As organizations grow in revenue and people strength, a lot of data comes into existence that needs to be managed well for business success. With more people being onboarded, most HR teams struggle to manage all processes, especially where employee data is concerned. 

‍

Invariably, different HR tools and software or HRIS (Human Resources Information Software) get adopted to automate certain parts of the workflow. 

‍

Research shows that larger companies with over 500 employees often choose HRIS to consolidate systems. 

‍

With the increasing number of HR tools and overall use cases, organizations need to integrate these software with one another and their core application to ensure seamless flow of information. Here, HRIS integration plays a major role. 

‍

This article seeks to provide a complete understanding on HRIS API integration, focusing on different concepts, data models, use cases and how to achieve it in the most efficient and effective way. 

Key Concepts

Here are some of the key concepts or terminologies you should understand before moving onto more details on the applications, use cases, etc. 

Directory

Directory platforms essentially are the single source of truth for all employees, especially the new joiners. It ensures that when an employee joins, they have access to all the resources, tools and software they need. Employees can leverage the Directory to familiarize themselves with different aspects of the organization. 

Payroll

Payroll refers to everything related to the compensation aspect for employees. It helps companies calculate the salary due to employees at the end of every month, taxes, benefits, etc. It ensures that employees are accurately compensated based on their agreements, while also complying with statutory laws and policies. 

Benefits

In most structured organizations, employees are entitled to additional benefits beyond the compensation. This includes health insurance, accidental insurance, retirement plans, provident fund (India), paid time off, etc. All these come under the benefits section of an employment contract and need to be carefully monitored. 

Recruitment, retention and retirement

Any HRIS API that you come across will address all or some aspects of the employee lifecycle. Here, you should understand the basics of recruitment, which involves attracting and hiring the best talent for your open roles, retention, which focuses on ensuring that you are able to prevent attrition and turnover for your employees by facilitating the right culture, fair pay, etc. and finally, retirement or exit, either due to completion of tenure, age or any other reason. 

Learning and development

Another concept that requires attention is learning and development. It caters to understanding the learning and training needs for your employees, both hard and soft skills and adequately providing the right upskilling opportunities for professional success. 

HRIS Integration: Top Use Cases

Let’s quickly understand how HRIS integration across HR software and tools leads to an exemplary employee experience as well as facilitates operational efficiency for HR teams. Most of the use cases of HRIS integration follow the read and write HRIS APIs which ensure automatic syncing of data between the HRIS platforms and allied applications. Put simply, manually entry of data across applications and updates can be prone to human errors. However, even a single inaccuracy in updating data can lead to serious consequences, including faulty payroll creation, absence tracking, etc. Furthermore, manual data entry might lead to unauthorized data access, especially for sensitive employee information. Here’s a quick snapshot of how HRIS integration can be used across different scenarios.

HRIS integration for ATS tools

ATS or applicant tracking system can leverage HRIS integration to ensure that all important and relevant details about new employees, including name, contact information, demographic and educational backgrounds, etc. are automatically updated into the customer’s preferred HRIS tool without the need to manually entering data, which can lead to inaccuracies and is operationally taxing. ATS tools leverage the write HRIS API and provide data to the HR tools in use.   

‍

Examples: Greenhouse Software, Workable, BambooHR, Lever, Zoho

HRIS integration for payroll software

Payroll software plays an integral role in any company’s HR processes. It focuses on ensuring that everything related to payroll and compensation for employees is accurate and up to date. HRIS integration with payroll software enables the latter to get automated and real time access to employee data including time off, work schedule, shifts undertaken, payments made on behalf of the company, etc. 

‍

At the same time, it gets access to employee data on bank details, tax slabs, etc. Together, this enables the payroll software to deliver accurate payslips to its customers, regarding the latter’s employees. With automated integration, data sync can be prone to errors, which can lead to faulty compensation disbursal and many compliance challenges. HRIS integration, when done right, can alert the payroll software with any new addition to the employee database in real time to ensure setting up of their payroll immediately. At the same time, once payslips are made and salaries are disbursed, payroll software can leverage HRIS integration to write back this data into the HR software for records. 

‍

Examples: Gusto, RUN Powered by ADP, Paylocity, Rippling

HRIS integration for employee onboarding/ offboarding software

Employee onboarding software uses HRIS integration to ensure a smooth onboarding process, free of administrative challenges. Onboarding tools leverage the read HRIS APIs to get access to all the data for new employees to set up their accounts across different platforms, set up payroll, get access to bank details, benefits, etc. With HRIS integrations, employee onboarding software can provide their clients with automated onboarding support without the need to manually retrieve data for each new joiner to set up their systems and accounts. Furthermore, HRIS integration also ensures that when an employee leaves an organization, the update is automatically communicated to the onboarding software to push deprovisioning of the systems, and services. This also ensures that access to any tools, files, or any other confidential access is terminated. Manually deprovisioning access can lead to some manual errors, and even cause delays in exit formalities. 

