What is an API integration and why modern organisations can no longer do without it

Reading time: approx. 8 minutes

Business software has become smarter. But it has also become more complicated.

Twenty years ago, organisations often used a single software package. That package managed the financial accounts, customers, orders, stock and sometimes even production. Everything took place within the same environment.

Those days are behind us.

Nowadays, organisations are increasingly opting for specialised software. An ERP system for administration, a CRM for sales, an online shop for online sales, a planning tool for the field staff, and a separate platform for marketing or customer service.

This results in better software, but it also creates a new problem.

The systems must be able to communicate with one another.

And that’s exactly where the world of API integrations begins.

What is an API?

API stands for Application Programming Interface.

Think of an API as a digital receptionist.

When software needs information, it does not access another system’s database directly. Instead, it sends a request to the API.

For example:

List all outstanding orders.
Create a new customer.
Update the stock levels.
Please send this invoice.
Please check whether this item exists.

The API checks whether the request is valid, retrieves the relevant data and returns a response.

This enables two different systems to communicate securely with one another without needing to be aware of each other’s internal workings.

An API is not a link

This is perhaps the biggest misconception surrounding APIs.

Many organisations think:

“Our software has an API, so integration is straightforward.”

In reality, an API is merely the gateway.

The link then determines:

what data is exchanged;
when that happens;
which checks need to be carried out;
how errors are handled;
which application takes precedence.

An API enables communication.

The interface determines how that communication takes place.

That is a key difference.

Why API integrations are becoming increasingly important

Software is becoming increasingly specialised.

Whereas in the past a single package did everything, a modern software landscape often consists of dozens of applications.

Consider:

ERP;
CRM;
WMS;
PIM;
e-commerce;
BI;
HR;
planning;
service;
accounting.

Every application does what it does best.

But without integration, problems soon arise.

New customers are entered more than once.

Orders must be entered manually.

The stock levels are no longer correct.

The reports contradict one another.

Staff are constantly checking data that should, in fact, be automatically consistent.

In our view, it is precisely this development that represents the biggest change we have seen in recent years. Organisations no longer grow within a single application, but are building a landscape of specialised systems. As a result, the challenge is shifting from choosing software to connecting software.

A practical example

A customer orders a product via an online shop.

Without a link, the following often happens:

The order has come in.
An employee opens the online shop.
The customer is entered manually into the ERP system.
The order lines are copied.
Stock levels are being checked.
The invoice is being generated.

Every step takes time.

Every step can lead to mistakes.

With an API integration, the same process runs entirely automatically.

Once the order has been placed, the online shop immediately sends a message to the ERP system.

The customer is being created.

The order appears automatically.

Stock levels are being updated.

The invoice can be processed straight away.

Within a few seconds, both systems will have exactly the same information.

Why an API alone is not enough

Many software suppliers advertise with the message:

“Our software features a comprehensive API.”

That’s a good start.

But that doesn’t solve anything.

The real questions only start after that.

For example:

What data needs to be synchronised?
Which application takes precedence?
What happens if a customer already exists?
How do you deal with missing data?
When should synchronisation take place?
What happens if an API is temporarily unavailable?

In practice, it turns out that successful integrations are far less about programming than about establishing clear agreements.

That is precisely why SenseCloud almost always begins by mapping out the desired process before a single line of code is written. The first step is to determine what an organisation wishes to achieve. Only then is consideration given to how the technology that underpins it.

Why standard couplings are often not standard

On the internet, you often come across texts such as:

“Directly linked.”

“Live in five minutes.”

That sounds appealing.

In practice, however, things work differently.

No two organisations are the same.

Some companies operate with multiple accounting systems.

The other one uses projects.

A third of them operate across several warehouses.

Some organisations only synchronise customers.

Others also want to exchange quotations, orders, items, price agreements and stock levels.

The technique may be the same.

Business processes are almost never affected.

That is why effective integration usually consists of two parts:

a standardised technical framework;
a structure that is in line with the way the organisation operates.

According to Gert, that is precisely why a fully standardised integration is rarely found in practice. However, large parts of an integration can be reused, whilst the final step is tailored to the organisation’s requirements.

APIs form the basis of automation

An API does more than just exchange data.

A modern API integration can also:

check the data;
enrich data;
prevent duplicate entries;
apply company policies;
start processes automatically;
record errors;
send notifications;
combining information from multiple systems.

As a result, manual tasks are eliminated and a single digital process chain is created.

Not because software is getting smarter.

But because software works together.

Why API integrations form the basis for AI

Many organisations are currently looking into artificial intelligence.

However, AI can only provide good answers when the right business information is available.

That information is scattered across various applications.

In the ERP.
In the CRM.
In the online shop.
In the service management system.

API integrations bring that information together.

This creates the context needed for AI to provide valuable insights.

In other words:

AI doesn’t start with AI.

AI starts with well-integrated business data.

As is also the case in The Evolution of Integration As described, linking and enriching data is the essential step before AI can truly deliver business value.

What criteria must a good API integration meet?

A reliable API integration involves more than just the technical aspects.

Key features include:

secure authentication;
clear documentation;
logging;
monitoring;
error handling;
support for changes to APIs;
scalability;
maintainability.

It is precisely these components that determine whether a coupling will continue to function reliably for many years.

Conclusion

An API integration is not an end in itself.

It is a means of enabling software to work together securely and reliably.

As organisations make increasing use of specialised applications, the importance of effective integrations is growing. This is not only to exchange data automatically, but also to automate processes, prevent errors and lay the foundations for data-driven working and AI.

Technique is important in this regard.

However, successful API integrations always start with a thorough understanding of the business processes that need to be supported.

Frequently asked questions

What does API stand for?

API stands for Application Programming Interface: a standardised way for software to communicate securely with other software.

Is an API the same as an integration?

No. An API enables communication. The integration determines what data is exchanged, when this takes place and how business rules are applied.

Does every application have an API?

No. Older systems sometimes still use XML, CSV, FTP or database connections. Modern integration platforms often support multiple technologies alongside APIs.

Are API connections always in real time?

No. Some links work immediately, whilst others synchronise at set times. Which method is suitable depends on the process and the capabilities of the software being used.