In today's business landscape, businesses face an ever-growing number of applications they need to juggle to run their operations. In 2022, businesses worldwide used an average of 130 applications.
Having data siloed across multiple applications results in a decrease in productivity from the time, money and resources wasted on mundane tasks like manual data entry, or regular data imports and exports. MSMEs are especially resource-constrained, and should not waste time on mundane, low-ROI tasks. Ideally, data should be synced across all their applications, so MSMEs can focus on delivering their core product/service and maximize revenue.
If you’re a fintech or software provider building innovative solutions for MSMEs, you know the solution to fragmented data and siloed systems is B2B integrations. Attracting and retaining customers involves building a feature-rich product that often requires third-party, customer-facing integrations. However, it is important to consider all options before deciding on an integration strategy.
In this blog, we go over what B2B integrations are, how they can be used, what factors are critical to consider in your integration strategy, and finally, define and compare the different options to access consented financial data.
What is B2B integration?
B2B integrations allow different software systems to communicate with each other and share data seamlessly. There are a few methods of making systems communicate with each other, but with most systems running on the cloud and business activity becoming more and more complex, B2B Application Programming Interface (API) integrations have become more of a necessity rather than a nice to have.
How can B2B Integrations be used?
Internal integrations (between 2 or more internal applications)
Internal integrations involve connecting two or more applications used internally by a business.
Examples include linking a Customer Relationship Management (CRM) system with an accounting platform. This allows sales representatives to see when a customer has outstanding invoices directly within the CRM. Another instance could be the connection between an inventory management system and the accounting platform, ensuring that inventory costs are always updated in real-time in the financial books.
By leveraging internal integrations, businesses can streamline operations, reduce data redundancy, and enhance decision-making with unified and up-to-date information across different platforms.
Product or Customer-facing integrations (your application and 3rd party software)
Businesses can use product integrations, also called customer-facing integrations, to connect data between your application and 3rd-party software that their customers use.
Examples include an expense management platform (like Brex or Expensify) integrating with accounting softwares (like NetSuite, QuickBooks or Xero). When an expense is registered on the expense management platform, the financial transaction details are automatically updated in the accounting software, eliminating the need for manual data entry and reconciliation.
By using customer-facing integrations, you can provide your customers with a better user experience and increased productivity, with data being synced across platforms, reducing the need for menial tasks.
What factors you need to consider in your B2B integration strategy
- Number of Integrations - Do you need to build a few simple integrations or one complex integration?
- Complexity of the Integrations - Are your integration needs relatively simple, to cloud-based software with public APIs (like Zoho Books or Quickbooks), or more complex, to ERP or on-premise systems (like Tally or NetSuite)?
- Internal Expertise - Do your developers have the engineering expertise in building and maintaining integrations? Additionally, do they have or have immediate access to subject expertise in the categories of applications they’re building integrations for? For example, developers who do not have an understanding of healthcare systems shouldn’t build integrations for health-tech apps.
- Scalability and Future Planning - How many integrations do you need now and how many integrations will you need in the future? Planning for growth as your target market and features improve may necessitate additional integrations.
- Maintenance - Does your existing engineering team have the resources and bandwidth to maintain integrations due to API updates, manage rate limits, address errors and handle any edge cases?
- Security Risks - It is critical to consider the mandatory data security and compliance standards you need to maintain, especially when your integrations contain sensitive financial data. Further, consider the associated costs and risks if these standards are not maintained.
- Time to Market - How quickly do you need your product live? How long will your chosen solution take to implement?
- One-time and ongoing costs - Do you have the budget to support the costs associated with the build and maintenance of integrations?
What are the options for connected data?