‍

Examples: Deel, Savvy, Sappling

Ease of communication and announcements

With the right HRIS integration, HR teams can integrate all relevant data and send out communication and key announcements in a centralized manner. HRIS integrations ensure that the announcements reach all employees on the correct contact information without the need for HR teams to individually communicate the needful. 

HRIS integration for LMS tools

LMS tools leverage both the read and write HRIS APIs. On the one hand, they read or get access to all relevant employee data including roles, organizational structure, skills demand, competencies, etc. from the HRIS tool being used. Based on this data, they curate personalized learning and training modules for employees for effective upskilling. Once the training is administered, the LMS tools again leverage HRIS integrations to write data back into the HRIS platform with the status of the training, including whether or not the employee has completed the same, how did they perform, updating new certifications, etc. Such integration ensures that all learning modules align well with employee data and profiles, as well as all training are captured to enhance the employee’s portfolio. 

‍

Example: TalentLMS, 360Learning, Docebo, Google Classroom

HRIS integration for workforce management and scheduling tools 

Similar to LMS, workforce management and scheduling tools utilize both read and write HRIS APIs. The consolidated data and employee profile, detailing their competencies and training undertaken can help workforce management tools suggest the best delegation of work for companies, leading to resource optimization. On the other hand, scheduling tools can feed data automatically with HRIS integration into HR tools about the number of hours employees have worked, their time off, free bandwidth for allocation, shift schedules etc. HRIS integration can help easily sync employee work schedules and roster data to get a clear picture of each employee’s schedule and contribution. 

‍

Examples: QuickBooks Time, When I Work

HRIS integration for benefits administration tools

HRIS integration for benefits administration tools ensures that employees are provided with the benefits accurately, customized to their contribution and set parameters in the organization. Benefits administration tools can automatically connect with the employee data and records of their customers to understand the benefits they are eligible for based on the organizational structure, employment type, etc. They can read employee data to determine the benefits that employees are entitled to. Furthermore, based on employee data, they feed relevant information back into the HR software, which can further be leveraged by payroll software used by the customers to ensure accurate payslip creation. 

‍

Examples: TriNet Zenefits, Rippling, PeopleKeep, Ceridian Dayforce

HRIS integration for workforce planning tools

Workforce planning tools essentially help companies identify the gap in their talent pipeline to create strategic recruitment plans. They help understand the current capabilities to determine future hiring needs. HRIS integration with such tools can help automatically sync the current employee data, with a focus on organizational structure, key competencies, training offered, etc. Such insights can help workforce planning tools accurately manage talent demands for any organization. At the same time, real time sync with data from HR tools ensures that workforce planning can be updated in real time. 

‍

Examples: ClearCompany, Deel, ActivTrak

HRIS API Data Models

The different HRIS tools you use are bound to come with different data models or fields which will capture data for exchange between applications. It is important for HR professionals and those building and managing these integrations to understand these data models, especially to ensure normalization and transformation of data when it moves from one application to another. 

Employees/ Employee Profiles

This includes details of all employees whether full time or contractual, including first and last name, contact details, date of birth, email ID, etc. At the same time, it covers other details on demographics and employment history including status, start date, marital status, gender, etc. In case of a former employee, this field also captures termination date. 

Employee Contact Details

This includes personal details of the employee, including personal phone number, address, etc. which can be used to contact employees beyond work contact information. 

Employee Profile Picture

Employee profile picture object or data model captures the profile picture of the employees that can be used across employee records and purposes. 

Employment Type

The next data model in discussion focuses on the type or the nature of employment. An organization can hire full time employees, contractual workers, gig workers, volunteers, etc. This distinction in employment type helps differentiate between payroll specifications, taxation rules, benefits, etc. 

Location

Location object or data model refers to the geographical area for the employee. Here, both the work location as well as the residential or native/ home location of the employee is captured. This field captures address, country, zip code, etc. 

Leave Request

Leave request data model focuses on capturing all the time off or leave of absence entries made by the employee. It includes detailing the nature of leave, time period, status, reason, etc.

Leave Balance

Each employee, based on their nature of employment, is entitled to certain time off in a year. The leave balance object helps organizations keep a track of the remaining balance of leave of absence left with the employee. With this, organizations can ensure accurate payroll, benefits and compensation. 

Attendance 

This data model captures the attendance of employees, including fields like time in, time out, number of working hours, shift timing, status, break time, etc. 

Organizational Structure

Each organization has a hierarchical structure or layers which depict an employee’s position in the whole scheme of things. The organizational structure object helps understand an employee’s designation, department, manager (s), direct reportees, etc. 

Bank Details

This data model focuses on capturing the bank details of the employee, along with other financial details like a linked account for transfer of salary and other benefits that the employee is entitled to. In addition, it captures routing information like Swift Code, IFSC Code, Branch Code, etc. 

