Takeaways From the 2020 Cloud Elements State of API Integration Report

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We review the 2020 State of the API Integration Report, conducted by Cloud Elements. Download it here.

For players in the software space, staying relevant in the marketplace has always been a challenging task. Each passing year brings the emergence of numerous new APIs, and standing out is becoming tougher than ever. Success in today’s API climate — paradoxically — means building functional products while “playing nicely” with others.

Cloud Elements surveyed over 380 experts from 44 countries to gather feedback on today’s state of integrations. 83% percent of respondents believe that API integration unlocks transformative experiences for customers, partners, and employees. We can do even better yet with integration across the API landscape. The Cloud Elements 2020 State of API Integration Report highlights the importance of creating robust software platforms — and how APIs can generate value for your organization.

We’ll jump into some of the report’s key findings. Cloud Elements has weighed in on one key question: why should we view API integrations as a competitive advantage, especially as our services grow more diverse?

Breaking Down the Survey Process

When designing the study, Cloud Elements and fellow contributors were interested in the following:

  • If and how API integration strategies are evolving
  • Which emerging technologies have the most influence on integration standards
  • How APIs influence product strategies and development
  • How key decisions drive the development process
  • How to support the process of implementing API integrations

Independent software vendors made up 33% of respondents, with enterprise participants close behind (30%). Integrators and others rounded out the remainder of the group. Survey takers answered several questions related to API integration trends and overall sentiment.

Revealing the Trends

API providers overwhelmingly offer integration platforms as part of their products. SDKs and workflows are much less prominent parts of the development pipeline. 77% percent of respondents offer API management platforms to support integration — while alternatives like iPaaS, iSaaS, and Enterprise Service Buses are prevalent yet less popular. Overall, infrastructure seems to be pretty diversified, though investment is management-heavy.

Why are companies favoring integration? The rise of API platforms has ushered in rapid modernization. Organizations are scrambling to transition into the digital realm. In fact, digital transformation is a chief reason behind app integration for over 40% of software leaders. Business needs are primarily driving the creation of customized API integrations —for both API providers and their partners. Lastly, 60.6% of respondents say their integration requirements are mostly cloud-based. This tells us that on-premises popularity is dwindling in response to industry shifts.

What’s the Business Case?

While technology rules the landscape, we can’t deny that money still rules the day. Companies are fervently told that APIs are crucial, though many companies must still discover how these solutions can add value. Accordingly, 83% of participants say that API integration is either critical or very important to their greater business strategy. It appears that companies have embraced the platform-first mindset, and will continue warming up to the concept.

Companies need to ensure their solutions are interconnected. Customers have become accustomed to integrated software solutions. Cloud Elements asserts that these expectations are justified. Why bother using an application that’s completely walled off? Fragmentation breeds frustration and kills productivity. According to the report findings, customers demand and deserve state-of-the-art products that do it all and do it cohesively. Such expectations are magnified when customers pay for products.

API integrations ultimately lead to happier users. The idea is that integrated functionality will inspire users to renew their subscriptions, make more purchases, and engage more frequently with API platforms. Nearly 50% of respondents agree that most customers will renew or upgrade once rich integrations roll out. Companies that don’t adapt risk user flight.

Integrations may take a few forms. They support functionality across different platforms and unify data sharing and access between applications. Integrations also enhance customer visibility with collective metrics. That data, when managed safely, is another potential revenue stream for the companies that oversee it. API integrations can pay for their costs, generate profits, or bring indirect cash flow.

Enterprise vs. Independent Software Vendors (ISVs)

The report highlights two main developments in the integration space, as they relate to vendors and enterprise entities. Solutions are expanding to include higher levels of functionality for customers. Furthermore, the enterprise players are becoming data collectors—managing user information while boosting its fluidity across the ecosystem.

This “data governance” is a hot-button topic today, as companies like Google, Microsoft, Adobe, and SAP seek to protect sensitive data. A push for improved, unified standards surrounding unification and enhancement of applications is brewing. New open data initiatives aim to employ AI and standard data models to unearth insights.

