Application programming interfaces have been around for as long as there has been a need to pass data between computers. But relatively new web-based APIs are helping advisers share benefits information among different types of systems.
At a time when human capital management (HCM) platforms have become all the rage, says Mike Ehrle, SVP of strategic partnerships at Hodges-Mace, a provider of benefits management software and services, these lightweight software interfaces make it easier to work with more than one vendor’s system.
From a technical standpoint, the web-services technology frequently used in today’s APIs make them easier to integrate, faster and more portable, notes Adam Wachtel, SVP of technology at Hodges-Mace.
From a practical standpoint, “This means developers spend less time maintaining the API and more time enhancing the service it enables,” Wachtel says. He credits the power of these bits of software code with delivering a better and safer employee experience.
That’s due to the rise of so-called all-in-one HCM solutions, which handle a wide range of HR tasks, including new hire on-boarding, benefits enrollment and administration, compliance and payroll. Such systems are cheaper and easier to deploy than having to support multiple systems for each discrete task.
But because all-in-ones can’t be customized to meet the unique needs of a workforce, Wachtel says the user experience can suffer. One way of sidestepping this problem is to incorporate certain functions, such as benefits enrollment, from a third-party technology provider.
That’s where the web-based APIs come in. They make it relatively easy to enhance all-in-one systems with third-party solutions. “In other words,” Wachtel says, “they allow a developer to remove the stock benefit enrollment module and replace it with one built by a company that focuses exclusively on benefits enrollment.” And this can be done, he adds, without duplicating efforts or adding significantly to system maintenance.
HCM and payroll companies struggle – in many cases, by their own admission – with handling all the complexities of employee benefits information. For example, says Ehrle, “think of how plans can be stacked to cover a critical illness, or how medical and age-band credits need to be applied and tracked.” His point is that this type of complexity requires a robust benefits system that can be readily reconfigured—not an all-purpose HCM system that wasn’t specifically designed for benefits administration.
But web-based APIs can make such a system far more flexible. ADP, for instance, as part of its HCM ecosystem, puts hundreds of APIs on various tailor-made solutions for a wide range of employer clients.
“What we hear from our clients as we move up market is that they have three to four dozen systems that they use to manage human capital,” explains Jigesh Saheba, VP of product development at ADP. “In a lot of these cases, the systems do not interact with each other.”
For advisers, says Ehrle, there are significant advantages to guiding clients towards HCM platforms that can readily work with other best-of-breed solutions. “If you’re a broker,” he says, “you make a lot of your money by finding very good solutions for your employer clients and—let’s face it—the commissions that they generate. If something goes wrong, you as the broker are ultimately held responsible. API’s,” he adds, “allow for positive experiences for employers and their employees.”
API technology isn’t perfect, however, and one drawback is that API definitions vary from one system to the next. For example, Ehrle says ADP’s payroll-deduction API will have a different, albeit similar, signature to that of Ultipro, and HCM systems that need to work with both service providers will need two different APIs—both of which will have to be built, tested and maintained.
But as the technology continues to move forward, Wachtel says the next logical step will be to simplify and standardize API formats, “so that integrating with one payroll service provider will be the same as working with another.”
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