Dependents

Dependents object focuses on the family members of an employee or individuals who the employee has confirmed as dependents for purposes of insurance, family details, etc. This also includes details of employees’ dependents including their date of birth, relation to the employee, among others. 

KYC

This includes the background verification and other details about an employee with some identification proof and KYC (know your customer) documents. This is essential for companies to ensure their employees are well meaning citizens of the country meeting all compliances to work in that location. It captures details like Aadhar Number, PAN Number or unique identification number for the KYC document. 

Compensation

This data model captures all details related to compensation for an employee, including total compensation/ cost to company, compensation split, salary in hand, etc. It also includes details on fixed compensation, variable pay as well as stock options. Compensation object also captures the frequency of salary payment, pay period, etc. 

Unified HRIS API Integration: Get Started

By now, it would be clear to you that there are several HRIS tools in the market today that companies use and need to integrate with one another to ensure smooth exchange of data and consistency in records across platforms. However, manually implementing integrations between APIs of individual platforms can be extremely time consuming and resource intensive. In such a case, you can rely on a unified API like Knit, which gives you a single HRIS API to integrate with. Once you integrate with the HRIS API, you automatically get integrated with all the HR platforms you use. 

‍

Before moving on to the best practices to choose the right Unified HRIS API integration platform, here are some quick reasons why you should choose one:

‍

• Requires integration with a common unified API to connect with a plethora of HRIS software used by different customers
• Supports common integration logic, endpoints, pagination which is easy to understand
• Normalizes and transforms data into a unified data model with possibility of having custom fields for smooth data sync
• Can facilitate real time data sync between the application offered and HRIS software with instant alerts
• Tales care of integration maintenance and management with logging and error detection
• Significantly lower cost and time requirements, ability to integrate with multiple HRIS platforms within days to a few weeks
• Common documentation and need to understand only one API than toggling between documentation of all HRIS APIs
• Need to deal with only one form of authentication, rate limits, pagination, etc. 

‍

Here are some points that you should always consider while choosing the right unified HRIS API for your company:

Understand the documentation

Start by gauging whether or not the unified API provides comprehensive and easy to understand documentation for integration. One of the key reasons to choose a unified API is to prevent the effort of navigating through individual documentation for each integration you need. Therefore, getting the right documentation, which covers everything you need is important. The documentation will also help you understand the integration logic being followed, including REST vs SOAP, and end points like  GET, POST, and PATCH, provision of free sandbox, etc. 

Which authentication model is followed?

Next, understand the authentication model that the unified API provides. Essentially, there are a few major types of authentication, including, 

• Basic Auth that requires an API key or password for access
• OAuth 2.0 which relies on token exchanges
• Username-password based authentication

The right authentication and authorization is important since it will directly impact the privacy and security of the data you exchange between integrations. 

What are the rate limits?

Rate limits are simply the number of API requests that can be made in a defined period of time. They are generally set to prevent cyber attacks like DDoS attacks which come in the form of exponential unleashing of API requests. Having a lower threshold of rate limit, but with expected high rate of requests can lead to unexpected unified API behavior. Ensure that your unified API provider can customize rate limits to address your and your customer needs.  

Do you get post integration support?

HRIS API integration doesn’t end with building the integrations. There is a lot which goes on once the integrations are under use. There can be errors in data transformation, zombie APIs, API keys breaking or expiring, bad data being returned, long running syncs, troubleshooting challenges, and more. Your unified API needs to provide you with exceptional maintenance and management support, taking care of any challenge that comes along. At the same time, the error messages should be easy to decipher for your customer success team to ultimately address the queries. 

How secure are the integrations?

Undoubtedly, security of your HRIS API integration is critical to your business operations. Thus, choose a unified API provider which is security-first. Gauge the level of encryption it offers, We have already talked about authentication. Don’t forget to check for security protocols, certifications and compliances which are adhered by the unified API for maximum resilience. 

Knit: Unified HRIS API

Knit is a unified HRIS API provider that enables companies to implement native HRIS integrations to streamline and optimize HR processes. When you integrate with Knit, you get:

‍

• One unified API to connect with all HRIS tools you need
• Single unified data model for seamless data normalization and exchange
• Compliance to the highest security standards like SOC2, GDPR, ISO27001, HIPAA
• Option to authenticate the way you want, including, OAuth, API key or a username-password based authentication
• 100% webhooks architecture that send out notification whenever updated data is available
• Guaranteed scalability and delivery of HR data irrespective of data load
• High level of security as Knit doesn’t store a copy of your data
• Option to read and write data from any app from any HRIS category
• Option to limit data sync and API calls to only what you need
• Double encryption when in transit and when at rest with addition PII layer
• Detailed Logs, Issues, Integrated Accounts and Syncs page to easily monitor HRIS integrations
• Custom fields to manage any non-standard HRIS data

‍

Knit, as a unified HRIS API ensures a high ROI for companies which seek to integrate their diverse HRIS applications to make their HR processes effective, without sinking their organizational budgets. 

