In this second of a series of articles about encouraging API adoption, I talked with Ronan Quirke, Developer Partner Programs Manager from Xero. Xero is an online accounting platform that's closely tied with accounting firms. While originally started in New Zealand, Xero has made a recent push into North America and hopes to break Intuit's stranglehold on the US market.
In this article, we will talk a little about API adoption in general, and also about the unique challenges of supporting an API from half a world away.
Q: This is unique to Xero, I suppose, but have you found it difficult to get developers in the U.S. to do work against your API since you're on the other side of the world in New Zealand?
A: "I guess everybody thinks they're a bit different and special, but in terms of our API, really because we're a horizontal accounting application, the applications that integrate with us are generally pretty serious applications, they are business software. They are pretty meaty things like job management software, reporting tools that are doing financial analysis, point-of-sale applications, inventory management, payroll applications and all these types of things. This is where the actual sort of demand is for.
When you look at all these categories, very quickly you realize you don't come to our API thinking, "Ooh, I've a good weekend project that I'm going to do here." You already have an existing business or you have an existing business idea."
Q: What drives owners of these applications to integrate with Xero then?
A: "The idea to integrate with Xero generally comes from two drivers.
The first driver is accessing our customers. We have over 750,000 customers [As of the H1 2013 half yearly results] which has doubled year on year for the last three years. That's a really interesting pool of customers now for people to access.
Then the other driver is your customers requesting an integration with an accounting application. They might be specifically asking for an integration with Xero or you might just be looking for an accounting back-end solution to integrate with your application because customers are using your application for day-to-day running of the business, but then when it comes to the month end or the year end they then need to put that in some sort of accounting application to do their accounts.
If your customers are specifically asking for Xero that's great. But what we also find, particularly when you're building new SAS apps and that kind of thing, is that people are looking for an accounting back-end and they have a choice of integrating with Xero or they go integrating with QuickBooks or other things in the marketplace."
Q: If they might be looking for anything, how do you make sure they pick Xero, specifically?
A: "What we are trying to do is to make sure that our API and our documentation of our API is clear as possible, and as easy to use as possible. We want to be a front running candidate if you've got a choice of different accounting applications that you want to provide an integration to. The best way to do that is to be an easy one to do an integration with.
That comes from just making sure we've got excellent documentation and we include code samples. We've got a bunch of [vertical-specific] guides on how to integrate different types of applications with Xero as well.
If you have an inventory management application or a point of sale application, we have guides to help you navigate the accounting side of that sort of development and integration process. Because, of course, not every developer has an excellent knowledge of accounting systems, and that may be a bit of a stress. We're trying to meet you half way there and trying to give you some of the information that you'll need on that side."
Q: About how often does somebody like you have to be involved with an integration vs. developers just using documentation?
A: "We have over 160 partners that are certified applications that we'll list on our website. Which is about 10 percent of our overall API usage. We hear from between 10 to 15 percent of our users in terms of having complicated applications and integration requirements that need some assistance from us. Which is pretty reasonable. We do want to make it as self service as possible.
What we realize is that, in the vast majority of cases, an integration with any API is something that you have time boxed. It's not a core feature for your application unless the application hinges on these integrations. You're going to have time boxed in a measure of time and a given space of time to do that integration. We are conscious of the fact that when a developer contacts us, and needs some information to progress, that we need to provide that in a timely way. We're keen to [help] if you do need assistance then we'll try to jump on it as quickly as possible.
We know how our development processes work, and we assume that theirs work in similar ways. You've got a sprint for a couple of weeks or whatever it is. If we don't get you that information, keep you going now, then we're conscious of the fact that it's going to hit the back burner for another month or so.
That comes through in terms of what I see we're working with the partners. Some of our partners, we may not hear from them for about six months or so. They'll come back and say, "We've done the next bit," and we say, "OK, that looks cool, and you might want to think about this over here." They say, "OK." Then we might not hear from them for another two months or something like that. The time frames that we work with, particularly in the partner space, can be actually quite a long time sometimes. That bears out this idea that people do time box integrations."
Q: Would you say that Xero has basically won business because it has an API?
A: "Absolutely. We consider it a core feature of the product, not only because of the applications and services that can provide integrations and become add-on partners, but also purely because people can just use that API as a feature.
We see quite a few people who actually actively seek out Xero because it has an API. They might have some custom piece of software that they've built, or maybe they're a SaaS company themselves. They've built a subscription engine or a bidding engine internally within their application, and then they need to obviously interface that with accounting. They say, "OK, what are my options in terms of web-based accounting applications that has an API?" That's their driver for seeking out an accounting application.
I guess we do stand out as being pretty good in that space, that's an interesting one as well."
Q: Over the years have you tried different programs to increase developer adoption of the API, and some worked and some didn't?
A: "The amount of seeding [eg: developer funds] you can do for people to develop a business that integrates with your API is pretty limited. You can provide them the support structures, but they really have to meet you probably more than halfway in terms of they have to build a product.
Particularly, what we found with Xero is that not only do you need to build a product, but you also need to align yourself to providing support, and align yourself to our sales channels as well if you're going to be really successful.
A vast majority of our business doesn't come from online, it comes from offline. We have a really strong accounting partner channel. These are accountants around the world who resell Xero. Our sales model is primarily working with these accountants. We educate them about Xero and provide them training. We provide them whole suites at the backend side of Xero which they can use to run their accounting practice. The expectation is that they will then recommend Xero to their clients and bring them onboard.
In a similar vein, these are great people to be ambassadors for the add-on applications that work with Xero. In some cases, they sign up for partner programs or the applications that integrate with Xero, or maybe they just recommend the ones that they think will work well for a given business. If you can align with that channel, then that...all our really successful add-on partners are doing that.
It takes people on the ground, it takes building relationships, it takes building up partner programs, and there's a whole bunch of other things, which you can't really package up and provide to developers. We can give them the learnings, we can show you how Xero does it and what we've done well in the past and what we haven't done well in the past and you can take that onboard.
Here in New Zealand and Australia, we've done things like funding workshops. We've had some of our more successful add-on partners along to talk to some of our new developers and give them some of their insights in terms of how they're building their businesses. We'll give them the information, but there is a limit to what you can do in terms of bringing people on, on that journey."
Q: If you had to categorize the 160 different apps out there, do they augment Xero with more reporting or something, or are they standalone businesses of their own that just need an accounting backend?
A: "I think every API is a little bit different. Shopify [for example] has a slightly different model where you're building on top of the Shopify stack in some ways, whereas the applications that integrate with Xero are very much standalone applications. They are in their own right an application that you can run.
In most cases, they are the primary application that a business would run day to day. And the application is just synching in the backend the accounting movements into Xero. It's quite a different market to quite a few of the other the APIs out there.
I would say probably about 80 percent are standalone apps, and only about 20 percent would be the likes of...some really successful ones out there, like Debtor Daddy is a great example. What Debtor Daddy does is it connects to the Xero API and it just pulls for overdue invoices, and just sends those follow-ups, and those kind of things. That would be more of the kind that just plugs in and uses the existing stack versus other guys out there. Stitch Labs would be a good example. They are very much a standalone app. You get a lot more benefit if it's integrated with Xero, but you could run the two separately."