Any SaaS company on an average uses 350+ integrations. While SaaS unicorns use 2000+ integrations, a new startup also uses 15+ integrations on average. What is common to all SaaS companies is the increasing number of integrations they are using. To facilitate a faster time to market and increased data/ information exchange, quality SaaS integrations have become a go-to for almost all businesses.
However, when it comes to building, deploying and maintaining SaaS integrations, companies tend to get overwhelmed by the costs involved, engineering expertise needed, security concerns, among others.
Invariably, there are one of two paths that businesses can explore, either building integrations in house or buying them/ outsourcing the process to a third-party platform. In this article, we will uncover:
- Top two approaches to SaaS integration
- Build vs Buy for SaaS integrations: Key considerations
- Which one to choose
- Unified API as a solution for SaaS integrations
If you are interested to learn more about the types, trends, and forecast of SaaS integrations, download our State of SaaS integration: 2023 report
Which integration stage are you at?
Before we discuss the pros and cons of the two parallel ways of achieving integration success, it is important to understand which integration stage you are at. Put simply, each integration stage has its own requirements and challenges and, thus, your integration approach should focus on addressing the same.
Stage I: Getting started
It is the first stage, you are in the launch phase where you are all set to go live with your product. However, currently, you don’t have any integration capabilities. While your product might be ripe for integration with other applications, the process to facilitate the same is not yet implemented.
This might lead to a situation where your customers are apprehensive about trying your product as they are unable to integrate their data, and may even see it as underdeveloped and not market-ready.
At this stage, your integration requirements are:
- Low cost integration deployment and maintenance
- Prevention of diversion of focus from core product enhancement for your internal engineering team
- Ability to quickly and easily integrate with different applications and systems to drive adoption of your product
Stage II: Scale up
In the second stage, your product has been in the market for sometime and you have managed to deploy some basic integrations that you have built in-house.
Now your goal is to scale your product, ensure deeper market penetration and customer acquisition. However, this comes with an increased customer demand of deploying more complex integrations as well as the need to facilitate greater volume of data exchange. Without more integrations, you will find yourself unable to scale your business operations.
For scale up, your integration requirements are:
- Facilitating new customer acquisition and preventing business revenue loss with streamlined integration experience
- Accelerated integration addition and implementation to keep pace with customer demand
- Real-time integration support for customers queries to prevent any delays
- Ability to maintain and manage integrations, error handling, troubleshooting etc. for a seamless experience
Stage III: Sustain and grow
In the third stage, you have established yourself as a credible SaaS company in your industry, who provides a large suite of integrations for your customers.
Your goal now is to sustain and grow your position in the market by adding sophisticated integrations that can drive digital transformation and even lead to monetization opportunities for your business.
This stage has its own unique integration requirements, including:
- Comprehensive integration support without additional costs for maintenance and management
- Increase in integration coverage across different APIs and new-age integrations
- Monetization of integrations by offering them as exclusive features at a premium to add business value for customers
- Preventing costs of adding incremental updates and API changes for smooth functioning
Overall, across all the three stages, while the requirements change, the expectations from integrations revolve around being cost effective, easy maintenance and management without draining resources, supporting the large integration ecosystem and ultimately creating a seamless customer experience.
Therefore, your integration strategy must focus on customer success and there are two major ways you can go about the same.
Two modes of integration: Build vs Buy
Irrespective of which integration stage you are at, there are two approaches that you can consider to traverse the integration ecosystem. Put simply, you can either build integrations in-house or you can partner with an external or third party player and buy integrations.
- Building integrations in-house will give you end-to-end control and the option to customize each functionality to give a very native feeling. This is ideal if you have to add only a couple of integrations, which your engineering team can manage along with core product development.
- However, buying or outsourcing integration development and management enables you to scale at speed and makes the process more cost efficient, resource lite and faster. Companies that prefer buying integrations believe that their developers should solely focus on product development and the supplementary efforts for integrations should be outsourced.
The integration development process
If you are using SaaS integrations, you are likely to rely on APIs to facilitate data connectivity. This is the case whether you build it in-house or outsource the process. From a macro lens, it looks like a streamlined process where you connect different APIs, and integrations are done. However, on a granular level, the process is a little more complex, time consuming and resource intensive.
Here is a snapshot of what goes into the API based integration development:
1. Get publicly available APIs or build them in-house
The first step is to gauge whether or not the full version of the API is publicly available for use. If it is, you are safe, if not, you have to put in manual effort and engineering time to build and deploy a mechanism like a CSV importer for file transfer, which may be prone to security risks and errors.