Wrapping up: TL:DR

To conclude, it is quite evident that HRIS integration is a must have for any growing HR team which is looking to work with several HR tools to manage different parts of the process. However, building and managing integrations in-house can be quite intensive in terms of investments and engineering team involvement. Fortunately, with a unified HRIS API, companies only need to integrate once with a unified API key and connect with all HRIS applications, with high levels of security, guaranteed scalability, seamless data normalization, integration management and real time sync.

If you are looking to integrate multiple HRIS, payroll and ATS apps with a single API key, check out Knit API. If you are looking to learn more about key payroll API concepts, data models and use cases, keep reading

‍

As the nature of employment is constantly changing with dynamic employee benefit expectations, organizational payroll is seeing constant transformation. At the same time, payroll data is no longer used only for paying employees, but is increasingly being employed for a variety of other purposes. 

This diversification and added complexities of payroll has given rise to payroll APIs which are integral in bringing together the employment ecosystem for businesses to facilitate smooth transactions. 

What are payroll APIs?

Like all other APIs or application programming interfaces, payroll APIs help companies integrate their different applications or platforms that they use to manage employee payment details together for a robust payroll system. 

Essentially, it enables organizations to bring together details related to salary, benefits, payment schedule etc. and run this data seamlessly to ensure that all employees are compensated correctly and on time, facilitating greater satisfaction and motivation, while preventing any financial challenges for the company. 

Payroll concepts and information

To build or use any payroll API or HRIS integration, it is important that you understand the key payroll concepts and the information you will need to collect for effective execution. Since payroll APIs are domain specific, lack of knowledge of these concepts will make the process of integration complicated and slow. Thus, here is a quick list of concepts to get started.

1. Frequency and repetition 

The first concept you should start with focuses on understanding the frequency and repetition of payments. There are multiple layers to understand here. 

First, understand the frequency. In technical terms, it is called pay period. This refers to the number of times a payment is made within a specific period. For instance, it could be monthly, twice in a month, four times a month, etc. Essentially, it is how many times a payment is made within a particular period.

Second, is the repetition, also known as payroll runs. Within an organization, some employees are paid on a regular basis, while others might receive a one-time payment for specific projects. A payroll run defines whether or not the payment is recurring. Your payroll run will also constitute a status to help understand whether or not the payment has been made. In case the payment is being calculated, the status will likely be unprocessed. However, once it is complete, the status will change to paid or whatever nomenclature you use. 

2. Pay scale and in-hand pay

As a part of the payroll concepts, it is extremely important for you to understand terms like pay scale, in-hand pay, compensation, pay rate, deduction, reimbursements, etc. We’ll take them one at a time.

Pay scale/ Pay rate

A pay scale or pay rate determines the amount of salary that is due to an employee based on their level of experience, job role, title, tenure with the organization, etc. 

A pay scale or a pay rate can be in the form of an hourly or weekly or even a monthly figure, say INR xx per week or INR yy per hour. It may differ for people with similar experience at the same level, based on their tenure with the company, skills and competencies, etc. 

Compensation

Based on the pay scale or pay rate, a company can calculate the compensation due to any employee. Generally, the math for compensation isn’t linear. Compensation is also referred to as the gross pay which includes the pay rate multiplied by the time period that the employee has worked for along with other benefits like bonuses and commissions that might be due to the employee, based on their terms of employment. 

For instance, some organizations provide a one-time joining bonus, while others have sales incentives for their employees. All of these form a part of the compensation or gross pay. 

Benefits

In addition to the benefits mentioned above, an employee might be eligible for others including a health cover, leave-travel allowance, mental wellness allowance etc. These all together add up to benefits that an employee receives over and above the pay rate. 

Deductions

Within the compensation or the gross pay are parts of deductions, which are not directly paid to the employees. These deductions differ across countries and regions and even based on the size of the company. 

For instance, in India, companies have to deduct PF from the employee’s gross pay which is given to them at the time of retirement. However, if an organization is smaller than 20 people, this compliance doesn’t come into existence. At the same time, based on the pay scale and pay rate, there are tax deductions which are due. 

In-hand pay

The in-hand pay is essentially the amount an employee receives after addition of all due payment and subtraction of the aforementioned deductions. This is the payment that the employee receives in his/ her bank account.

Reimbursements

Another concept within the payroll is reimbursements. There might be some expenses that an employee undertakes based on the requirements of the job, which are not a part of the gross pay. For instance, an employee takes out a client for dinner or is traveling for company work. In such cases, the expenses borne by the employee are compensated to the employee. Reimbursements are generally direct and don’t incur any tax deductions.

