What is API integration? (The Complete Guide)

As businesses adopt more sophisticated software for their operations, they are bound to be surrounded by APIs. Essentially, APIs or Application Programming Interfaces refer to a set of protocols, definitions and models based to facilitate communication between software components. Today, over 90% of the developers use API. There are different types of APIs that are under use today, including REST, GraphQL, SOAP, etc. While there are several factors driving the increased use of APIs for software companies, a study shows that 49% companies leverage APIs to facilitate platform and system integration. Thus, API integration has become increasingly sought after for organizations that use multiple applications and wish to integrate them for seamless use. Through this article, we will discuss different aspects of API integration, its growth, benefits, key trends and challenges, as well as the growth of unified API for seamless integration. 

What is API integration?

On a broad level, API integration refers to the connection between two applications, through their APIs, to facilitate data exchange in a frictionless manner. API integration helps the APIs of different applications to communicate with each other, automatically, without human intervention, by adding a layer of abstraction between the two. It allows two applications or systems with APIs to interoperate in real-time and ensure data accuracy for exchange. 

Since the applications you use cannot achieve their full potential in silos, API integration ensures that they can establish a secure, reliable and scalable connection which prevents an unauthorized exchange of data, but enables them to talk to each other. 

Difference between API and integration

While API integration is used for data exchange between applications based on APIs, it is important to understand that individually, API and integration are not synonymous terms. API or application programming interface essentially allows applications to communicate with one another. This could be for data and information exchange or other purposes. 

Integration, on the other hand, is a code or a platform that allows applications or systems to exchange data. This can be a one-way or a two-way exchange, depending on the need and application expectations. 

Generally, in an API integration an external API acts as a connection point when it comes to API integration to ensure that any system or application can connect to the other and access data. However, both APIs and integration can exist exclusively as well, where APIs can have use cases beyond data exchange like connecting subsystems within an application and integrations can follow other ways than purely relying on APIs. 

Importance of APIs in integration

Before we delve deeper into the benefits of API integration, how it works, etc. let’s quickly look at how APIs play an important role in the integration ecosystem for businesses. APIs enable businesses to reorganize and establish such a relationship which allows them to interact as per business needs. This allows companies to achieve a high level of integration at lower development costs. They essentially act as a connecting thread, which is critical for integration. 

Growth of SaaS API integration ecosystem

The last few years have seen a significant growth in the use of APIs across SaaS and other applications that businesses use. Let’s take a quick look on the growth of the API ecosystem:

• More than 90% of executives indicate APIs as mission-critical
• Companies that used APIs reported 12.7% more growth in market capitalization compared to those that did not adopt APIs
• 2 Million+ API repositories exist on GitHub
• 56% of developers report APIs help them develop better products
• 40% of large organizations have 250+ APIs and 71% plan to use even more APIs
• 64% are developing their API program or strategy

This clearly indicates that the growth of APIs in the SaaS ecosystem can be expected to see an exponential increase, with increased adoption and an expectation to streamline integration between applications for businesses. 

The API first economy

For a long time, APIs were considered as an afterthought to product development to facilitate connection between applications. However, as the pace and volume at which applications need to connect with one another in today’s digital ecosystem, companies are moving towards an API first economy. Put simply, API first is a form of product development which puts the development and eventual usage of APIs as the central or the core focus area for engineering, while other objectives follow. In an API first economy, the goal is to develop APIs which are reusable, scalable and eventually extensible. 

Characteristics of a good API

In a discussion about APIs, it is very important to understand what are the characteristics of a good API, which can eventually facilitate API integration with ease. 

Consistency

First, a good API is one which is consistent. This is especially important when you are working with multiple APIs. Factors like security and data models must be consistent across APIs and they follow a standardized method of development along with a uniform experience for all users. 

Documentation

An API without strong documentation can only achieve limited success. Irrespective of whether the APIs are for internal use or for external API economy, documentation is extremely important. From an internal perspective, documentation ensures maintenance of continuity in case one developer takes over from the earlier one. From any external API, documentation can help third parties understand protocols, data logic, models etc. making it easy for them to integrate and leverage the impact. 