2. Access to comprehensive documentation
Next, it is important to go through the documentation that comes along with the API to ensure that all aspects required for integration are taken care of. In case the API data importer has been built in-house, documentation for the same also needs to be prepared.
3. API alignment with product use case
Furthermore, it is vital to ensure that the API available aligns and complies with the use case required for your product. In case it doesn’t, there needs to be a conversation and deliberation with the native application company to sail through.
4. Legal/ compliance requirements for data access
Finally, you need to ensure that all legal or compliance requirements are adhered to revolving around data access and transfer from their API, through some partnership or something along those lines.
Should you build integrations in-house?
Now that you have a basic understanding of the requirements of the integration development process, answer the following questions to gauge what makes more sense, building integrations in-house or outsourcing them.
#Q1. How many integrations do you have?
Start by taking a stock of how many integrations you have or need as a part of your product roadmap. Considering that you will have varied customers with diverse needs and requirements, you will need multiple integrations, even within the same software category.
For instance, some of your customers might use Salesforce CRM and others might use Zoho. However, as a SaaS provider, you need to offer integrations with both. And, this is just the top of the iceberg. Within each category, there can be 1000s of integrations like in HRIS with several vertical categories to address.
Thus, you need to gauge if it is feasible for you to build so many integrations in-house without compromising on other priorities.
#Q2. Do you have domain expertise with the concerned integrations?
Second, it is quite possible that your engineering team and others have expertise only in your area of operation and not specific experience or comprehensive knowledge about the integrations that you seek.
For instance, if you are working with HRIS integrations, chances are your team members don’t understand or are very comfortable with the terminologies or the language of data models being used.
With limited knowledge, data mapping across fields for exchange can become difficult and as integrations become more sophisticated, the overall process will get more complex.
#Q3. When do you want to roll out the integrations?
Next, you need to understand what is your timeline for rolling out your product with the required integrations.
A single integration can take up to 3 months to build from planning, design and deployment to implementation and testing. Thus, you need to ask yourself if this duration sits well with your go-to-market timeline.
At the same time, you need to consider the impact any such delay due to integration might have on your market penetration and customer acquisition vis-a-vis your competitors. Therefore, building integrations in-house which are too time consuming can also add an opportunity cost.
#Q4. Have you calculated the costs associated?
Undoubtedly, one is the opportunity cost that we have discussed above, which might result from any delays in going live due to delay in building integrations. However, there are direct costs of building and maintaining the integrations.
Based on calculations of time taken for building integrations and factoring in the compensation for developers, each integration can cost on an average 10K USD. At the same time, you lose out on the productivity that your engineering time might have spent on accelerating your product roadmap timeline.
It is important to do a cost benefit analysis as to how much of business value in terms of your core product you might need to give up in order to build integrations.
#Q5. Do you have enough resources?
This is a classic dilemma that you might face. If you are building integrations in-house, you need to have enough engineering resources to work on building and maintaining the integrations. Invariably, overall, there has been a shortage of software development resources as reported by many companies. Even if you have enough resources, do you think diverting them to build integrations is the most efficient use of their time and effort?
- On one hand, this could result in a delay or hamper your product core functionalities.
- On the other hand, your developers might not even be interested in working on something that doesn’t contribute to the core product.
Therefore, you are likely to face a resource challenge and you must deploy them in the most productive manner.
#Q6. Have you considered security and authentication?
A key parameter for API integration is authentication to ensure that there is no unauthorized access of data or information via the API. If you build integrations in-house, managing data authorization/ authentication and compliance can be a complicated process.
While generally, integrations are formed on OAuth with access tokens for data exchange. However, other measures like BasicAuth with encoded username, OAuth 2.0 with access using third-party platforms and private API keys are also being used.
At the same time, even one SaaS application can require multiple access tokens across the platform, resulting in a plethora of access tokens for multiple applications. You need to gauge if your teams and platforms are ready to manage such authentication measures.
#Q7: What about data normalization and mapping?
Once your integration is ready, the next stage of data exchange comes to life. While deciding whether to build integrations or buy them, you need to think about how you will standardize or normalize the data you receive from various applications to make sure everyone understands it. For instance, some applications might have one syntax for employee ID, while others might use it as emp ID. There are also factors like filling missing fields or understanding the underlying meaning of data.