3. Cost to employer

The above concepts together add up to the cost to the employer. This refers to how much an employee essentially costs to a company, including all the direct and indirect payments made to them. The calculation starts with the pay scale or pay rate to which other aspects like contribution to benefits and em

Payroll data models/ data schemas 

Now that you have an understanding of the major payroll concepts, you also need to be aware about the key data or information that you will need to comprehend to work on payroll APIs. 

Essentially, there are two types of data models that are most used in payroll APIs. One focuses on the employees and the other on the overall organization or company.

Employee details

From an employee standpoint, any payroll API will need to have the following details:

Location 

The part of the world where the employee resides. You need to capture not only the present but also the permanent address of the employee.

Profile 

Employee profile refers to a basic biography of the concerned person which includes their educational backgrounds, qualifications, experience, areas of expertise, etc. These will help you understand which pay scale they will fit into and define the compensation in a better way. It is equally important to get their personal details like date of birth, medical history, etc. 

ID

An employee ID will help you give a unique identifier to each employee and ensure all payments are made correctly. There might be instances where two or more employees share the same name or other details. An employee ID will help differentiate the two and process their payrolls correctly. 

Dependents 

Information on dependents like elderly parents, spouses and children will help you get a better picture of the employee’s family. This is important from a social security and medicare perspective that is often extended to dependents of employees.

Company details

When it comes to company details, working with a payroll API, you need to have a fair understanding of the organizational structure. The idea is to understand the hierarchy within the organization, the different teams as well as to get manager details for each employee.

A simple use case includes reimbursements. Generally, reimbursements require an approval from the direct reporting manager. Having this information can make your payroll API work effectively.

Top payroll API use cases

Invariably, a payroll API can help you integrate different information related to an employee’s payroll and ensure a smooth payment process. However, it is interesting to note that many SaaS companies are now utilizing this payroll data collected from payroll APIs with HRIS integration to power their operations. Some of the top payroll API use cases include:

1. Insurance and lending

Often, information about payroll and income for individuals is siloed and insurance and lending companies have to navigate through dozens of documents to determine whether or not the individual is eligible for any kind of insurance or loans. Fortunately, with payroll APIs, this becomes easy by enabling several benefits. 

• First, payroll API can help lenders or insurance agents with streamlined information on whether or not the person has the ability to pay the installments or loans. 
• Second, any kind of lending also requires a background verification which payroll APIs with HRIS integration can easily provide. Thus, with payroll APIs, SaaS based insurance and lending companies can easily process verification and loan underwriting. 

2. Accounting

Accounting and tax management companies have for long struggled with manual paperwork to file company taxes which comply with the national and regional norms. With payroll API, SaaS based accounting firms find it extremely easy to access all employee related tax information at one place. They can see the benefits offered to different employees, overall compensation, reimbursements and all other payroll related technicalities which were earlier siloed. 

Armed with this data, courtesy payroll APIs, accounting firms find their work has been highly streamlined as they no longer have to manually document all information and then work to verify its accuracy and compliance.

3. Employee benefit companies

There are several SaaS companies today that are helping businesses set up their benefits plans and services for high levels of employee satisfaction. These employee benefits companies can take help of data from payroll APIs to help businesses customize their benefits packages to best suit employee expectations and trends. 

For instance, you might want to have different benefits for full-time versus contractual employees. With payroll API data, employee benefit companies can help businesses make financially prudent decisions for employee benefits. 

4. Performance management systems

The recent years have seen a rise in the adoption of performance management systems which can help businesses adopt practices for better employee performance. Armed with HRIS and payroll API data from different companies, these companies can identify motivators in payroll for better performance and even help identify rate of absenteeism and causes of poor performance. 

Such SaaS based companies use payroll APIs to understand which pay scale employees take more time off, what their benefits look like and how this gap can be bridge to facilitate better performance. Invariably, here, payroll data can help streamline performance management from a benefits, incentives and compensation standpoint.As well as, it makes HRIS data makes it a one click process to gather all relevant employee information. 

5. Consumer fintech companies

Consumer fintech companies, like those in direct deposit switching, are increasingly leveraging payroll APIs to facilitate their operations. Payroll API integrations allow consumers to directly route their deposits through their payroll with direct deposit switching. The account receiving the deposit is directly linked to the employee’s payroll account, making it easy for consumer fintech companies to increase their transactions, without manual intervention which increases friction and reduces overall value. 

5. Commercial insurance 

Finally, there are SaaS companies that deal with commercial insurance for companies for different purposes. Be it health or any other, payroll API data can help them get a realistic picture of the company’s people posture and their payroll information which can help these commercial insurance companies suggest the best plans for them as well as ensure that the employees are able to make the payments. They can achieve all of this without having to manually process data for all employees across the organization.

Payroll fragmentation challenges

Research shows that the payroll market is poised to grow at a CAGR of 9.2% between 2022 and 2031, reaching $55.69 billion by 2031. 