Security

A key characteristic of any API is the security it brings along. As the end point responsible for data transfer and exchange, API security is extremely critical for business resilience. Some of the security factors include HTTPS/SSL certificates, authentication and JSON web tokens, authorizations and scopes, etc. 

Discoverability

A good API is easily discoverable. This suggests that it is so intuitive that users can learn how to use it on their own. More often than not, users prefer to try and play around the APIs before they contact the customer care for the application or go through the manual. Here, simplicity in design and documentation with self-describing access points is a key feature for APIs. 

Abstraction

Essentially, APIs add a layer of abstraction which prevent the users from seeing what is going on at the backend. For instance, if a payment is underway, APIs ensure that verification and other parts of the cycle are not visible to the user. APIs internally interact with each other to make everything happen. A good API ensures that the objective is achieved without the need for a user to understand what happens in the code or execution. 

API integration process 

The API integration process involves a series of steps which ensure that businesses are able to integrate different applications and systems using their APIs. The steps including:

• Understanding and researching on the type of APIs you will be using (REST, SOAP, etc.), the type of format in which you will be receiving the data which needs to be exchanged between different applications (XML, JSON) and check on the availability and comprehension of detailed documentation for different APIs to ensure how to format requests based on the data available. 

• Next you need to figure out how the data will flow from one application to another. Here, the focus needs to be on identifying the right authentication and security protocol, like OAuth. At the same time, you need to gauge if authentication and authorization needs to be a one time task or needs to be undertaken every time there is a data exchange.

• Following this, you need to understand how data mapping will take place. This involves figuring out how to normalize data from different applications into a standardized format or model which can easily be mapped against different applications. 

• The API integration process comes to a melting point when you have the basic parameters in place and you enter the code development, deployment and testing phase. Focus on development and use case testing to ensure effective authentication and security, robust data mapping and stress tests when there is an unusual disruption/ flow of data to ensure that your API integration doesn’t break. 

If you follow this API integration process, you can create API integrations in-house to support application connectivity and data exchange. 

How API integration works

Let’s quickly see how an API integration works. It involves connecting two applications via their APIs which can then request and send data across. A quick example of how an API integration works is as follows. 

Suppose you have a CRM and a marketing automation platform If these two applications are connected by their APIs, i.e. via API integration, an update in the status of any lead in the CRM will be reflected in the marketing automation platform. This will allow your marketing team to automatically customize the messaging for the lead based on the updated status. Similarly, if after a campaign, the lead’s engagement status changes, the same will be reflected in the CRM. This will ensure that the status of a lead is uniform across all applications.  

API integration checklist 

If you are building an API integration, it is important to ensure that you don’t miss out on the key elements or parameters which can determine the success of any integration. The following quick checklist can help you stay on top of your API integration process:

• Check data mapping for different formats of data you are dealing with
• Get information on different API systems
• Gather API documentation
• Determine flow of data
• Decide on security and authentication protocols
• Determine hosting- on-premise or cloud
• Obtain API key and select supported data formats
• Gauge maintenance and support required
• Undertake consistent monitoring and testing

API integration management

API integration is not simply about building and deployment, but involves constant maintenance and management. API integrations require comprehensive support at different levels. 

First, you need to constantly refresh the data to ensure real-time availability and data synchronization. Invariably, you will set a data synchronization frequency and number of API calls that can be made. However, exceeding those calls can lead to API integration failure which needs management support. 

Second, in terms of API integration management, you need to align on the data storage needs and how you seek to address them to store the volumes of data that are exchanged across applications. 

Third, API integration management needs to ensure that any updates or upgrades to individual APIs are reflected in their integrations without disrupting the flow of work. Maintenance involves finding and updating changes in API schemas before anyone notices. 

Finally, APIs can and do fail, which requires immediate error handling support and communication. Thus, API integration management is as important and engineering bandwidth as building and deployment and can impact the success of the overall integration experience and effectiveness. 

How much does an API integration cost?

