iPaaS vs. API: Which is best for your product integration strategy?

Businesses today use dozens of different software applications, making integrations table stakes for modern buyers. This is especially true in the employment sector, where HRIS and payroll systems act as the employer’s source of truth, holding valuable information that other B2B applications need to function. 

Building integrations in-house is resource-intensive and costly, so developers have begun turning to new tools like unified APIs and embedded iPaaS to quickly launch multiple integrations and outsource ongoing maintenance. So which of these tools — iPaaS vs. API — is right for your organization?

The answer is, of course, it depends. Each solution has its own pros and cons depending on your needs, resources, and budget. We’ll break down the ways each approach differs in function, implementation, maintenance, and cost and share helpful considerations when deciding which will better suit your needs.

Unified API vs. iPaaS: What’s the difference?

A unified API is a tool that aggregates and normalizes data from multiple systems or data sources, then delivers that data to a single endpoint. Unified APIs have pre-built integrations with dozens or hundreds of systems. The data is pulled from each platform to the central API, standardized, then pushed to your application. You only need to build one integration—to the provider—to unlock access to all of their supported platforms.

Key benefits of unified APIs include a single point of access, faster time to launch, normalized data formats, and a consistent, high-quality user experience—plus scalability and robust security controls. Since your team doesn’t need to build integrations to each individual system, you also benefit from a much higher ROI per integration, and your developers can focus on improving your core product, instead of investing countless hours into building 1:1 integrations.

In contrast, embedded iPaaS solutions are low-code, connector-based platforms that integrate applications and data across different systems. These platforms offer pre-built integration frameworks for various software designs and provide middleware that facilitates fast and secure data exchange. They also allow for customizable workflows and connectors. 

It’s worth noting that there are general iPaaS solutions and embedded iPaaS solutions: while the former integrates systems within a company, embedded iPaaS platforms enable developers to build and manage customer-facing integrations between their own company’s products and third-party systems. 

To put it simply, unified APIs are a means of outsourcing all the work of building and maintaining integrations with a wide array of platforms. Embedded iPaaS, on the other hand, is a marketplace tool that provides the basic rails for an integration, but it’s up to your development team to customize and complete the connection.

To decide which solution is better for your needs, you’ll need to consider the nuanced differences between the ways unified APIs and embedded iPaaS are used.  

Depth of data coverage: iPaaS vs. API

Unified APIs tend to focus coverage on commonly used data attributes. As a result, horizontal APIs often have limitations when it comes to accessing deeper or less common data points. However, verticalized APIs like Finch offer a deeper level of data granularity that is tailored to specific industries and use cases—in our case, employment technology. 

Embedded iPaaS solutions offer extensive coverage across a wide range of applications and data sources. But since each integration must be built separately, they require more development work and significant technical expertise. 

Bottom line: Unified APIs offer breadth and depth of coverage for standard data sets, while embedded iPaaS is better suited to providing comprehensive access to custom data fields or unique data sets. 

Data standardization: iPaaS vs. API

Data standardization refers to formatting data from disparate sources, each with their own field naming conventions, into a single, uniform standard so it’s always ingested into the end system the same way. It can save users a significant amount of time, reduce the chance of errors, and allows for automated workflows where data flows seamlessly from system to system.

Bottom line: Most unified APIs offer a single, standardized data format. This makes data handling much more straightforward because data models are always presented consistently, regardless of the data’s origin. This functionality is present in some embedded iPaaS tools, but not all. 

Development effort required: iPaaS vs. API

Unified APIs can be deployed rapidly because only one integration must be built to unlock connections to multiple data providers. They also give developers a higher level of technical control.

Embedded iPaaS platforms use pre-built rails but may need customization for each specific application. They require significantly more technical expertise and development work, particularly for long-tail systems. However, some iPaaS solutions also offer low- or no-code environments, which makes it easier for non-technical users to create and manage integrations—think of Zapier or Workato, for example.

‍Bottom line: While embedded iPaaS offers a higher level of customization, unified APIs are an excellent choice for organizations with limited development resources or budgets, or for organizations that need to access the same data sets from lots of different systems—like payroll data to administer retirement benefits, for example.

Integration flexibility: iPaaS vs. API

Unified APIs offer a simplified integration process: data flows from all connected systems through the unified API and into a single endpoint. For example, when a customer builds one integration to a unified API provider like Finch, they enable access to hundreds of different providers. 

This approach is less flexible than embedded iPaaS but is better suited to specific use cases within certain industries. As Finch is explicitly built for employment systems, it’s designed to meet the needs of industry-specific use cases, like pulling organization and payroll data so users can effectively administer benefits, monitor employee engagement, manage equity, and so on.

Bottom line: Embedded iPaaS has the potential to offer more customizable workflows and logic—but only if your team has the technical expertise to code it as such, and only if the iPaaS tool is built to work with any type of system. For example, some iPaaS tools only support cloud-based systems, which leaves on-premises legacy applications inaccessible. Unified APIs can provide fast, cost-effective, and reliable access to a wide range of industry-specific providers if you don't require this degree of customization.

Scalability: iPaaS vs. API

Unified APIs scale easily because once the initial integration to the provider is built, the user organization can access connections to all of the provider’s supported systems. Once set up, adding new providers within a unified API is simple because it’s all routed through the existing integration. The benefit of this is that organizations can access as many provider integrations as needed all at once, or as the need for new integrations arises.