While the growth is promising, the payroll market is extremely fragmented. Undoubtedly, there are a few players like ADP RUN, Workday, etc. which have a significant market share. However, the top 10 players in the space constitute only about 55%-60% share, which clearly illustrates the presence of multiple other smaller companies. In fact, as you go down from the top 2-3 to the top 10, the market share for individual applications dwindles down to 1% each. 

Here is a quick snapshot of the payroll market segmentation to help understand its fragmented nature and the need for a unified solution to make sense of payroll APIs. 

Before moving on to how payroll fragmentation can be addressed with a unified solution, it is important to understand why this fragmentation exists. The top reasons include:

Changing and diverse employee demographics

First, different businesses have different demographics and industries that they cater to. Irrespective of the features, each business is looking for a payroll solution that provides them with the best pricing based on their number of employees and employment terms. While some might have a large number of full time salaried employees, others might have a large number of contractual workers, while the third kind might have a balanced mix of both. These diverse demographic requirements have given birth to different payroll applications, fragmenting the market. 

Dynamic market conditions

Next, it is important to understand that market conditions and employment terms are constantly in flux. 

• On one hand, the compensation and benefits expectations are continually changing. 
• On the other hand, with the rise of remote and hybrid work, employment models are undergoing transformation. 

Therefore, as businesses need new and fresh approaches to deal with their payroll requirements, a consequent rise of fragmentation can be observed. 

New and tech enabled solutions

Finally, organizations are increasingly adopting white labeled or embedded payroll solutions which enable them to either brand the solutions with their name or embed the API into their existing product. This is enabling market players in other verticals to also enter the payroll market, which further adds to the fragmentation. 

• On one hand, there are completely new SaaS players entering the market to address new business needs and changing market conditions. 
• On the other hand, existing players from other verticals are adding to their capabilities to address payroll requirements. 

Unified API for payroll integration

With so many payroll applications in the market for HRMS integration, it can be extremely daunting for businesses to make sense of all payroll related data. At the same time, it is difficult to manage data exchange between different payroll applications you might be using. Therefore, a unified payroll API can help make the process easy. 

Data normalization

First, the data needs to be normalized. This means that your unified payroll API will normalize and funnel data from all payroll providers about each employee into a consistent, predictable and easy to understand data format or syntax, which can be used. 

Data management

Second, a unified API will help you manage all employee payroll data in the form of unified logs with an API key to ensure that you can easily retrieve the data as and when needed. 

Make informed decisions

Finally, a unified payroll API can help ensure that you are able to make sense of the payroll data and make informed decisions during financial planning and analysis on factors like pay equity, financial prudence, etc. 

Payroll API data with Knit 

As a unified payroll API, Knit can help you easily get access to the following payroll data from different payroll applications that you might be using to facilitate seamless payment processing and payroll planning for the next financial year. 

Employee Profile

Seamlessly retrieve all employee data like first name, last name, unique ID, date of birth, work email, start date, termination data in case of former employees, marital data and employment type. 

Employee Organizational Structure

Hierarchical data for the employee, including information on the employee’s title and designation, department, manager details, subordinates or those who report to the employee, etc. 

Employee Dependents

Details about the family members of the employees including children, spouse and parents. The information includes name, relation, date of birth and other specific data points which can be useful when you are negotiating insurance and other benefits with third party companies. 

Employee Location 

Information on where the employee currently resides, specific address as well as the permanent address for the employee. 

Employee payroll

All kinds of details about the compensation for the employee, including gross pay, net pay, benefits and other earnings like commissions, bonuses, employee contributions to benefits, employer contributions, taxes and other deductions, reimbursements, etc. 

Wrapping up: TL:DR

Overall, if you observe it is very clear that increasingly, the payroll market is becoming more and more fragmented. Invariably, it is becoming extremely difficult for businesses using multiple payroll applications to normalize all data to facilitate understanding and exchange. To make sense of payroll APIs, you need to first acquaint yourself with the key payroll concepts like pay period, payroll run, compensation, in-hand pay, gross pay, reimbursements, benefits and deductions, etc. 

Once you understand these, you will agree that a payroll API can make the payment process seamless by helping in employee onboarding and payroll integration, management of reimbursements, administration of benefits and easy deductions, tax and net pay management, accounting and financial planning, among others. 

Increasingly, data from payroll APIs is also enabling other SaaS companies to power their operations, especially in the finance and fintech space. If you look closely, lending, insurance, portfolio management, etc. have become very streamlined, automated with a reduced reliance on manual process. At the same time, HR management has also become simplified, especially across performance management. Payroll data can help performance management companies help businesses identify the right incentive structure to motivate high performance. 

However, with increasing fragmentation, a unified payroll API can help businesses easily extract salary information, data on benefits and deductions and records about how and when the employees have been paid along with tax related information from a single source. Thus, if  you are adopting payroll API, look out for data normalization and data management for maximum business effectiveness. 

