The Software as a Service (SaaS) market is witnessing unparalleled growth due to the increasing demand for software innovations without investing in expensive in-house IT infrastructure. This allows companies to expand their reach with first-class capabilities. For instance, the global SaaS market is projected to reach $317.55 billion by the end of 2024 and grow to an impressive $1.23 trillion by 2032.
However, competition is becoming more pressing due to the increasing appeal of the industry. SaaS brands recognize the value of third-party application programming interfaces (APIs) as out-of-the-box solutions for their application’s functioning and boosted performance. Integrating third-party APIs allows businesses to stay ahead.
Since using third-party API can boost businesses’ application efficiency and deliver more value to customers, companies should incorporate them into their SaaS products to maintain a competitive edge. Doing so requires knowledge of how APIs work and what objectives business owners should prioritize to make such an adoption possible.
Let’s explore third-party APIs, their key uses, reasons for adoption, and strategies to integrate them.
Understanding third-party APIs
What are third-party APIs
What is a third-party API and how does it work? An API is a program that serves as an intermediary for software systems allowing for data sharing, communication, and collaboration. Essentially, they allow your SaaS to communicate with other software.
Any API has a specific set of protocols that enable integration between the chosen systems, and it’s an indispensable element of modern software. Unlike the native ones, 3rd party APIs are made by an external development team that’s not directly involved with the platform or service it interacts with.
Why use third-party APIs
Business owners contemplating third-party API integration with their application should consider the following benefits:
Faster development
While there are advantages to developing one’s own APIs, software development and adaptation with other systems is much faster with third-party APIs. A company can launch its SaaS much faster without the need for re-inventing the wheel and creating a new API. An out-of-the-box tool enables businesses to utilize the pre-built functions, cutting back on time and giving brands a chance to respond to clients’ needs faster.
Cost efficiency
Developing in-house API solutions can be expensive, and not every company has the budget to work out its perfect alternative. The price for an API can begin at $25,000 and rise from there. A third-party API eliminates development and maintenance expenditures, instead presenting a ready option to launch into action.
Enhanced functionality
A 3rd party API achieves two purposes: it presents the features that improve the app’s quality and offers a finished product at a minimum development cost. It accelerates time-to-market and ensures that your app remains competitive without the need for extensive in-house development.
Scalability
As your app grows, companies can opt for API integration for SaaS to manage increased user demand by offloading certain functions to external providers. This long-term orientation allows enterprises to envision future progress and guarantee better performance of their apps in the future.
Key uses of third-party APIs in SaaS apps
While third-party app integration best practices vary, the list below covers key areas where third-party APIs can add substantial value.
Payment processing
Programs and services in need of processing payments capitalize on integrating 3rd party APIs into their system to handle their financial transactions. Such APIs deliver support for different payment methods and ensure that the process itself goes smoothly, with regard to safety protocols.
Examples of such APIs are Stripe or PayPal; both rely on payment processing operations as a significant part of their business procedures, including billing, fraud prevention, and invoicing services.
Communication
A company can exploit an API for mobile app or service to cover communication features, integrating emails, chats, different messaging types, and even voice functions. Integrating such a feature in many software products is imperative to user engagement.
Third-party API examples for communication purposes are Twilio and SendGrid which provide such capabilities to their clients. These communication APIs allow individuals to get email delivery services, voice calls, and video communication.
Geolocation
Geolocation APIs provide services for determining and utilizing users’ geographic locations. Brands using such third-party integrations retrieve the information from client-side devices, including browser or IP geolocation as the most common ones. For example, Google Maps is the perfect case of when geolocation APIs accomplish their task, giving users location data and directions based on it.
Analytics and tracking
Typically, analytics and tracking APIs collect user information and supply the company with specific characteristics of their behavior or traffic sources within a program. Businesses applying these APIs gain knowledge about their clients and their engagement. Both Google Analytics and Mixpanel present analytics and tracking APIs helping businesses assess user interactions and segment this data.
Access and authorization
Managing clients’ authentication and authorization, these APIs guarantee secure access to applications. They are built around particular security standards and provide mechanisms for user authentication and secure token management. To illustrate, OAuth and Auth0 offer frameworks for authorization and user management that highlight the principles of access and authorization APIs.
Data storage and management
Such API integrations provide flexible solutions for saving and managing application data, such as databases. Some of the typical features these APIs can provide are real-time synchronization and automatic backups. That’s the case with Amazon S3 which proposes scalable object storage for users needing to preserve large amounts of information, reducing the need for maintaining and managing data infrastructure.