Since embedded iPaaS integrations are custom-built, they can handle large volumes of data and integration complexity. But as the scale of operations increases, they may require additional configuration and management. If organizations want to add a new provider, they need to build a new integration. And that, of course, demands more time, money, and resources. 

Bottom line: Unified APIs are easily scalable, with new integrations taking moments, not months. Scaling integrations using embedded iPaaS is more technically challenging and expensive.   

Integration maintenance: iPaaS vs. API

Unified API providers handle all updates and maintenance related to the integrations, giving in-house teams more time to focus on strategic tasks. Thanks to a unified API's abstraction layer, users are also shielded from any changes to the underlying systems. 

Embedded iPaaS solutions may need ongoing maintenance and regular updates from your team to maintain a stable integration. This provides organizations with a greater level of control, but also comes with higher operational overhead. However, some embedded iPaaS providers offer maintenance and management as a service to remove the burden of this task as much as possible. 

One other thing to note is that during product development and maintenance, errors often occur because of small discrepancies in the code—say, for example, a member of your development team enters a value into the “start_date” parameter that is before the “end_date” value. Alone, handling these errors is menial, but over time, these errors can compound and wreak havoc on your integrations, and finding the source of the problems can be challenging. Unified APIs can often aggregate these errors and flag them for your developers so they can be corrected quickly and accurately.

‍Bottom line: Maintaining existing integrations within a unified API is effortless because your API provider handles everything. If you do choose an embedded iPaaS solution, it’s important to know that it will require far more maintenance and technical know-how unless your provider offers this as part of its service.

Data security: iPaaS vs. API

The security of a unified API is handled by the API provider and usually includes features like encryption, adherence to compliance standards, and access controls. The level of data security across unified APIs varies, so it’s important to carefully review the provider’s security protocols to ensure they’re compliant with standards like GDPR, HIPAA, and SOC 2, especially in industries that work with highly sensitive information, like employment. 

Vertical unified APIs are highly specialized, which also affords applications the ability to apply product scopes for domain-specific data. In other words, the organization that governs the data has greater control over the information they share with your application. Take Finch as an example: our Unified Employment API requires the employer (the application’s end-user) to explicitly authorize access to Social Security numbers. That way, the employer feels secure connecting their source of truth to your application via Finch, and your organization doesn’t have to assume liability for the sensitive data that isn’t applicable to your use case. 

Due to their enterprise-level use, embedded iPaaS solutions generally offer robust security features including data encryption, detailed access controls, and adherence to common compliance standards.

Bottom line: Both unified APIs and embedded iPaaS offer robust data security. Choosing the best option for your product will depend on the degree of sensitivity of the data you need to access, and how much control you want to offer to your end-user who is sharing their data with you.

Use cases: iPaaS vs. API

Unified APIs are best suited for organizations looking for quick access to common data sets across multiple platforms—and vertical unified APIs are ideal for use cases that require a deep level of data granularity, like individual pay statement data from payroll systems. Since minimal integration overhead is required for unified APIs, time-to-market is much faster. 

Embedded iPaaS, on the other hand, is suitable for large organizations needing complex, highly customizable integrations across multiple verticals—for example, financial services and telecommunications.

Unified API vs. iPaaS: Which should I use?

Choosing the right integration approach is a strategic, long-term decision. One is not necessarily better than the other. Instead, each offers distinct advantages that suit different situations. It’s crucial to assess your needs, considering factors like:

• Workflow complexity: How complex are the integrations you need to support? Do the systems you need to access typically have open APIs, or do they require partnership agreements?
• Level of customization required: How much control and customization do you need over integrations? Do you need to map unique or uncommon data fields between a few systems, or access common data sets across a wide array of platforms?
• Team capacity: Do you have the technical resources and expertise to build and maintain integrations in-house? Is this the best use of your developers’ time, or would you prefer they focus on improving your core product?
• Number of integrations required: How many different applications need to be integrated?
• Data-sync and standardization needs: How important is it for your integration solution to provide consistent data formats and centralized management?
• Cost-benefit analysis: Is the cost of the integration solution justified by its benefits? (Finch’s ROI calculator can help you understand the impact of a unified API.)
• Future scalability needs: What is the expected scalability and future growth of your product? How important is the speed of implementation and time-to-market?

Choosing the best integration strategy for your organization

Unified APIs provide a straightforward, standardized solution that can be quickly deployed with minimal upkeep, making them ideal for organizations with limited technical resources that require access to multiple systems within a specific category. Conversely, embedded iPaaS solutions offer extensive customization suitable for large organizations needing intricate, highly customized integrations.

What suits one organization won’t suit another because every embedded iPaaS and unified API provider will offer slightly different applications and advantages based on the use case they’re designed to serve. By understanding your specific needs and the advantages and disadvantages of each integration option, you can choose the integration path that best matches your requirements. 

Unlock payroll integrations with Finch

As a vertical unified API in the employment space, Finch provides deep data access to the largest network of HRIS and payroll systems—4x more than any other unified API. By working with Finch, developers in HR tech, benefits, and fintech can unlock data access from 200+ providers with a single integration. 

To see how Finch can benefit your organization, schedule a call with our team or try it yourself for free.