Build vs. Buy: The No. 1 Software Development Question
When you work in the business of building custom software solutions for companies, you compete with other custom software development companies and with out-of-the-box SaaS solutions. However, we often are asked early on in the RFP process whether or not the company's decision to build custom software “makes sense” for their situation.
In reality, the majority of the time, it makes more sense to buy than it does to build custom software. And that's okay, not everything is a fit for building. At Entrision, we are committed to being honest with potential clients on whether a custom software project is the right solution. Here's how:
Steps to Deciding Whether to Build or Buy Software
When you're making this decision for your business, you'll first want to make sure you understand the scope of the problem, the availability of internal resources (and budget), and business factors that may sneak up on you.
Defining the Problem
Before you build or buy your solution, you need to understand the problem you're looking to solve. Once you fully understand that, you can evaluate SaaS solutions against that problem to see if they are viable options.
We've worked with dozens of companies over the last several years and all of them come to us at various stages of the problem definition process. Our advice: define the problem as clearly as you can before investing in a custom software solution. A great software partner (like us) will help your team re-define and smooth out the kinks of the true goals of the software, but your team knows your business best. Come to the conversation with a deep understanding of how your software needs to solve real problems.
Evaluating the Resources
A big part of making a custom software decision is evaluating your internal resources. Building software in house, building it with an external team, or buying a SaaS solution all come down to two things: time and money.
Team Resources and Competing Projects
Let's pretend for a moment that you're entertaining building software in-house. That's definitely a viable option for several companies that have strong development teams. What's your product roadmap look like? Do your teams have time? Is the never-ending backlog on the existing software going to allow for internal resources to commit to a build without letting anything else drop?
Now, let's pretend you're entertaining employing an external software company (like us) to build the software. Do you need this software to be completed relatively quickly? Will you need to keep them on for maintenance after launch or can your internal team pick up the bugs and new feature updates?
These are all relevant and extremely important questions to ask and answer before you move down the decision-making process.
Remember, we said time AND money. So what's your budget for this project look like? Whether you build in-house, externally, or purchase software, you'll allocate the budget differently in the P&L. When you purchase software licenses, you will need to understand that cost will most likely hit your budget every year until the end of time. When you build software, you'll have a project end date (even if you keep the company on for maintenance for some time).
Consider Outside Forces
Lastly, consider the reason you need this software and how that plays into the greater picture of your business. For example, if you pull resources from another project to complete this software build, will this affect your placement among the competition? Will it slow you down to gain market share in your industry? How will this software build affect your company's reputation and user-friendliness once it's complete? How will completing this project in a timely manner help your top-line? These are questions that only your own data analysts and marketing team can truly answer.
Pros and Cons of Building a Custom Software Product
Allocation of Costs
Simply put, you need to decide if your employees' work is worth you spending money outside the company to get the software built. Not only that, but you'll need a point person inside the company to run the project with a third party, which means you'll be taking at least one person away from internal projects.
Tech Debt Implications
How can the third-party software integrate with your existing software? Does it have to? If the software is built outside your current architecture, will it be easy or time-consuming (and costly) to integrate it?
No economics of scale
How are you going to host this software once it's built? Will you have to rent server space from the third party that builds it? Do you purchase your own server space to house it? When someone builds your software you have to consider how it will be hosted and maintained once it's gone live.
You own the idea
When you purchase licenses to SaaS platforms, they will (nearly 100% of the time) keep your data and use it in various ways. They could sell it and use it for their own marketing anonymously - but without a doubt, it's not just yours. But building your own software ensures that your data and your users' data is just your companies - no one else's.
You secure the software
Let's take you through a scenario where you are using SaaS software and that company is hacked. Now every one of your clients' and users' information has been compromised. Large SaaS companies are often the target of hackers, but when you build your own software you are responsible for your own data protection plan.
"All" your problems are solved
We don't like to talk in absolutes when it comes to user software, because it's forever changing. However, when you have a problem and build custom software to solve it - it's going to be solved. With out-of-the-box solutions, you often are solving a majority of the problems, but it's never fully satisfying.
No Business Reliance
Let's say you've done everything right - you did your research and you picked an up-and-coming SaaS product that has stellar data protection procedures and they even have some custom features that make the platform unique enough. But then 6 months after you sign and are fully integrated, that up-and-coming platform sells to a Big Guy which has no intention of keeping the platform running, but actually integrating over the clients to their cookie-cutter platform that you originally rejected. This happens! Build custom and you'll never have to worry about your platform changing without you knowing.
Whether you decide to build software or buy software, the important thing is the problems you are trying to solve are actually solved, or at least better than before. Going through these steps will help you and your team determine what solution will move you forward to success.