To understand how software providers can build innovative products for MSMEs, we first have to consider the six options providers have to access data in and out of their customers’ accounting software:
- Manual workflows: Simple, technology-free process
- Workflow automation: Automate mundane manual processes
- iPaaS: Connect internal applications
- Embedded iPaaS: Seamless customer-facing integration
- Native integrations: Custom-build in-house
- Unified API: Leverage a 3rd party API Aggregator for multiple complex customer-facing integrations
1. Build: Manual Workflows
As previously mentioned, manual workflows are the simplest way to access and provide data to your customers. This process involves manually inputting data into accounting systems line by line or importing and exporting static files between your solution and your customers’ accounting platforms.
Manual Workflow Use Cases:
- A small business owner downloads monthly bank statements in a CSV format and then manually enters this data into their standalone accounting software for reconciliation
- A small business owner manually updates expense data from paper receipts into an accounting software every month
Benefits of manual workflows
- Simplicity: Doesn't require tech expertise or tools.
- Immediate Control: Users can verify each entry.
- Cost: No upfront software costs.
Drawbacks of manual workflows
- Extremely Time-Consuming: Especially compared to the efficiency and productivity gained from an embedded iPaaS or a Unified API.
- Error-prone: Humans can make mistakes, leading to financial discrepancies.
- Not Scalable: As the business grows, this manual method becomes unsustainable.
Integration Solutions for Apps Used Internally:
2. Buy: Workflow automation tools
Third-party workflow automation tools connect two platforms by overlaying a low or no-code interface to set up and manage the workflow. Once set up, these tools automate specific tasks based on defined triggers or rules.
Examples: Make, Celigo, Zapier, Microsoft Power Automate
Workflow Automation Use Cases:
- Whenever an invoice is marked as paid in a CRM, an automation tool automatically creates a corresponding entry in the accounting software.
- Each time an e-commerce platform records a sale, a corresponding financial entry is automatically created in the accounting software.
Benefits of Workflow Automation Tools
- Reduces Manual Tasks: Certain processes become automated.
- Some Flexibility: Can customize workflows based on needs.
- Improved Accuracy: Reduces manual entry errors.
Drawbacks of Workflow Automation Tools
- Limited Capabilities: Can’t handle complex data processes as Unified API can.
- Maintenance: Workflows can break if one platform changes its system.
- Costs at Scale: As workflows increase, costs can rise.
Overall, workflow automation tools are most helpful in automating manual, mundane internal processes, or for setting up simple customer-facing automated workflows like sending a scheduled email based on a trigger, but do not transform or normalize data and are not effective for complex use cases. Using a Unified API could be more effective at scale, especially when automations are customer-facing.
3. Buy: iPaaS
An iPaaS, or Integration Platform as a Service, is a cloud-based integration solution that allows low-code one-to-one connections between two platforms. iPaaS providers usually help enterprises connect siloed data in internal applications.
Examples: Workato, Tray.io, Boomi, Mulesoft, Celigo
iPaaS Use Cases:
- Integrating an e-commerce platform with accounting software so that sales data from the online store is automatically reflected in the company's financial records
- Automatically syncing sales data from an e-commerce platform with an accounting software.
Benefits of iPaaS
- Ease of Use: Low-code integration setup
- Security Features: Pre-built data security controls.
- Pre-made Integrations: Many providers offer ready integrations.
Drawbacks of iPaaS
- Limited Uses: Can only be used to connect internal applications
- Deceptively Simple: Needs developer support for deep integrations
- Messy data: Lack of data normalization across systems
- Cost: Premium features often come with high costs.
- Maintenance: Requires constant monitoring for updates and changes.
Overall, iPaaS solutions are most effective for internal use cases, where one-to-one connections need to be quickly used.
API Integration solutions for customer-facing applications:
4. Buy: Embedded iPaaS
An embedded iPaaS is a cloud-based, low-code solution that connects a customer-facing application and third-party software. It allows software providers to seamlessly integrate data from third-party software into their applications.
Embedded iPaaS solutions have pre-configured connectors, templates, and workflows tailored to the specific needs of the platform, making integration tasks easier. Unlike iPaaS, embedded iPaaS is focused on simplifying and enhancing integration for a specific software or service, providing a more tailored and user-friendly experience.
