Over just the past 5 years, dozens of unified API companies have been founded.

Why are so many unified API companies emerging? 

The answer lies at the intersection of four macro trends: the changing buying habits of SaaS companies, the increasing importance of customer retention and experience for SaaS products, the need for companies to do “more with less”, and the failure of existing product offerings to solve the problem of customer-facing integrations. 

Let’s dive into these trends.

Note: As a refresher, unified APIs act as abstraction layers for a single vertical of software applications—such as HRIS, CRM, ticketing, ATS, etc. 

Trend one: The breadth and depth of SaaS tooling continues to grow

The modern SaaS organization uses A LOT of software. In 2023, BetterCloud’s SaaS Ops report estimated that the average organization used over 130 different software solutions. And while the buying frenzy seems to be slowing down—finance departments are more involved in procurement and renewal conversations—the need for software remains substantial.

This demand has led to new software categories (exhibit A: the continual boom in new martech categories). It's also led to greater depth in existing software categories. For example, in the HR space, companies today might use separate applications for employee management, payroll, engagement, and headcount planning. 

Given the sheer volume and diversity of tools that continue to come out, integrating just a small fraction of them is only becoming more challenging.

Unified APIs solve this by offering a ‘one-and-done’ solution to entire verticals of software.

Related: Why low-code integration platforms fall short of expectations

Trend two: Good integrations boost NRR

Travis Patterson, our CRO, cringes about a time in software when UIs were bad and what happened after you sold the deal didn’t matter much. Companies could spend millions on a lengthy implementation process, then be left in the lurch by their vendors to maintain and manage their purchases. 

Times have changed, and post-sales is just as critical as pre-sales.

The Harvard Business Review summarizes the point well. They point to the “SaaS Crash” of 2022 as an inflection point where investors saw “a shift from ‘scalable’ growth without regard to profitability to ‘sustainable’ growth based on more enduring drivers of a subscription model.”

The key measurement of this sustainable growth is NRR, or net revenue retention. The HBS authors describe it as “a better metric than new-customer growth, because NRR reflects the relevant economics, including upgrades, additional services, adding more users, but also downgrades, fewer users, and/or churn in the customer base.” 

Integrations (and the value afforded by unified APIs) factor in here because integrations have an outsized impact on the customer experience.

In the pre-sales process, Gartner reports that 81% of software buyers consider integrations crucial for their purchasing decisions. 

From the post-sales perspective, our own State of Product Integrations found that 53% of businesses found that their product improved their customer retention. The reasoning behind this data is fairly intuitive: When your product connects to your customers’ software, your product delivers more value for customers—whether that’s auto-provisioning users in your product, serving them better insights based on their data use case, or just getting them to that “a-ha!” moment faster.

This assumes, of course, that integrations work. Integration maintenance is the biggest (and most unpredictable) pain when it comes to integrations. It’s a ‘forever’ tech debt (you can learn more about its issues here). A unified API solution like Merge alleviates this by handling integration maintenance for customers.  

Related: Breaking down the different types of API integration

Trend three: Unified APIs complement hard-to-hire engineers

With the increasing complexity and quantity of software, unified APIs are seen as essential infrastructure. Vendr’s State of SaaS finds that while finance teams are urging to cut costs, they push for the “buy” decision when software can provide outsized benefits over an in-house build.

How do we know that unified APIs provide such specialized value? One way of knowing is to look at what engineering jobs are still in demand. Even among the tech layoffs of the past two years, reports from Hired show that backend engineers—the ones closest to integration infrastructure—are still in the highest demand.

Unified APIs abstract away the specialized, hard-to-find skills of the engineers who typically have to build, manage, and maintain hundreds of integrations. 

For companies that are looking to do more with less, then, unified APIs provide an enticing value prop.

Trend four: iPaaS wasn’t enough

While many companies choose to build their integrations in-house, the rise of low-code iPaaS companies that began offering embedded integrations, like Workato and Tray.io, seemed to offer a solution. 

However, where iPaaS platforms succeed—making point-to-point integrations easy to build—is exactly where they fail, too. Companies with hundreds of customers require hundreds, if not thousands, of connections to be built and maintained in an embedded iPaaS solution. This effectively renders embedded iPaaS’ time savings” as negligible, as developers are forced to do the same work they’d do in-house, just in a different interface.

Unified APIs directly address this limitation, as building to a single unified API can allow an organization to offer hundreds of integrations through a single connect. Crucially, through Merge, engineers also don't need to maintain each integration.

Related: How API integration compares with data integration

Final thoughts

While there are still many verticals that need to be addressed and the overall awareness of the category is still not as high as it should be, the unified API space is seeing early promise.

We’ve witnessed this ourselves through our company’s fast growth and the success our clients—from Ramp to Navan to Snappy—see from leveraging our unified APIs and integrations management features.

You can learn more about unified APIs and why Merge is uniquely positioned to lead this high-growth market by connecting with one of our integration experts.