Peter Campbell has published an N-TEN article called Seven Questions for Peter Campbell on Open APIs. The article tries to answer some common questions about software and their open APIs. It's a good read and provides a high level look at the subject.
In short, open APIs enable customers to extend their software to better meet the needs of their organization. To me, this is one of the most important features software can have. This is especially true if you're part of a growing organization, because you never know what your software needs will be in the future. Here are some examples of things that open APIs can provide:
Third-party development: Other software companies can build retail software that can extend or integrate with the APIs . For example, Quickbooks has an open API which allows other software to synchronize accounting records with it.
User-interface customization: Customize the way the software works. For example, with GiftWorks, if you want to install it for your data entry people and don't want them to use the Reports or Mailing section you can use the APIs to remove those sections. Or if you want to be able to store and display a picture of your donors within the software, good APIs would allow you to add that functionality.
Website integration: Give your web server the ability to present data that is stored in your donor database. For example, if your organization wants to allow their donors to change their information through your website, good APIs would give your website developers the ability to do that.
Data access: Move data into and out of your database using different sources. For example, if you have an Excel spreadsheet that you use to collect information in your laptop when you are on the road, good APIs would allow you to synchronize that spreadsheet with your database when you are back in the office.
Automation: Have certain functionility of your software happen automatically. For example, if you have a Membership Renewal field in your software, good APIs will enable you to have your software automatically send you an email of expired memberships at the end of every week.
Web service integration: Leverage other web sites or services to extend the functionality of your software. For example, you can use the Google Maps web service to plot a map with your top 100 donors.
Notice I used the term "good APIs" above. Not all APIs are created equal and they should be evaluated when deciding on which software to purchase. Also, most APIs require some programming knowledge. If this knowledge is not available within your organization, it is available outside using consultants.
A note about GiftWorks and open APIs... GiftWorks was designed and developed from the ground up with open APIs in mind. All the scenarios I listed above, and more can be done with GiftWorks *BUT* until we are able to release documentation and examples of using the APIs (also called a Software Development Kit (SDK)), it is still out of reach for our customers. Our SDK is a high priority for us and we are commited to supporting a development community around the GiftWorks SDK. Hopefully you won't have to wait too long.