Additionally, who owns this data and its visibility? These questions are crucial in the era of GDPR and CCPA. Trust and accuracy aren’t just aspirational—they’re required. Businesses must ensure their API platforms meet their data-lifecycle demands at scale.

Democratizing Information and Access

API providers are trying to simplify customer workflows while personalizing user experiences. We’re seeing many new entrants in the API space offer useful services to customers in banking, healthcare, pharmaceuticals, and more.

Surprisingly, enterprise respondents were much more forthcoming about their top integration priorities. These mainly include:

  • Digital transformation to drive innovation
  • Cost reduction and productivity increases
  • External benefits like partner integrations, platformification, increased API adoption, and investment justification

By comparison, none of the 121 ISVs shared their most significant focus areas. The report speculates that these priorities are outwardly obvious, or ISVs “couldn’t be bothered.” Furthermore, these integrations have become core, implied additions to each product pipeline.

Here are some more quick facts:

  • The vast majority of enterprise providers offer SDKs, while 20% offer full-fledged platforms.
  • Opinions are split on whether more integrations will lead to customer renewals or upgrades, as these enterprise users are entrenched and accustomed to specific solutions (comfort factor)
  • Many enterprise customers favor integrations in the form of RESTful endpoints to core systems and exploring better linkages between these systems
  • Respondents believe APIs need to flexible and agile—ready to evolve with customer needs
  • Since on-premises practices aren’t waning completely, numerous companies are adopting a hybridized API integration strategy to bridge the gap

It’s also unsurprising that the enterprise is still much slower to act than individual vendors are. Added bureaucracy, business concerns, and vetting go into every development decision across the product lineup. This inflexibility will have massive implications, as both ISVs and enterprise players hope to add over 34 integrations on average this year. How companies perceive the development challenges behind them will impact future successes.

Developer Trends and API Design

We know our API integrations are data-centric; accessing and safeguarding databases are essential tenets. Thus, technologies that streamline data retrieval are gaining favor. The GraphQL query language, for example, has gained momentum since its inception across multiple industries. Because GraphQL can abstract and pull from numerous sources in one request, it carries immense promise for complex data chains.

For example, Cloud Elements’ Luke Vance believes GraphQL has the power to supplant major players like Hypermedia amongst video services. Designing API integrations using GraphQL can simplify many processes. It also boosts performance and avoids bloat. Deficiencies in these areas can otherwise harm the user experience. GraphQL is still evolving, though developers are hopeful that it’ll soon grow into a complete API-creation mainstay.

Making Decisions in Real-Time

It’s speculated that roughly 33% of all data will be produced in real-time by 2025. Our API integrations must shoulder this massive demand. A significant barrier to these event-driven integrations is fragmentation—namely, protocol and engineering fragmentation. How we call data will become crucial to API success moving forward. REST and other command-query designs have been successful to date. However, the adoption of over ten prominent web request protocols has created a fragmented landscape. Ideally, a unified set of standards will help mitigate developmental challenges.

Engineering teams are also muddying the waters. Some groups are using popular integration standards, while others are using proprietary approaches. This hampers cohesiveness, especially when crafting event-driven solutions. These fragmented processes are slower, costlier, and ill-suited to tackle complexities. Even if API integration methods are sound, each provider has to address common concerns involving latency, throughput, and others.

Lastly, our designs should be consumer-centric. They should evolve based on demand—not remain rigid and resistant to change. Users should have integration options to choose from instead of being pigeon-holed.

The Future is Bright for API Integrations

Cloud Elements’ report shows us that the API landscape is evolving rapidly. Decision-makers are privy to the benefits of robust integrations, and the correlations they have with customer satisfaction. We expect a new class of capable services to emerge from this platform-based approach. Older services have been siloed for far too long, and API providers are catching on. Keep in mind that professionals and developers still face a learning curve. Adaptation takes time. Balancing innovation and harmony with outside ecosystems is an ongoing challenge. API integration will depend on how we handle engineering, customer needs, and mountains of complex data.