In this article we will learn about Merge API, a unified API solution to help developers build native integrations with multiple 3rd party end systems in one go using the 1:many connectors provided by Merge. 

We will also learn about what happens post integration - how data syncs happen on Merge API predominantly via a pull based model where Merge stores a copy of the end customer data in their servers, which could lead to end customer anxiety around security and compliance. 

Finally, we will talk about how Knit API is solving for this by working on a push based model which does not require any customer data storage - helping you reduce friction with your customers and alleviate their concerns on how their data is being handled.

Let’s dive in.

‍

What are unified APIs?

Essentially, a unified is a 1:Many API which helps developers go-live with multiple integrations within a category of SaaS with a one time effort of integrating with the unified API provided by the platform. For example, let's say an Employee Benefits platform wishes to integrate with multiple HRMS systems which its existing or potential customers use. In the absence of a unified API, the developers at the benefits platform will have to read API documentation of each HRMS, understand its data model and build the connectors 1:1. This wastes massive dev effort on a repetitive task which essentially serves the same basic purpose of syncing employee data from the customers HRMS to the benefits platform. Unified APIs save all of this effort by normalizing the data models of all the HRMS tools out there in to one common data model so the developers at the benefits platform have to work with just one connector rather than building a connector for each different HRMS tool in a 1:1 manner.

Other than building the integrations faster, unified APIs also help you maintain them in a low effort way by providing DIY integration management dashboards which your front line customer success teams can use to diagnose and fix any issues with live integrations so that your engineering team does not need to get involved every time there is a break or question around data syncs from your customers.

If you are wondering whether a unified API is a right solution for you or not, read this

Now, let us look at the components of a unified API solution.

‍

Key components of a unified API solution

Any unified API solution has four basic components - 

1. The auth component 

Users of your APP use the auth component, embedded in your APP, to authenticate and authorize access to their enterprise app to your SaaS application.

‍

2. 1:Many Connectors 

1:many connectors are simply put, a common data model which abstracts the data models of all the existing applications in a category of apps so that your engineering team can work with just the one connector provided by the unified API platform rather than individually integrating with all the connectors within that category of apps.  This saves massive time as your dev team does not need to understand the nuances of each and instead build your product logic on the common data model of the unified API provider.

‍

3. Integration Management 

Often the most neglected piece when teams build integrations in-house, integration management dashboards are one of the key value propositions of Unified API platforms since they help your frontline teams diagnose and fix any integration or sync issues without having to involve the engineering team each time. Think about the massive amount of time it can save in maintaining the integrations which are already built and live.

‍

4. Data Syncs

This is probably the core of the product - getting data in from the source app to your app and writing back from your app to the source is why we build integrations. Because this is important, we will talk about this in more detail below, and along the way of understanding Merge's data sync model.

‍

Data syncs via unified APIs

To understand how data syncs happen via unified APIs, we first need to understand that there are two parts to the process -

1. Data syncs between the source app and the unified API provider

2. Data syncs between the unified API provider and your app

‍

Data syncs between the source app and the unified API provider

The first part of the data sync is to read data from the source APP and do something. Now, here again, there are two phases:

• The initial data sync
• Delta syncs thereafter

The initial data sync happens when your app’s user has authenticated and authorized the unified API platform to access data from the source app for the first time. This is when Merge API accesses and stores a copy of the data in its own database. This is the copy of the data that Merge API uses to serve your app, i.e., the consumer app.

Post the initial syncs, the delta syncs come into the picture. The purpose of the delta syncs is to inform the consumer app of any changes in the data, for example title, manager, or location changes for any employee if you are syncing with a source HRMS system.

Now here, depending on the source system, delta syncs could be handled via webhooks OR by periodic polling of the source app. 

• When the source app supports Webhooks, like Rippling, it dispatches any delta events to Merge, which then changes its copy to reflect the new information available. 
• When the source app does not support Webhooks, like Success Factors, Merge has to again read the entire data from the source app and create a fresh copy of the data by polling the source system at pre-set frequencies. Depending on the plan you have, these sync frequencies could be every 24 hours or more frequent.

The thing to note is that in both scenarios, whether or not the source app supports Webhooks, Merge API serves the consumer app via its stored copy of the data.

‍

Concerns with a data storage first model for data syncs

A data storage based model brings with it multiple challenges. First and foremost the end customers who are authorizing your app to access their data via Merge API might not be comfortable with a third party having a copy of their data stored somewhere. Even when Merge API is SOC2 compliant, as ex-users of Merge APIs HRMS integrations for our HRTech venture, we had a segment of customers who had concerns about the handling of the data, employee data being PII, and there were also concerns about where the data is being stored (in some cases outside the customers geography).

This added unnecessary friction between us and our customers, requiring additional infosec questions and paperwork which delayed deal closures or in some cases led to deals not closing at all.