Normalizing data between two applications in itself can be daunting, and when several applications are at play, it becomes more challenging.
#Q8. Have you considered the management and maintenance required?
An integral role that you take up when building integrations in-house is their management and maintenance which has several layers.
- First, you need to constantly refresh the data to ensure that any fresh data in one application is automatically synced with the other one by refreshing the cache.
- Second, systems or APIs might fail, leading to errors in functioning. You need to be prepared for handling such errors and troubleshooting challenges to ensure that the business continuity of your customers is not disrupted. This might require unnecessary bandwidth deployment in addressing minor technical issues with the teams of applications from where you have received your API.
- Third, the API you are using might not have the customization capability needed for your use case, which might take up considerable bandwidth.
- Fourth, the APIs are updated often and these changes need to be tracked and fixed before the customers realize.
Build vs Buy: Which way to go?
Building integrations in-house can be cost intensive and complicated, whereas, buying or outsourcing integrations is resource-lite and a scalable model. To help you make the right choice, we have created a list of conditions and the best way to go for each one of them.
Unified API to outsource integrations
Undoubtedly, there are several ways you can adopt to outsource or buy integrations from third party partners. However, the best outsourcing can be achieved with a unified API. Essentially, a unified API adds an additional abstraction layer to your APIs which enables data connectivity with authentication and authorization.
Here are some of the top benefits that you can realize if you outsource your integration development and management with a unified API.
Faster time to market and scale
With a unified API, businesses can bring their time-to-market to a few weeks from a few months.
- On one hand, this helps them reach the market before their competition, giving an edge for market penetration.
- On the other hand, a unified API also allows them to add more integrations and scale keeping pace with customer demands.
When it comes to the overall picture, a unified API can help businesses save years in engineering time with all integrations that they use. At the same time, since the in-house engineering teams can focus on the core product, they can also launch other functionalities faster.
A unified API also provides you with greater coverage when it comes to APIs.
If you look at the API landscape, there are several types and API endpoints. A unified API will ensure that all API types and endpoints are aggregated into a single platform.
For instance, it can help you integrate all CRM platforms like Salesforce, Zoho etc. with a single endpoint. Thus, you can cover the major integration requirements without the need to manually facilitate point-to-point integration for all.
Low costs and operational efficiency
Undoubtedly, a unified API brings down the cost of building integrations.
- First, the hard costs associated with building integrations like developer time and storage costs are significantly reduced.
- Second, soft costs like opportunity costs due to delays in market entry can also be eliminated.
- Third, a unified API also takes care of maintenance with error handling, troubleshooting, managing expired tokens, fixing API source schema change etc. For instance, Knit Unified API offers a dedicated dashboard with RCA and resolution as well as proactively fixing them for its users as and when necessary. This adds to the operational efficiency for your developers, preventing unnecessary diversion of focus for them.
Opportunity to monetize
A unified API can help you provide unparalleled features to your customers which blend beautifully with your core functionalities. You can even automate certain tasks and actions for your customers. This leads to a significant impact for your customers as well in terms of cost and time saving.
In such a situation, chances are very high that your customers will be happy to pay a premium for such an experience, leading to a monetization opportunity which you might have not been able to achieve if you build integrations in-house, considering the volume you need to address for monetization.
Single API knowledge required
Finally, a unified API ensures that your engineering teams only need to learn about the nuances, rules and architecture of one API as opposed to thousands in case of in-house integration development. This significantly reduces the learning hours that your developers can invest in value oriented tasks and learning.
Wrapping up: TL:DR
As we draw the discussion to a close, it is evident that building and maintenance of integrations can be a complex, expensive and time consuming process. Businesses have two ways to achieve their integrations, either build them in-house or outsource them and buy them from a third party partner.
While building integrations in-house keeps end to end control with the businesses, it can be difficult to sustain and maintain in the longer run.
Thus, buying or outsourcing integrations makes more sense because it is:
Cost and time effective, facilitating faster time-to-market at a lower cost
- Resource-lite and doesn’t add burden to developers, preventing diversion of focus away from product roadmap
- Has the potential to add multiple integrations at once, leading to higher coverage
- Takes care of authentication, authorization and security
- Ensures access to all APIs, irrespective of whether they are publicly available or not
- Takes away the time and effort related to ongoing integration maintenance.
- A unified API is a smart solution and a competent alternative to building integrations in-house for businesses in different stages of the integration cycle. You integrate once with a single API and get access to hundreds of apps within a single category.