Examples: Paragon, Cobalt, Cyclr, Elastic.io, Prismatic
Embedded iPaaS Use Cases:
- A CRM platform has built-in features to draw financial data from different accounting software
- An accounts receivable platform has built-in functionality to sync invoices across different accounting software
Benefits of Embedded iPaaS
- Seamless experience: Integration is a built-in part of the application.
- Focused functionality: Tailored to the primary software's requirements.
- Market appeal: Integrations can make the software more attractive to potential customers.
Drawbacks of Embedded iPaaS
- Prevents Scaling: Since integrations need to be built one at a time, limiting scalability
- Lack of normalized data for multiple integrations
- Integration challenges: Though embedded iPaaS solutions are often marketed as low/mo-code, they can require significant developer work to embed and operate.
- Potential for vendor lock-in: Dependence on the embedded iPaaS provider
- Restrictive: Limited to the integrations the embedded iPaaS supports.
- Potentially High Costs: Building and maintenance can be expensive at scale.
With its cloud-based, low-code interface, embedded iPaaS tools allow companies to seamlessly merge data and functionalities of distinct platforms, enhancing the user experience and reducing the complexities traditionally associated with integration.
However, when compared to a Unified API, embedded iPaaS can fall short in certain areas. While embedded iPaaS might cater to specific integration use cases, a Unified API provides a more comprehensive integration suite, with features like managed authentication, security, and data normalization across multiple platforms. This ensures a consistent, secure, and efficient data flow, making Unified API a more holistic and scalable solution for businesses aiming for extensive and future-proof integrations.
5. Build: In-house integrations
Building an integration involves creating custom code that connects two or more systems. If both systems are cloud-based and maintain public APIs, an API integration can be built. If one or either system is on-premise, building an application to serve as a connector becomes even more complicated. Building integrations in-house requires skilled developers and can take a lot of time and resources. However, there are some benefits to building your own API integration.
In-House Use Cases:
- Most large firms like Google or Microsoft build many integrations natively
- Start-ups looking for very specific integrations tailored to their needs
- An online payment gateway custom-creates an integration to sync with different bank data
Benefits of in-house integrations
Building your own API integration allows for complete customisation. You can tailor the integration to meet your business needs and ensure it works seamlessly with your existing systems.
With a custom-built integration, you have complete control over the development process. You can make changes and updates as needed and ensure that the integration is secure and reliable.
Drawbacks of building in-house integration
- Prohibitive Costs
Building your own API integration can be more expensive than buying a pre-built solution. This is because you will need to bear the expense of dedicated engineering teams or hire additional engineers to build out API integrations.If you need to connect your product to software that is on-premise and not on the cloud, expect the difficulty and costs to increase even more. Further, some applications have publicly available APIs and require significant fees to become licensed partners to build APIs, which may be an unrealistic expense for a growing company.
- Extensive Long-term Maintenance
In the long run, maintaining your own API integrations can be more challenging than buying a pre-built solution. Once the integration is developed, you will have to dedicate engineers to check for updates, handle errors, rate limits and more.
- Longer Time to Market
Building a single B2B integration that is secure and stable can take weeks, if not months, as it requires a thorough understanding of the system’s API. When you multiply that complexity for each integration you need to build, the time to market when building in-house will likely be months, if not quarters.
- Developer Resources Required
Your developers need to understand each API, map each integration’s fields to your data schema, test for errors and bugs, and manage edge cases. This is a resource-heavy process, which takes time away from developing your core product.
- Limited Scalability
Since your team is building in-house, reaching new customers involves starting the entire process of building an integration from scratch. This process can be very cumbersome for developers.
- Need for domain expertise
Your product team will need to have domain expertise in each of the categories you want to build API integrations.
