What is an API in Simple Terms for Business Owners

What is an API in Simple Terms? A Non-Technical Guide for Business Owners

APIs come up in nearly every conversation about software - mentioned by developers, CRM vendors, and consultants as if everyone knows what they mean. Most business owners don't, and that gap matters because APIs quietly power some of the most useful automation in daily operations.

At its simplest, an API is how one software program talks to another. When a new email contact automatically appears in your CRM, or bank transactions flow into your accounting system without manual upload, an API made it happen. Your email program sends a message to your CRM's API, and the CRM adds the contact - no mystery, just structured communication between systems.

This guide explains what an API is in simple terms, how it works, and whether your business actually needs one. It also covers what to do if you already have API access but aren't sure how to use it.

Evaluating vendor API capabilities

When evaluating vendor API capabilities, focus on whether the vendor's API can perform specific tasks your business needs - such as pulling data programmatically, pushing data from other systems, triggering automated actions, and integrating with your existing software stack - rather than simply accepting claims that "we have an API." Vendor demos of software that automatically integrates with other tools include APIs (Application Program Interfaces) that allow automatic data import and export from within the software itself. According to IBM (2024), an API is a set of rules or protocols that lets software applications communicate and exchange data, features, and functionality.

APIs automatically import and export data from and to other applications. For example, an application could "talk" to another software application. The information is automatically transferred between these different systems and no manual import and export of data between for example a database, a spreadsheet and other systems needs to take place.

Just because a SaaS vendor claims to have an API does not mean that they have an API that can be put to good use. The real question is: will that vendor's API do what you need it to do?

What vendors actually mean when they say "we have an API":

• Data access without manual exports - pull records, contacts, transactions, or usage data programmatically instead of downloading CSVs every week
• Inbound data flows - push data from other systems into their product without re-entering it manually
• Trigger actions - Automate actions within the application or create custom automations that perform specific actions based on triggers or data changes. For example, when a user adds a new customer to a CRM application, automatically create a new account in an accounting package or create a new support ticket in a support application.
• Support integration with your existing stack - integrate with applications including Salesforce, HubSpot, Slack and accounting packages.

The end result of APIs is to enable data flow between systems. Information is automatically added or updated between programs as needed. For example, a person closes a deal in a customer relationship manager. The API immediately sends a notification to the billing system, and updates the support system with the newly added customer. Finally, a message is automatically posted in the collaboration platform for all team members to view.

The gap between "we integrate with everything" and reality:

A vendor has a list of all the systems you can integrate with, but in reality they only have "connectors" for some of them. For the rest, they have an API but it has limitations that affect your use case (i.e.: rate limits that will affect your normal usage).

Red flags that suggest an API isn't production-ready:

• Documentation that hasn't been updated recently
• No code examples in the language your team actually uses
• Rate limits that would force you to throttle basic daily syncs
• Authentication requires manual refresh of token every few days
• No support for webhooks to automatically detect new changes, requiring manual polling of the API

If a vendor asks you to schedule a call with their "solutions engineer" (integration specialist) when you request API documentation, the API may cost significant money and may not meet typical SMB requirements.

Common API examples in business

Common business APIs enable automated data exchange between systems, including payment processing that securely charges customers through services like Stripe, real-time shipping quotes that pull live carrier rates into e-commerce checkouts, contact enrichment that retrieves LinkedIn profiles and company data into CRMs, and calendar booking that checks availability through Google Calendar without storing duplicate copies. When developers refer to APIs in business, they are talking about a large number of connections that have been built allowing software to talk to each other.

APIs allow systems to integrate seamlessly with each other and for data to be exchanged automatically. By understanding what is an API in simple terms, teams can focus on building their business and leave the rest to run in the background.

Here's where they're already in use:

Payment processing: A customer checks out of your online store. You enter their credit card information on their behalf (never seeing the credit card numbers in your own database) and Stripe's API processes the payment. Your store's API asks the payment processor's API to charge a customer's payment method. The payment processor's API processes the charge and then returns whether the charge was approved or declined.

Real-time shipping quote API for e-commerce checkout: Zip code and package weight are input into the e-commerce checkout. A real-time shipping quote API is called from within the checkout for both UPS and FedEx. Live rates for shipping a package with a specific zip code are displayed instantly on the site for both carriers.

Contact enrichment. A contact's email address is added in a field of your CRM. After a click of a button all information about the contact and their company, their job title, their profile and picture on LinkedIn is added to the contact's record in your CRM. All of this information is retrieved by an API from a provider such as Clearbit or ZoomInfo. The email address of the contact is sent to the API and all the information about the contact is returned and added to the contact's record in your CRM.

Calendar Booking. The process of booking time with someone using Calendly for example does not require storing that person's calendar on your system or importing it. Instead, every time someone books time with that person Calendly will check their Google Calendar for availability. For example, "Is 2pm on Thursday open?". Google's API will return yes or no. If yes, Calendly will book the 2pm time slot on Thursday for that person. All of this happens in real time without storing a duplicate copy of someone's calendar or the risk of them being double booked.

When API knowledge matters most

API knowledge matters most when evaluating software for integration capabilities, hiring developers who can build custom integrations and automations, and scoping integration projects by understanding API limitations like rate limits and data sync timing to prevent scope creep and cost overruns. For most businesses, the API knowledge ends when they are evaluating software, hiring a developer to build custom software, or figuring out if a proposed integration project is even feasible.

