The Pros and Cons of Building Software vs Buying It
Many modern businesses are faced with the question of whether to build or buy the software required for their critical business operations. This question doesn't just come down to costs. It also involves efficiency, effectiveness and the long-term goals of a company.
Business owners who are on the build-vs-buy cusp must understand the advantages and disadvantages of each in order to make an informed decision about which direction is best for the company as a whole.
Consider the following Pros and Cons of Building vs Buying the Software
Pros of Buying
COST: Off-the-shelf software will certainly cost far less than the cost involved in building it. Some vendors offer subscription options so that your upfront cost for using the software is even less.
TIME: You can almost immediately start using the software for your business which gives you advantage of time-to-market over your competitors.
SUPPORT and MAINTENANCE: Saves you from putting additional cost and effort as it is taken care of by the vendor. In case of an online or a SaaS application all aspects such as hosting, network availability, security etc. are ensured by the vendor which allows you to concentrate on your business critical functions.
ACCESS TO NEW FEATURES: External software vendors are compelled to keep improving their systems by adding features, keeping up with industry trends, etc. Especially with Cloud/ SaaS billing systems, you get these new capabilities for free, whereas a home-built system will need ongoing investments.
Cons of Buying
CUSTOMIZATION: Most of the softwares available in the market are provided off-the-shelf, which offer limited scope of customization to suit your business specific needs. It would be worth considering the software which offers customization possibilities on top of the ready to use features.
COST: You need to pay the software cost upfront while buying. The cost may be as significant as it is for building it but for small businesses that would be subject to their budget. It would be worth considering a subscription option which involves only paying for a certain period (e.g. monthly, quarterly, etc.) or pay-per-use in which you pay quantitatively based on your need.
Pros of Building
If your company has complex software needs that aren't common to other businesses, it may be difficult to find what you're looking for on the market so the primary benefit to building is the ability to customize the software to your needs including:
- Features that are specific to your unique business model
- Integration with your existing proprietary software
- The ability to highlight the services that only your company offers in the marketplace
Cons of Building
COST: Whether you hire an outside company or build the software in house, custom building is almost always going to be an expensive endeavor.
TIME: Building software (e.g. an automated subscription billing system) will take significantly longer than buying software (SaaS instance), which may delay implementation of your marketing and sales strategies.
ONGOING SUPPORT: You have to consider the secondary cost of ongoing support for a custom built software which is essential for proper maintenance. It is common to see enterprises abandon their home built system when the development has moved on. This leaves you with no ability to make changes required by business trends, regulations or 3rd party integrations. The latter point is a notable consideration given that 3rd party external systems like CRM, ERP, payment gateways, etc. are constantly evolving.
UPGRADES and ENHANCEMENTS: New features and enhancement are must-haves with changing industry trends and introduction of new compliances. Upgrading the home build software with new features will always involve time and efforts which will hamper your business process in a way or another.
Simply looking at a list of pros and cons is risky and oversimplifies this decision making process. Here are a few questions you should answer for your company:
Is the software a competitive advantage? If your answer is no, do you really want to allocate development resources that could be used for other more productive projects?
Are you building a large business that will allow you to spread the cost of building across multiple business, clients, etc.? If not, again we have to recommend buying rather than building.
Making a decision about whether to build or buy your software is dependent on the type of company you own, the simplicity and complexity of your processes, and the amount of money you are willing to spend. The most important thing is to FULLY consider both options and not to let a particular department or individual overly influence your decision.
NOTE: There are a lot of factors to consider when deciding whether to buy off-the-shelf software, be sure to take the time to weigh the different vendors and solutions available or develop a custom software solution, recognize the time, effort, and costs it will incur, to meet all your unique business needs.If you're still having trouble making your decision CIO Magazine has some great resources available.