An API (Application Programming Interface) is a set of rules that allows different software systems to communicate and share data or functions. In ERP or business systems, APIs are commonly used to connect with third-party services—such as linking a sales order system to a shipping provider—reducing manual input and enabling automation and integration.
At a basic level, an API works through requests and responses:
- One system sends a request asking for data or an action
- The API validates the request
- The system processes it
- A response is returned with data or confirmation
This happens in the background, usually in seconds, without user involvement.
| Manual Integration | API-Based Integration |
|---|---|
| Relies on copy-paste or file exports/imports | Automatically exchanges data between systems |
| High risk of human error | Consistent and reliable data flow |
| Updates are delayed or batched | Near real-time or real-time updates |
| Requires ongoing manual effort | Runs continuously in the background |
| Difficult to scale as volume grows | Scales easily as systems and data grow |
APIs are widely used in business systems to connect tools and automate workflows. Common examples include:
Payment APIs: Connect your system to payment services like credit card processors or online wallets, allowing payments to be processed automatically.
Shipping and logistics APIs: Sync orders with shipping providers to generate labels, calculate fees, and update delivery status.
CRM APIs: Share customer data between sales, support, and marketing systems to keep records consistent.
Accounting APIs: Send invoices, payments, or expense data to accounting software for accurate financial records.
Notification APIs: Trigger emails, SMS, or app notifications when events occur, such as order confirmation or service status updates.
ERP and internal system APIs: Connect inventory, purchasing, production, and after-sales modules to ensure data flows across departments.
APIs can be categorized based on how they are accessed and used:
Internal APIs: Used within an organization to connect internal systems or modules, such as linking inventory and sales data inside an ERP.
External APIs: Provided by third-party services to allow integration, such as payment gateways or shipping platforms.
Public APIs: Openly available APIs that developers can access with documentation and authentication, often used by SaaS platforms.
Private APIs: Restricted APIs designed for internal use or selected partners, offering more control and security.
Partner APIs: Shared with specific business partners to enable controlled data exchange, such as supplier or distributor integrations.
Just like languages have grammar rules, APIs follow specific protocols that define how data is exchanged. These protocols ensure consistency, reliability, and predictable communication between systems.
Different API protocols have unique strengths and trade-offs. Here’s a quick comparison to help you decide:
| Protocol | Key Features | Best For | Beginner Tips |
|---|---|---|---|
| REST | Lightweight, flexible, uses HTTP, stateless | Web apps, mobile apps, general-purpose integrations | Easy to learn; start here if you want simple and widely supported APIs |
| SOAP | Strict, XML-based, built-in security and error handling | Enterprise systems, banking, healthcare, compliance-heavy industries | Steeper learning curve; use when strict rules and reliability are critical |
| gRPC | High-performance, uses HTTP/2, Protocol Buffers, low latency | Microservices, internal APIs, real-time systems | Good for speed and efficiency; requires understanding of Protobuf |
| WebSocket | Two-way, real-time communication | Live chat, dashboards, multiplayer apps, stock trackers | Great for real-time updates; not needed for simple requests/responses |
| GraphQL | Clients request exactly the data they need, single endpoint | Mobile apps, frontend-heavy applications, optimizing network usage | Good for reducing payloads; learn schema design to use effectively |
| XML-RPC / JSON-RPC | Older RPC-style, call functions on a remote server | Legacy systems, lightweight integrations | Less common today; mainly useful if working with existing legacy APIs |
Beginner advice: Start with REST if you’re new. It’s widely supported, easy to learn, and works for most web and business integrations. Understand whether your workflow needs real-time communication (WebSocket), structured compliance (SOAP), or optimized data requests (GraphQL) before choosing another protocol.