The cost of an API integration essentially depends on the compensation for your engineering team that will be involved in building the API integration, the time they will take and whether or not the full access to the API for the application in question is available freely or comes at a price. 

In case the API is freely available, the estimated cost of an API integration can be considered as the following. Generally, three resources from the engineering team are involved in building an API integration. A Developer at a compensation of 125K USD, a Product Manager at 100K USD and a QA Engineer at a salary of 80K USD. Each one of these apportions a segment of their time towards building an API integration. 

Secondly, an API integration can take anywhere between 2 weeks to 3 months to build, averaging out at about four weeks for any API integration. In such a scenario, an API integration cost stands at 10K USD on an average, which can go higher if the time taken is more or if you need to hire an engineering team just for building integrations with higher compensation. Similarly, this will increase if the APIs come at a premium cost. You can multiply the average cost of one integration with the number of integrations your company uses to get the overall API integration cost for your business. 

How to learn API integration?

If you are just getting started in your API integration journey, there are specific lessons that you must learn to ensure that you are able to achieve the quality of integration you seek. Follow these practices to start your API integration learning:

• Understand you API integration requirements
• Learn about different API, data formats, security protocols and authentication methods
• Review API documentation
• Get the API key and request API endpoint
• Learn a programming language to code the API integration
• Learn how to create data sets and data models and normalization
• Get support from community of developers working on API integration

Benefits of API integration

While there are several ways businesses today are leading integrations between different applications they use, API integration has become one of the most popular ways, owing to the several benefits it brings for developers and business impact alike. Some of the top benefits of API integration include:

Reduced human effort

To begin with, API integrations significantly reduce the human effort and time your team might spend in connecting data between different applications. In the absence of API integration, your team members would have to manually update information across applications, leading to unnecessary efforts and wastage of time. Fortunately, with API integration, information between two applications, for instance, CRM and marketing software, can be directly updated, allowing your team members to focus on their functional competencies and expertise, instead of updating data and information. The interoperability brought along with API integration ensures that data is automatically exchanged, in real- time, leading to added efficiency. 

Increased accuracy

A related benefit from the first one is the concern with manual errors. If one team member is expected to update several applications, there are chances of human error. Especially as and when the data becomes voluminous and has to be shared between multiple applications, it can lead to inaccuracies and inadequacies. However, with API integration, data exchange becomes accurate and free from human error, ensuring that all data exchanged is in usable condition and compatible to all applications involved.

Build complementary capabilities

API integrations help businesses leverage capabilities from other applications, while allowing them to focus on their core expertise. Conventionally, businesses focused on building everything in their application from scratch. However, with API integrations, they can rely on the complementary functions of other applications, while focusing on only building strengths. It relieves considerable engineering bandwidth and effort which can be used to develop core application features and functionalities. 

Leverage applications better

When data is exchanged between applications, the usability of different features and benefits from different applications increase. As they have additional data from other applications, their potential to drive business benefits increase significantly. For instance, if you are using a marketing automation platform to run campaigns for your product. Now, if you get user data on how they are interacting with the product, how engaged they are and what their other expectations are, you can create a customized upselling pitch for them. 

Thus, with API integration, data exchange not only makes business more smooth and efficient, but also helps you explore new business cases for the different applications that you have adopted, and at times, even identify new ways of creating revenue.  

Greater security

APIs have a strong security posture which protects them from threats, flaws and vulnerabilities. API integrations add a security layer with access controls which ensures that only specific employees have access to specific or sensitive data from other applications. API integration security is built upon measures of HTTP and supports Transport Layer Security (TLS) encryption or built-in protocols, Web Services Security. API integration can also help prevent security fraud that might occur during data exchange between two applications or if one application malfunctions. 

With the help of token, encryption signatures, throttling and API gateways, API integration can help businesses securely exchange information and data between applications. 

