A software war is raging, and APIs are foreign policy.

Cloud software vendors are at war.

For the past few years, the cloud software world has been dominated by the concept of add on’s. Each software add-on will generally focus on a specific industry vertical or business function, such as retail, point of sale, reporting or time management. 

These front-end software applications focus on making a set of business processes more efficient than their non-cloud counterparts, before shipping pieces of information (data) into a complementary application such as Xero or Quickbooks, where further processing of the data occurs. 

Examples of this include. 

• Vend posting end of day sales data to Xero.
• Unleashed sending real-time inventory levels into Vend.
• Deputy posting timesheet information to Xero for payroll processing. 

This concept of an API (Application Programming Interface) is becoming more widely understood by businesses, which is enabling them to replace traditional all in one software systems with a few complementary business apps that work together to create an integrated system, and automate processes which would traditionally require manual data handling. 

This worked well for a few years as the cloud vendors collaborated in a united front against their non-cloud alternatives. Creating eco-systems and combining their marketing efforts to educate the market on the benefits of their emerging technology. The software companies needed to work together to supplement gaps in their own feature sets and offer end to end solutions that when combined would offer a compelling use case for businesses to endure the pain of switching software.

And then the war began.

In my opinion, the first shots were fired by Xero, against debtor management apps like Debtor Daddy at their 2015 Xerocon. A new set of features in Xero allowed automated emails to be sent from the software, that would automatically send reminders to clients with outstanding invoices. Whilst this seems like a perfectly logical feature for an accounting system to include, it completely undermined the features in Debtor Daddy which they had spent years building, marketing and supporting in collaboration with Xero. 

This trend continued over the next couple of years, with the larger software players slowly cannibalising the ecosystems they created to support their own feature growth. We are now seeing them cannibalise the supporting services eco-system as well, but that’s for another blog. 

As the cloud software ecosystem evolved we began to see deeper integrations between the apps themselves. Alliances between cloud software vendors were formed, with Vend and Neto for example, starting to work together to create an omnichannel retail solution. Retailers would use Vend for their in-store Point of Sale and Neto as their E-Commerce platform. The integration would allow business processes such as inventory management and customer management to be spread across the two apps creating a near seamless workflow for the retailer. 

As the apps themselves continued to evolve and new features were released, these alliances became fractured and tested. Vend released its own e-commerce product in direct competition to Neto, which took many (myself included) by surprise. The marketing of Vend E-Commerce confused the retail market, who had just months before been sold the concept of the two apps working in harmony with each other. The rift deepened a few months later when Neto released a competing Point of Sale product in direct competition to Vend. 

The stability of the Vend and Neto API connection was questionable for a few months following this, with customers reporting stability issues syncing data between the two apps in several online forums. The companies also stopped referencing each other on their supported integrations pages, confusing many businesses who were considering adopting both systems at the time. "Do they still integrate?" was the title of many client emails for a few months. 

In a technology landscape dominated by Venture Capital investment, the number one driver for cloud software companies has become user growth and market share, rather than customer success. As their industry or business function niches becomes saturated with competitors, they have chosen to turn on their allies, by offering competing products and functionality in an endless conquest for market domination. The final line of diplomacy is often open access to each others API, which we’ve seen become increasingly restricted or even cut off when it provides access to data that provides the other application with a competitive advantage.

So what’s the problem, these are commercial realities, right?

Like any war, the citizens are always the worst affected, which in this case are the businesses and users of the cloud software.

Businesses move slowly and develop their workflows and processes to align with the flow of data shared between the apps via the APIs. When these are restricted or eliminated it causes businesses workflows to break down and inconsistencies in the business data to appear.

Businesses I speak to are becoming increasingly confused and frustrated by the shifting sands of the cloud ecosystems and ultimately are delaying or limiting their adoption of cloud software because of this uncertainty. Some businesses simply can't rely on the quality of the data sent by the limited API connections and are retreating to more reliable "systems" like spreadsheets, until the war dies down and the borders become defined. 

For the cloud software ecosystems to truly go mainstream and break down the barriers, we need to see software companies commit to longer term product roadmaps and integration partnerships, which give businesses the confidence to make the investment in process improvement and training initiatives. 

How do you think the war will end?

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