What is iPaaS, and when do you need it?

If you want to connect more than two or three systems, sooner or later you’ll run into the same question: how do you ensure that all those systems communicate with each other without creating an unmanageable tangle of separate connections? iPaaS is the answer to that question, but the term itself is often used without properly explaining what it entails and when it’s the right choice.

The basics: What does iPaaS mean?

iPaaS stands for Integration Platform as a Service. It is a cloud-based platform that allows you to connect multiple systems to each other through a single central environment, rather than linking each system directly to every other system.

Imagine you have an online store, an ERP system, a PIM, a CRM, and a WMS. Without iPaaS, you’d have to build a separate integration for each combination: online store to ERP, ERP to PIM, CRM to online store, and so on.

Each of these integrations is a separate piece of code, with its own error handling, its own documentation, and its own maintenance burden. As soon as one system receives an update, a whole series of integrations can break.

With iPaaS, there is a single central hub. Each system communicates with the platform, and the platform handles the translation, transformation, and routing of data between systems. You don’t have to build a separate connection for every combination.

"Companies factor in the cost of building an integration. No one factors in the maintenance burden that comes afterward. That’s exactly where an iPaaS pays for itself."

An iPaaS platform consists of a number of building blocks. Connectors are the links to individual systems: your ERP, your online store, your CRM. These connectors are often already built and available in the platform’s library—a good iPaaS platform has hundreds to thousands of them. Alumio, the platform we use, offers many connectors.

How does it differ from a direct API connection?

A direct API connection is code you write to enable two specific systems to communicate with each other. This works well if you have two systems you want to connect and that connection is relatively stable. The connection is quick to build, you don’t need an additional platform, and you don’t pay any license fees.

The problem starts with scale and complexity. Every additional integration you build adds complexity to your landscape. Every system update can break integrations. If you have five systems, each with three or four integrations, you’ll quickly find yourself spending a day a month maintaining those integrations—and that’s without anything actually going wrong.

iPaaS is more expensive in terms of licensing but has a lower total cost of ownership if you have multiple systems. Our rule of thumb: for two systems and a single simple data flow, a direct API connection works just fine. As soon as you have three or more systems, need bidirectional data flows, or if the data requires complex transformations along the way, iPaaS is almost always the better choice.

iPaaS in practice: how does it work for a Magento online store?

A typical iPaaS implementation for a Magento online store starts with the most critical data flows: product data from PIM to the online store, orders from the online store to ERP, and inventory data from ERP back to the online store.

Then, more systems and data flows are added step by step: customer data to CRM, invoices to the accounting software, and return information back to ERP and WMS. The iPaaS platform scales with your integration needs, without every expansion requiring a new development project.

Factor Blue implements iPaaS integrations using Alumio as its primary platform. The combination of an Alumio license and our implementation expertise results in integrations that not only work when going live but also remain maintainable as systems evolve. If there’s a system update to your ERP, we update the data flow in Alumio—not every individual connection.