API integration and customer exp

In addition to the above mentioned benefits of API integrations, it is interesting to note that API integration has a positive impact on customer experience as well. There are multiple ways in which API integration can help businesses serve customers better, leading to greater stickiness, retention and positive branding. Here are a few ways in which API integration impacts customer experience:

Customized customer experience

By integrating data about customers from different sources, companies can customize the experience they provide. For instance, conversations with the sales team can be captured and shared for marketing campaigns which can exclusively focus on customer pain points rather than simply sharing all product USPs. At the same time, marketing campaigns can be directed towards customer purchase patterns to ensure customers see what they are interested in.

Reduced inter departmental hand-offs

API integration ensures that customer data once collected can be shared between different departments of a company and the customer doesn’t have to interact with the business multiple times. This also ensures that there is no error in multiple data exchanges with the customers, leading to an accurate and streamlined manner of interaction. Thus, with API integration, customer interactions become more efficient and with reduced errors. 

More customer penetration

API integrations can help businesses penetrate into new markets and address customer demands better. Since they ensure that businesses don’t have to build new functionalities from scratch, they can enhance customer experience by focusing on their core capabilities and providing additional functionalities with API integration. Thus, API integration helps businesses meet the growing demands of customers to prevent churn or dissatisfaction with lack of functionalities. 

Reduced context switching

API integration ensures that customers can access or exchange information between different applications easily without switching between applications. This significantly reduces the friction for customers and the time spent in toggling between different applications. Thus, a smooth customer experience that most expect ensues. 

API integration examples

Now that you understand why API integrations are important, it is vital to see some of the top use cases for examples of API integration. Here, we have covered some areas in which API integrations are most commonly used:

E-commerce platform

E-commerce companies extensively use API integration to fuel their work and operations. On the one hand, there are applications or interfaces which  are responsible for inventory management. On the other hand are those which take care of order suppliers and order management. At the same time, a CRM API might be needed to manage records of customers and their important details. While all of these applications have APIs, API integration can help connect them to unify and streamline data access. 

Payment gateway

Another popular use case for API integration is payment gateways. Whenever a customer makes an online payment, API integration at the backend gets activated to check the bank/ credit/ debit card details for the use to prevent any fraudulent transactions. 

API integration challenges

While API integrations have several benefits that can significantly help businesses and engineering teams, there are a few challenges along the way, which organizations need to address in the very beginning. 

Not all API functionalities are freely available

To begin with, not all applications provide all functionalities in their application for free to all users. While some might have an additional charge for API access, others might only provide APIs to customers above a certain pricing tier. Thus, managing 1:1 partnerships with different applications to access their APIs can be difficult and unsustainable as the number of applications you use increases. 

APIs can fail

When you are using API integrations, each component of your business is dependent on multiple applications. It is normal for APIs to fail or stop working once in a while. Factors such as uptime/ downtime, errors, latency, etc. can all lead to API failure. While individually, API failure may not have a big impact. However, when you have multiple applications connected, it can break the flow of work and disrupt business continuity. Especially, if you are offering API integrations along with your product to the client, API failure can lead to business disruption for them, resulting in a poor customer experience. 

Some API integrations require deep tech

While most API integrations focus on facilitating data connectivity and exchange between applications, there might be a requirement from integrations to analyze the data from one application and filter it out for different fields/ understanding for the next application. However, simple or conventional API integration cannot achieve this, and this will require some external developer bandwidth to achieve the deep tech functionalities. 

APIs can lack compatibility

Each application or integration has its own data models, nuances and protocols, which are unique and mostly different from one another. Even within the same segment or category, like CRM, applications can have different syntax or schemas for the same data field. For instance, the lead name in one application can be Customer_id while for another it can be cust_id. This might require developers to learn data logic for each application, requiring unnecessary bandwidth. 

API integration development is costly

Developing API integrations in house can be quite expensive and resource intensive. First of all, finding the right developers to build API integrations for your use can be very difficult. Second, even if you are able to find someone, the process can take anywhere between a few weeks to a few months. That’s when the developer understands the logic of the application and API integration can take place. This high time consumption also comes at a cost for the time the developer spends on API integration. Since the salary of a developer can be anywhere between $80K to $125K, API integration development can cost 1000s of dollars for companies. 