‍

Data syncs between the unified API provider and your app 

Now that the unified API provider has the data, your app must consume the data for your business logic to work. There are two main philosophies or approaches here - pull vs push.

‍

The pull model

‍

In a pull model, your servers are busy making calls to the data providers like HRIS, Payroll systems etc. to get data. In order to do so, you will need to create a polling infra.

If you're doing so for 10-15 batch jobs, perhaps it is manageable. But imagine doing this for hundreds, even thousands, of jobs. The problem gets harder. Further, if there is no new data to report, you just wasted your compute resources on an empty call.

‍

The push model

‍

Now compare this with the push model. Typically, you will be required to subscribe to certain events by registering a webhook. When the event happens, the data providers would notify you with appropriate payload on the registered destination URL. 

You don't have to manage any polling infra, nor would you waste compute resources on inconsequential calls. With event driven microservices architectures on the rise, the push model is definitely easier to work with and scale vs a pull model.

‍

Which approach does Merge API use? Pull or Push?

Here, the Merge API relies heavily on a pull-based approach (though it does provide delta webhooks, which we will talk about below). Let’s look at the three options Merge API provides to consumer apps-

‍

1. Periodic Syncs

Here, your app is expected to periodically poll the Merge copy of the data, such as every 24 hours. What this means is that you will have to build and maintain a polling infrastructure at your end for each connected customer. This is ok if you have a small number of customers, but quickly gets difficult to maintain if you have lots of connected customers.

‍

2. Ad-hoc Syncs 

If your app wants to sync data frequently, Merge API provides an option for you to write sync functions which can pull only data which has changed since last sync using its modified_after timestamp. While this reduces the data load, it still requires the polling infrastructure we talked about in point 1.

‍

3. Webhooks

Merge’s webhooks are again of two types - sync notifications and changed data webhooks. 

Sync notification events are simply notifications to your app that something in the data has changed and expects you to start the ad-hoc sync once you receive the notification - so essentially pull. On the other hand, while it does offer the changed data webhooks, it does not guarantee scale and data delivery via these webhooks. 

From Merge’s doc:

• Merge offers webhooks that deliver updated data when individual data instances are updated, but depending on the amount of user data, this will not scale well. 
• Make sure to implement polling and don't rely entirely on notification webhooks. They can fail for a variety of reasons (such as downtime on your end or failed processing). Merge does attempt to redeliver multiple times using exponential backoff, but we still recommend calling your sync functions on a periodic cadence of around once every 24 hours.

So you see the problem? You will not be able to work around the need for building and maintaining a separate polling infrastructure. 

‍

Knit’s approach to data syncs

While everyone talks about security, at Knit, we actually have walked the talk by embedding security in our platform architecture. 

We do NOT store a copy of the source data with us. And we have built a completely events driven architecture from the ground up, so we work only with Webhooks and deliver both the initial and delta syncs to your app via events.

So you have less compliance and convincing to do with your customers, and do not have to  waste engineering resources on polling while at the same time get guaranteed scalability and delivery irrespective of the data load.

Another advantage of a true events driven architecture is that it supports real time use cases (where the source APP supports real time webhook pushes) which a polling based architecture does not.

While we will soon be covering our architecture that guarantees security, scale and resilience for event driven stream processing in more detail in a follow up post, you could read more about the basics of how Knit API functions here: Knit API Documentation

‍

Other advantages of Knit API over Merge API

1. Auth component

Knit’s auth component offers a lot of flexibility in terms of design and styling vs what Merge API offers. 

It is a Javascript SDK which is far more customizable as compared to iframe which is Merge’s choice for the frontend auth component. 

So if you want to make sure that the auth component which your customers are interacting with, looks and feels similar to your own APP, Knit API might just be the right solution for you.

‍

2. Integration Management

Knit provides deep RCA and resolution including ability to identify which records were synced, ability to rerun syncs etc. It also proactively identifies and fixes any integration issues itself. 

While Merge also offers customer success dashboards, they are not as deep, so your frontline folks will have to reach out to your engineering teams more frequently. And we all know how much engineering teams enjoy maintaining integrations and going through logs to check for data sync issues rather than building cool new core product features ;)

‍

Final Thoughts

Knit is the only unified API solution which does not store customer data, and offers a scalable, and reliable push driven data sync model for large data loads. 

This has several benefits:

• Better security: Since Knit does not store any customer data, you and your customers can be confident about data security and you can close deals much faster.
• Better developer experience: Since you do not need to maintain any polling infrastructure for Knit due to its events driven architecture, your developers have lesser issues maintaining it.
• Better scalability & reliability: Even with a webhook first model, Knit guarantees data delivery and scalability irrespective of the amount of data being synced between the source and destination apps. We offer a 99.99 SLA and aiming for 99.9999 soon.

Curious to learn more about Knit? Get started today

‍