Retail

iPaaS vs. API Integration: Which Is Best for Your Business?

iPaaS and API

The world of retail is changing rapidly as traditional brick and mortar models and online commerce converge. As noted in a Fast Company article about trends in retail, “Omnichannel retail isn’t going anywhere. The in-store online convergence will only become more seamless.”

To stay competitive, retailers are looking at technology to provide these seamless omnichannel shopping experiences and grow customer loyalty. However, as retailers add new systems into their tech stack, it brings an additional level of complexity. There is a silver lining to technology integrations, which was once complex and cumbersome process has now become faster and more scalable.

While there are many integration options available, many businesses often narrow down their decision between a cloud-based integration (iPaaS) vs. Application Programming Interface (API) integration. But how do you know which integration will meet the needs of your business?

Both iPaaS and API offer unique value propositions and capabilities, so let’s examine each of these integration options in more detail.

What Is iPaaS? 

iPaaS, also known as Integration Platform as a Service, is a set of cloud services that connects cloud and on-premises technologies across multiple applications. iPaaS serves as a platform for building and deploying integrations within the cloud, between the cloud and those within the enterprise without any hardware or middleware.

What Is REST API? 

REST API, also known as Representational State Transfer, is an industry standard and one of the most preferred API paradigms which use a REST architectural style when creating the APIs. It allows an application or service (the client) to have access to resources that another application or service has (the server). Being developer-friendly, REST APIs empower organizations to build great new experiences on any channel with their data and with data from other organizations to support their innovation aspirations.

Pros and Cons of iPaaS and API

Let’s take a deeper look at the main features and limitations of these two modes of integrations. Both iPaaS and REST API have their own set of benefits, nonetheless there are clear differentiators that make REST API more suitable for omnichannel commerce and larger enterprise integration. But before we get into why REST API is the winner, let’s review the pros and cons of iPaaS.

Pros of iPaaS   

1. Simple to Use  

iPaaS requires low to zero code. In the process of implementing these services, all the technical work is done so it is very simple to link it with your application. A non-technical person can build an integration by simply using its drag and drop capabilities provided by the vendor. This allows businesses to focus on productivity and avoid time-consuming tasks related to their code.   

2. Low Upfront Costs  

iPaaS is cloud-based, so no hardware or software is needed to integrate applications. To add on, it also removes the need to have developers create APIs, so it is cost-effective.    

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Cons of iPaaS 

1. Limited Number of Prebuilt Use Cases/Domain-Specific  

iPaaS is very particular when it comes to its use cases and does not work well with larger enterprises because it is difficult to create connectors for each scenario. Therefore, in many cases the iPaaS provider may not be able to find a specific solution for the business due to its technical difficulty or it being a case of customization.

2. Periodic Costs and Higher Total Cost of Ownership

Although the upfront costs of using iPaaS may be cheap, depending on the vendor, the business could incur a periodic fee based on the subscription pricing (number of connectors used) or data usage pricing. Therefore, it is difficult for businesses to select an iPaaS vendor that satisfies all their needs, while paying a reasonable price. With an evolving SaaS marketplace, connecting each new and emerging system means additional costs and license fees which add up to a bloated total cost of ownership.

3. Unsuitable for Firewall-Sensitive Integrations

Integrations using iPaaS for connecting a cloud-based system and an on-premise system behind a firewall is always a challenge and often a forced compromise of the security guidelines imposed by the IT organization of the enterprise. This is more so in cases where sensitive personal, financial and health data is involved irrespective of the commerce use case.

Pros of REST API  

1. Deliver Personalized End User Experiences

Using REST APIs for backend communication and integration with other systems enables retailers to decouple channel-based frontend experiences from the underlying data that powers them. You could be catering to a Gen Z user on TikTok, a millennial user on your mobile app or a baby boomer user at your store, but still ensure each channel has its unique user interface and experience. This simplifies the purchase and, mostly importantly, ensures optimal order fulfillment using best-in-class routing and consolidation algorithms. All this made possible by seamless and efficient machine-to-machine communication powered by REST APIs.

2. Developer-Friendly, Firewall-Friendly and Internet-Friendly

REST APIs are easy to integrate, making it a smooth transition for new retailers to work on it and for developers to easily display the information on the client sideIt can handle various data formats and since the data is not tied to the resources and methods, it makes it very easy for the API to be suitable for various use cases. Considering well-established architecture and security mechanisms are followed using REST APIs, it provides a sense of satisfaction for the IT department to support complex end user journeys.

3. Lower Total Cost of Ownership

Most retailers’ tech stack involves multiple byte-sized systems each serving its own purpose. Thus, each integration with a newly discovered platform/system makes it cumbersome with a one-size-fits-all approach that an iPaaS platform may offer. This is where REST APIs provide more control over the integration needs considering its DIY approach. While the initial cost may be higher in comparison, REST API-based integrations help keep costs in check when it comes to connecting a new system each time in future after an initial implementation.  

Cons of REST API  

1. Dependency of Technical Expertise  

Although learning REST API does not have a steep learning curve, it could be difficult for new developers who do not have experience with HTTP and client-server architecture. This also means reliance on a technically strong team, which may be a challenge for some organizations based on their size and industry vertical.

Conclusion

Both iPaaS and REST APIs have their pros and cons when it comes to integrations. Although iPaaS may be low cost and require less code, the ease of use comes at the cost of limited customizability and a relatively higher TCO in the long run. On the other hand, REST APIs provide more control over the end user experiences that can be delivered, thereby fostering innovation. This means more flexibility and customizability for larger enterprises and unique domain-specific needs.

Enterprises with a mature IT landscape focused on more sustained and meaningful innovations often resort to an API-based mechanism for their integrations and with the universal applicability of REST APIs, the choice is a no brainer!

If you are thinking about omnichannel digital transformation, check out this webinar below.

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