6. Buy: Third-party API aggregator or a Unified API
Outsourcing integration needs to a third-party integration aggregator or a Unified API involves purchasing a pre-built solution from a vendor or paying a usage-based fee for services. This approach is faster and requires fewer resources than building your own integration. However, third-party does come with some drawbacks, depending on the provider chosen.
Examples: RootFi, Merge, Codat, Rutter, Finch, Railz
Unified API Use Cases:
- An accounts receivable tool uses a Unified API to push and sync invoices and associated financial data from multiple accounting software platforms, offering an end-to-end AR solution.
- A financial advisory app uses a Unified API to access data from several accounting platforms, offering users a comprehensive financial overview.
- A credit underwriting solution uses a Unified API to pull financial data from several accounting platforms, offering users a fast loan approval solution with the best terms.
Benefits of a Unified API
- Bypass the Costs of Building In-House
Paying for usage-based pricing with a Unified API allows you to avoid the major costs incurred when building multiple integrations in-house.
- Faster Time to Market
Using a Unified API allows you to skip months of time building multiple integrations in-house. With RootFi, you integrate once and access 16+ accounting integrations instantly. Testing and onboarding customers can occur in a few days, allowing you to focus on your core product.
- Normalized Data Across Platforms
A major benefit Unified APIs offer over other integration solutions is the normalization of data. This allows you to view and manage every customer’s data in a single format, no matter what underlying accounting platform they use.
- Offloaded Maintenance
Building an integration is sadly not a one-time activity. Once an integration is built, API updates and software bugs require a developer to dedicate significant time and resources towards ensuring the integration does not break. Further, close attention needs to be paid to rate limits and errors, which some providers manage.
- Refocus Developer Resources on Core Product
Since a Unified API handles building and maintaining integrations, and manages data normalization, rate limits, errors and edge cases, your developers need only learn how to work with one API. This frees up precious time better spent on building your core product.
Drawbacks of a Unified API*
*Note: None of these drawbacks apply to RootFi. Learn how we’ve solved for them here.
- Limited Customisation for Edge Cases
Pre-built API integrations are designed to work for a wide range of businesses. As a result, they may not be fully customisable to meet your specific needs. This can lead to additional development work or gaps in functionality.
- Lack of Control
When you purchase a pre-built API integration, you are at the mercy of the vendor. You have no control over the development process or the security measures implemented. If the vendor stops supporting the integration (in the form of integration maintenance), you may be left with a broken product.
- Cost to Build
While buying a pre-built API integration may be cheaper upfront, it can be more expensive in the long run. Most vendors charge ongoing licensing or subscription fees, which can increase at a moment’s notice and add up over time. RootFi offers a flexible multi-tiered pricing model, which allows you to pay for only the services you use.
- Security Concerns
Since a Unified API provider is a third party between your product and your customer’s systems, their use may come with security risks. Customers may be unwilling to share sensitive data if the Unified API provider does not have industry-standard security practices. At RootFi, we go above and beyond to ensure data privacy and security, as our data is encrypted both at rest and in transit, and RootFi is ISO27001:2013 certified and is SOC2 Type 2 and GDPR compliant.
Finding the right data integration solution for your business
When it comes to API integrations, there is no one-size-fits-all solution. The decision to build or buy an integration depends on your business needs, resources, and budget. Custom-built integrations offer complete customisation and control but require more time and resources.
Pre-built integrations are faster and require fewer resources but do not normalize data across platforms, may not be fully customisable and can be more expensive in the long run.
Ultimately, the best approach is to carefully evaluate your options and choose the solution that best meets your business needs.
If you want to build a connected product that syncs data between your solution and your customer’s accounting platforms, look for further than RootFi’s Unified API.
Offload all your integration headaches to RootFi, let your developers focus on your core product and go to market months ahead of your schedule. Allow RootFi to handle rate limits, manage API changes, and most importantly, API authentication. Integrate once and use RootFi to connect your product to 16+ accounting integrations.
Get started with RootFi’s Unified API for free, or schedule a demo to learn how RootFi could be your end-to-end data integration solution.