architect will be pivotal and crucial in this emerging landscape.

Flexibility to Scale: Key Challenges in API Consumption

While only 15% of companies identify cost-effectiveness as a major challenge in API consumption, 57% consider the flexibility to scale up or down as needed to be their primary concern.

As products scale and consumption increases, more issues arise, particularly during peak traffic events. To handle these surges, companies need greater flexibility but are often constrained by rate limits and costs.

Regarding API troubleshooting, 29% of engineering teams highlight scalability challenges as their core concern. Security ranks fourth, with only 11% citing it as a major issue.

(Going off-script for a moment, our CTO, Roy Gabbay, remarked that security likely ranked fourth because the survey focused on engineering personas, who may not prioritize security as much. However, this is an important trend that must change moving forward.)

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When a company experiences scalability issues within its own infrastructure, there are numerous methods to scale the infrastructure they manage—basic DevOps practice. But when it comes to third-party vendors and something goes wrong, there’s usually little you can do beyond contacting vendor support.

This problem is magnified tenfold when your product consumes your customers’ APIs. In such cases, you can’t even call the provider to debug the issue with them.

The Rising Importance of API Consumption Management Prioritization

Currently, 95% of companies consider API maintenance a priority. However, only 33% view it as a high or very high priority, while 62% see it as a moderate priority, and 5% do not consider it a priority at all.

As APIs becomes increasingly central to product and business development, this perspective is likely to change.

Companies that do not prioritize API maintenance will face greater security vulnerabilities, latency issues, and poor product performance. Additionally, they may overpay for API consumption, which will become a more significant problem for businesses, especially with the growing importance of AI and LLMs.

The Future Lies in Third-Party Solutions

The lack of proper tooling results in bloated API costs, unstable products, and expensive developer time allocation.

47% of companies agree that advanced API management tools to help manage errors in production could significantly reduce their overhead costs. However, most tools focus on ingress traffic and lack the features needed to support proper API consumption.

No company relies on a single sufficient solution; instead, they use multiple solutions to deal with API issues. For example, 38% of companies mention endpoint performance monitoring as their primary third-party API maintenance concern. Meanwhile, 54% report fixing the code in the service that originated the request, and 40% rely on purchased external solutions.

Clearly, there is still much room for optimization. Third-party tools, such as Lunar.dev, offer full API consumption visibility and optimize API calls through caching, throttling, and delayed queues for managing third-party APIs, providing faster responses to business needs.

When asked about the primary advantages of API consumption optimization, 42% mention improved cost-effectiveness, 35% cite faster responses to organizational needs, and 29% highlight improved integration with existing systems.

In addition to optimizing API usage, third-party tools help companies save time and resources on troubleshooting.

Read the full report

I invite you to explore the full report to gain a deeper understanding of the current state and future trends in API consumption management. 

The “2024 State of API Consumption Management” report is free, ungated and live for you to explore on the website. 

The report also includes the full methodology used, additional insights and resources. 

If you have any questions or inquiries, you are more then welcome to tweet at us or send me an email personally. 

Stay tuned for more insights and updates as we continue to explore the evolving landscape of API consumption management.

If you have any questions or would like to discuss the report’s findings in more detail, please feel free to email me!

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