Evaluating software: When looking at different packages of software to use in your business, one of the biggest things to look at is how the software integrates with other pieces of software and how it imports and exports data. This is where the API of the software comes into play. The biggest thing to find out is whether the software uses a full 2-way API integration or if they just use a Zapier connector to connect to other pieces of software. Most software these days imports data from other packages and services. So when looking at the APIs of different software packages the biggest thing to figure out is how they can assist in managing a business.

There is a big difference between utilizing Zapier for integrating new leads from your website into your Salesforce CRM and developing a custom integration for automating tasks. Zapier offers plans for different usage levels and task allocations. API integration can connect two systems to automate tasks and data flows.

Hiring developers: For those rare occasions when hiring a 'full-stack developer' to build custom tools and automations for a business, highlighting the candidate's API integration experience is important to list in the job post and to discuss in interviews. Typically, the candidate should first describe how he or she would connect two systems and then dive into the details of the inner workings of said systems. For example, the differences between REST and SOAP, what are webhooks, how do rate limits work, etc. If the candidate can't handle the basic aspects of integrating systems via APIs, there is a good chance that they won't be able to handle the more complex aspects.

Scope a project: An API can typically be integrated into a system in a predictable timeframe. Understanding the limitations of an API, such as rate limits on the number of requests that can be made to the API, the limits of the data that can be retrieved from the API, whether the information will be synced in real time or in batches every 15 minutes, is key to determining the value that an API can bring to a business and to effectively scope a project to prevent problems with scope creep and overruns.

By being aware of these constraints to integration via an API, businesses can save money by keeping the integration within scope and understand what an API is and how it can be used to integrate systems.

What to ask vendors about their API

When asking vendors about their API, focus on three critical questions: what specific data the API exposes (including custom fields and historical records), what rate limits restrict how many requests you can make, and whether the API uses standard REST protocols or proprietary formats that require custom development work and longer integration timelines. Three simple questions to consider when vendor APIs are being discussed: 1) What data can you get from the API (including custom fields, historical data, …)?

With many features now being sold as a checkbox (e.g. API access), it is not safe to assume that all APIs are equal.

What data can we access through the API?

Some platforms expose all of the data. Other platforms will hide the good stuff in their Enterprise tier of service. And then there are some platforms that simply won't expose any of the good data. In addition to standard fields, does your vendor's API have access to custom fields? Historical data? Pricing information? Get your vendor to produce an actual list of data that is exposed through their API. "Most data" or "standard fields" is what they'll tell you during your sales call. It's not good enough for implementation purposes. Press for specifics.

Are there rate limits?

This matters more than people realize.

Rate limits restrict how many requests a system can make to an API within a given time window. If your use case requires frequent syncing of records or high volumes of API calls, you can hit these ceilings quickly. Some vendors will charge extra for higher limits of API requests, while others will not raise the limits at all. It is better to find out these types of technical constraints before they become problems for a business.

Is this a REST API or something proprietary?

This will cause problems for the integration consultant and/or internal developers. If a vendor is using a custom API then there is usually a reason. Often the vendor's architecture is legacy and would require substantial work to switch to a standard API. In that case, ask the vendor to explain why a custom API is required. Find out what the issues are with a standard API and what the vendor is doing to address those issues.

APIs that are proprietary can require longer integration projects and custom code to implement. Sometimes a custom format is required, but that is often because the vendor's API architecture has not been updated to industry standards and causes extra costs to the customer. So generally speaking, it is best to prefer standard REST APIs for integration. Typically a decent integration consultant would have no problem integrating a company to a vendor's REST-based API. But with proprietary formats, there may be unexpected implementation details.

Frequently Asked Questions

What is an API with a simple example?

An API or Application Programming Interface is how two or more applications can communicate with each other. Typically this is done without human intervention. To better explain an API, here is an example of what happens when you do a search for flights to Denver on Kayak.com. When you do a search for flights to Denver on Kayak.com they do not store all of the prices for flights to Denver on their website. Every time you do a search for flights to Denver on Kayak.com they send a request to the APIs of the airlines such as United, Delta and Southwest Airlines for the most up to the minute prices for flights to Denver.

What's the difference between an API and an integration?

An API is the technical connection between two systems. An integration is the workflow or process that is created to use an API. An API between a website and Salesforce would be the technical door through which new records are added to the Salesforce account every time a new contact form is submitted on the website.

Can I use APIs without knowing how to code?

Almost. There are a number of tools on the market that enable the creation of integrations using APIs, such as Zapier and Make. However, even these powerful tools restrict you to creating integrations that have already been set up by others. For the majority of custom integration projects, it will be required to have someone write the code for the API calls to integrate the systems and applications effectively and reliably.

How do I know if I need a custom API integration?

If data is currently being manually moved from system to system then an integration is likely needed. If a CSV is being downloaded from a system on a monthly basis and then the same information is being uploaded to another system then an integration would be beneficial as well. Many companies are currently paying for a full SaaS product, simply because it connects two other systems that they are already using.

Gable Innovation is a technology consultancy that helps growing businesses build custom APIs, integrate third-party tools, and automate workflows across multiple systems. To find out whether building an API in-house or integrating your current tools is best for your business, contact us for a 30 minute free discovery call at gableinnovation.com.