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Integrating third-party APIs into your SaaS app
Once business owners become aware of the advantages of a 3rd party API, they start asking questions: How to incorporate APIs in your SaaS? What is needed to make the process smooth and benefit from third-party integration? If you or the people responsible for this implementation are non-developers, you’d need to set certain goals and work closely with a developer to avoid any potentially costly errors.
How to choose the right APIs for your SaaS app
Analyze your needs
When selecting an API for app development, the company should set specific demands it has toward features it intends to add or enhance. This process can call for much more effort than you might anticipate: business owners should account for their program profile and the particular functions necessary to make it better.
Identifying these expectations will help them narrow down the API options that best align with their goals. Ask yourself, “What is third party API integration bringing to my clients? Is it improving their experience?” Keep your user in mind whenever you make such decisions.
Evaluate API providers
Searching for the best API providers requires some time. It can be quite a difficult task: in 2021, there were 200 million private and public APIs worldwide. Although it complicates the search, it also means that you’ve got multiple opportunities to choose from even for quite niche industry branches.
Look for companies that have proven to be trustworthy. Analyze reviews, look at your rivals and market leaders to avoid repeating their mistakes or learn from their growth, and check performance benchmarks. Explore 3rd party API examples that highlight prior successes or failures.
The development communities also play a pivotal role in selecting the best API providers: well-documented APIs with active communities will give you better support and resources.
Consider costs and scalability
SaaS API integration has numerous cost implications, so it is critical to account for both short-term and long-term expenses. APIs may charge based on usage, data volume, or user access. Nonetheless, cost shouldn’t be the only factor to analyze: reflect on how the API will scale with your application.
Your perfect API solution must be adjustable enough to handle accumulating client information and operations as you expand and have flexible pricing to manage expenditures.
Best practices for integrating third-party APIs
Explore these strategies for integrating third-party APIs in a mobile app to leverage your strengths and prevent missteps while diversifying your functionality and improving user experience.
Prioritize security
Integration with third-party API always comes with security risks — you don’t control the regulations already in place, so you need to choose APIs carefully. Disturbing 95% of respondents commented on struggling to contain security incidents concerning production APIs.
Business owners should ensure that the chosen API provider complies with industry-standard security protocols, such as OAuth for authorization and HTTPS for secure data transmission.
Regular monitoring and maintenance
As much as it can be tempting to stop after integrating APIs and start working on your core features, it’s a continuous process requiring constant assessment and updates. Regularly monitor API performance metrics, such as response times, error rates, and uptime.
Since using a third-party API requires being constantly informed, it also means that businesses should keep up with updates if the API changes. Businesses often adopt proactive strategies including routine testing and version management. This approach will help your application operate smoothly without crashes or needs for urgent updates.
Implement robust error handling
Even the perfect APIs can become vulnerable to errors or downtime, and while you can’t change that, you can build secure measures when such errors arise. Make sure to add fallback procedures, such as retry logic or alternative workflows. To avoid users’ disappointment and confusion, provide clear messages to explain what’s happening and how soon it can be fixed.
Optimize performance and efficiency
An API integration for SaaS applications depends on how you work with it. As non-developers, business owners should opt for reducing the number of optimizing API calls and minimizing latency.
When it comes to thinking about how to integrate an API, the main question lies in improving its responsiveness and decreasing the load on your service and the API. Every API has its rate limits, so consult a developer team to make sure that the integration stays within them.
Plan for scalability
If you’re planning to grow your service’s reach, your API should be flexible to scale up together with your SaaS. Plan for it from the outset by choosing APIs that can accommodate increased traffic and usage.
Talk to your team and inquire about the API’s ability to expand horizontally in the future. To build a reliable system around the potential future expansion, implement distributed systems to manage high volumes of API requests.
The bottom line
Integrating third-party APIs into one’s application is a strategic move to elevate your company’s capabilities and operational efficiency. Using APIs to deliver better value at a lower cost and without over-investing in development allows your application to adapt and scale up much faster.
As your SaaS progresses, anticipate innovative changes combined with your users’ increasing demands. By staying in touch with your market and ensuring regular updates of your APIs and other tools, you’ll maintain a high quality of your SaaS offers, exceeding your customers’ expectations.
While third-party APIs make your app’s growth easier, integrating it into your SaaS is no easy task if you’re a non-developer and need professional insight. Do you want a fast, flexible, and customized solution? Contact our team and get a free consultation on setting up your system with a third-party API that meets your needs.
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About the author:
Oleg Roberman, Chief of Delivery at Eastern Peak
With strong technical background and outstanding project leadership skills, Oleg helps Eastern Peak customers introduce competitive advantages and instill productive changes in every process by resolving complex business issues and managing multicultural teams through innovation and creative thinking.
