What Is an API Integration? A Plain-English Explanation

An order comes in through your webshop. Someone retypes it into the accounting package, updates the stock in a spreadsheet and creates a shipping label in the carrier's portal. The same details, entered four times, with four chances to get something wrong. An API integration lets those systems talk to each other directly, so the order is entered once and is correct everywhere after that. This article explains what an API integration is, how it works, what it is used for and what it costs.

What is an API integration?

An API integration is an automatic connection between two software systems that lets them exchange data without a person in the middle. API stands for Application Programming Interface: a fixed set of rules through which a system states what data other systems may read or write, and in what format.

Think of a restaurant. You are the customer and the kitchen is the other system. You do not walk into the kitchen; you order from a menu through the waiter. The API is that menu and waiter: set dishes, a set way of ordering, and the kitchen stays in control of what happens.

How does an API integration work?

Under the hood, one system sends a request to the other, usually over the internet. The other system checks that the request is allowed, carries it out and sends a response back. In practice it looks like this:

1. 01Something happens: for example, a customer places an order in the webshop.
2. 02The integration notices the new order, either because the webshop sends a signal or because the integration checks at regular intervals.
3. 03It fetches the details: customer, products, quantities, amount.
4. 04It converts the data into the shape the other system expects, such as the correct VAT rate and ledger account.
5. 05It writes the data, for instance as a sales invoice in the accounting package.
6. 06If something goes wrong, the error is logged and someone is notified.

Access runs through a key or an authorised login, often via OAuth. You decide which systems can reach which data, and you can revoke that access again.

API, integration or connector: what is the difference?

The terms get mixed up. The API is the door a system opens. The integration is the software that walks through that door and moves the data. A connector is usually a ready-made integration for a common pair of systems. Some systems, often older packages, have no API at all. Then there are workarounds, such as exchanging files through a shared folder or reading directly from a database.

Examples of API integrations

Almost every modern business package has an API. To illustrate, these are common integrations for small and mid-sized businesses:

• Webshop to accounting: orders from WooCommerce, Shopify or Lightspeed automatically become invoices in Exact Online, Xero or QuickBooks.
• Marketplace to stock: orders from Amazon or Bol.com flow into your stock or warehouse system, and stock levels flow back.
• Warehouse to carrier: a shipping label from PostNL, DHL or Royal Mail is created directly, or through a shipping platform such as Sendcloud, and tracking goes to the customer.
• HR and payroll: hours or staff records from a planning tool are passed on to an HR package such as AFAS.
• CRM to accounting: a customer created in the CRM appears straight away as a debtor in the books.
• Reporting: figures from several systems come together in one dashboard, with no exports.

Which integration makes sense differs per business. A good question to start with: which data do we currently retype from one screen into another?

A worked example

Say a wholesaler sells through its own Shopify store and on Amazon, and keeps its books in Exact Online. Without integrations, someone downloads the orders from both channels every morning, retypes them and adjusts stock in a spreadsheet. With integrations, orders from both channels land in a single list. The warehouse picks them, the shipping label is created automatically and the invoice is already in the accounts.

After every sale, the new stock level is pushed back to both channels, so you never sell the same last item twice. The manual work shifts from retyping to checking the few exceptions the integration flags.

What are the benefits of an API integration?

• Time: retyping and copying disappear. What takes someone an hour a day happens in seconds.
• Fewer errors: no typos, no forgotten orders, no wrong quantities.
• Current data: stock, orders and invoices are right at any moment, not just after the next export.
• Scale: ten times as many orders does not mean ten times as much manual work.

How much does it cost to integrate an API?

It depends mainly on three things: how good the APIs on both sides are, how much logic sits in between and how many data flows you need. A simple integration that pushes orders one way is a contained job. An integration that syncs in both directions, handles exceptions and recovers from errors is more work.

As a general order of magnitude in the Dutch market, agencies' 'from' prices for an integration start at around €2,500, and complex integrations run to €10,000 or more. Allow for maintenance too, because third-party APIs change. For more on what drives the price, read how much custom software costs.

Can you build an API integration yourself?

There are three routes, from simple to custom:

• A ready-made app or plugin: many packages have an app store with standard connectors, for example between a webshop and Exact Online. Cheap and quick, as long as your process is standard.
• An integration platform such as Zapier or Make: you click flows together without writing code. Useful for simple flows, but at high volumes or with complex rules the subscription and the upkeep get awkward.
• A custom integration: built around your rules, with error handling and monitoring. This is the choice when standard routes fall short or the integration is business-critical.

Writing it in-house is possible too, if someone on the team can read the API documentation and keep maintaining the integration afterwards. Do not underestimate that last part: an integration that silently stops is only noticed when the stock no longer adds up.

What should you watch out for?

• Which system is the source of truth for which data? Otherwise systems overwrite each other.
• What happens when something fails? A good integration retries and reports what it cannot fix.
• Monitoring: you want to know the integration is running, not find out from a customer complaint.
• Personal data: exchange only what is needed, and make sure agreements with suppliers meet GDPR requirements.
• Maintenance: vendors change their APIs, and someone needs to keep up.

Where can you get an API integration built?

If a standard app or integration platform does not fit your process, a custom integration is the next step. Our page on API integration services explains how we build and monitor integrations. For larger data flows across several systems, see data integration or automating business processes.

Not sure yet what you need? Get in touch and tell us which data you retype today. We will say honestly whether a standard connector will do or whether custom work pays off.