API integration management and upgradation is time consuming

The story doesn’t end once an API integration is in place. APIs need to be maintained and continuously upgraded whenever an application updates itself. At the same time, as mentioned, APIs can fail. In such a situation, your non-technical teams will find it difficult to maintain the APIs, putting the reliance again on your developers, who might be required to fix any bugs. Thus, someone with technical knowledge of integration maintenance has to look over updates and other issues. 

Rise of Unified API

As the number of applications a business uses increases, as well as the APIs become more complex, with each one having its own set of peculiarities, there has been a rise of what we today call unified APIs. A unified API primarily normalizes data nuances and protocols from different APIs into one normalized data model from a similar category of applications, which organizations can use to integrate with applications that fall therein. It adds an additional abstraction layer on top of other APIs and data models. 

One of the best use cases for unified API is when you are offering different integrations to your customers from a single segment. For instance, if you are providing your customers with the option to choose the CRM of their choice and integrate with your system, a unified API will help ensure that different CRM platforms like Salesforce, Zoho, Airtable, can all be connected via a single API and your developers don’t have to spend hours in finding and configuring APIs for each CRM. Some of the top unified API examples include:

• CRM API which helps you connect different CRM software like Zoho, Airtable, Salesforce
• HRIS/ HRMS API which enables you to connect different HR software used for hiring, application tracking, employee attendance, payroll, etc.
• Accounting API which focuses on integrating differentiating accounting and payment related software for seamless budgeting, payouts, etc. 
• Calendar API which enables you to connect different calendars that you might be using like iCal, Outlook calendar to ensure that you don’t miss any meetings or important dates

Let’s quickly look at some of the key benefits that a unified API will bring along to manage API integrations for businesses:

• Enables data normalization to ensure that data is translated into a standard format which can be easily ingested
• Reduces API integration costs, developer time and overall resource consumption for deployment and maintenance
• Covers a wide range of data protocols, formats, models and nuances with coverage across all types of API including REST, SOAP, GraphQL, etc.
• Promotes a single access point for all data, mostly built in REST, which is one of the easier architectures
• Facilitates consistency in pagination and filtering

Therefore, unified API is essentially a revolution in API integration, helping developers take out all the pain for integrating applications with API, where they only focus on reaping the benefits and developing core product functionalities. 

API integration questions

Before we move on to the last section, it is important to check whether or not you are now able to answer the key API integration questions that might come in your mind. Some of the frequently asked API integration questions include:

1. What is API integration?
2. Why is API integration important?
3. What are the benefits of API integration?
4. How does API integration work?
5. What is the cost of an API integration?
6. How to be prepared for API integration?
7. What is API integration management?
8. What are the challenges to API integration?
9. What are some API integration examples?
10. What is a unified API and how does it relate to API integration?
11. How does API integration impact customer experience?
12. How does API integration ensure security?

Wrapping up: TL:DR

As we draw this discussion to a close, it is important to note that the SaaS market and use of applications will see an exponential growth in the coming years. The SaaS market is expected to hit $716.52 billion by 2028. Furthermore, the overall spend per company on SaaS products is up by 50%. As companies will use more applications, the need for API integrations will continue to increase. Thus, it is important to keep in mind:

• We are now in an API first economy where applications have a central focus on building consumable, reusable and secure APIs
• API integration will play an important role in the coming years, as APIs become more pronounced, sophisticated and voluminous
• API integrations reduce the manual effort for data exchange, enable companies to better use their applications and build complementary capabilities
• However, creating and maintaining API integrations in-house can be very expensive, time consuming as APIs might fail, may not be compatible and might require deep tech expertise
• Therefore, the world is seeing a rise in unified APIs, which add an additional abstraction layer on data models to help connect APIs of one segment together. It normalizes the data that gets exchanged between the applications and helps developers with reduced costs, consistent pagination, etc. 

Thus, companies must focus on exploring the potential of APIs, especially for the top segment of products they routinely use, to make connectivity and exchange of data smooth and seamless between applications, leading to better productivity, data driven decision making and business success.  

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