Nowadays newly created businesses have a lot of options to choose from and on the initial stage, they really can benefit the business. But as it scales the question of ‘Buy or Build?’ arises. Some years ago the SaaS revolution began and promised the dramatic change of all industries, yet there still no right answer.
Still, when it comes to software, it’s difficult to make a decision whether to choose the flexibility/ ideal fit of building your own software or the speed/ convenience of buying a trusted (or not so trusted) third-party option. This dilemma exists not just because of the question of cost but its efficiency, effectiveness, and fit with business long-term goals.
With the modern focus on the total Digital Transformation, these debates take a new turn. So let’s start from there. What is digital transformation?
The Digital Transformation has already started and become a game-changer for many businesses now in 2020. It allowed the companies that thought and implemented it ahead to avoid the crucial losses because of the pandemic. Overall because the digital transformation will look different for every company, it can be hard to pinpoint a definition that applies to all. Describing it on the company level – it means integrating digital solutions to the core of the business, changing and reshaping its workflow, creating new business processes, polishing customer experiences, – basically catching up with technological progress, rethinking the processes accordingly. In other words ‘not only enhancing traditional methods but reimaging them for a digital age to meet changing market expectations’.
A few years ago it sounded unnecessary but now it’s a survival issue. In the wake of the pandemic, an organization’s ability to adapt quickly to supply chain disruptions, time to market pressures, and rapidly changing customer expectations has become critical.
Making a fundamental decision like this is always a challenge. But with business analysis and ‘to the point’ questions asked it’s possible to make the right one!
Points and Questions to consider:
What are the problems you’re trying to solve, and how unique are they?
Depending on the processes so far you can already say if your company needs a fully custom solution. If, for example, you need a simple/straightforward customer management system or admin panel with some basic functionality, there will be tons of ready-to-use solutions to choose from. But if your manual processes used to be complex and rather unique – solving problems of your industry, company specifically. It might be much more problematic.
Do you have the needed funds?
The cost can be a deal-breaker when it comes to a limited/tight budget. Usually, building custom software costs more upfront than purchasing pre-built software. But it can be a win in the long run, as your company grows and you might need more services. So it will be more profitable to invest in custom development rather than integrate tons of small ready solutions.
What is your rational timeline?
Custom software takes time not only to develop but polish the concept from your side too. So you need to be ready for that. Understanding your timeline can help you plan the process, like – you can work with ready solutions that might not be a total fit while you work on the custom one, etc.
These questions and answers can help guide you in the decision. But it’s important to know all pros and cons of each approach.
Build vs. Buy: Pros and Cons
+ Pros of Building
Customization/Ideal fit and Scale: One of the strongest benefits of investing in building your own custom software solution is that it will include all the functionality you need to operate in exactly according to your processes and strategy. The finished software will be perfectly synchronized to your unique business model and challenges. Total control also allows you to add any new features on the go and if the solution is implemented right, scale it with time with no need to rebuild. You can start with a prototype and grow the software as your revenues grow. Additionally, you will be able to work on it after gathering employees’ feedback.
Total control/Security: overall your own solution allows you to fully control the features, updates, security measures. So basically you not depending on anyone and can even market your solution as a product solving your industry problems when finished and polished.
Standing out option: Unique selling proposition and services is a definite advantage. With a custom solution, you can be more efficient, scalable, and at the same time provide more for your customers than your competitors even in the crowded market. Simply said, get ahead of the game in your industry.
Integration freedom: Building your own solution means you can ensure seamless integration with any existing software, tools, and processes already in use.
– Cons of Building
Total cost: Like any custom thing, the software solution will cost more than a ready-to-use product. However, in the long run, it may not always be the case. Over time, ready solutions can create a revenue loss due to the inability to scale and control it.
The time needed to build: even planning and identifying your organization’s workflow processes takes time sure the development of the software that optimizes them does too. You have to be prepared to spend time gathering this information so that a custom solution will be appropriate and powerful for your business.
+ Pros of Buying
Lower cost: If cost is a major factor and concern that you have. Due to the limited resources to launch, pre-built software/ services may be your best option as it’s cheaper to buy and integrate.
Fast deployment: Ready-made solutions should be ‘good to go’ as soon as you pay for them. If you don’t have a unique needs rather a classic and simple flow than it might be no point in investing in something custom.
Updates, Ongoing maintenance: All support and further updates will be in the hands of third-party providers. But it can be good (you don’t need to invest) and bad (the features can be changed anytime).
– Cons of Buying
Less customization: Usually ready-to-use solutions suggest some customization. It’s pretty basic and can’t fulfill the unique business needs.
Less control: The provider fully controls the solution’s updates, prices, and functionalities. All the key decisions on the software’s features and future are out of your hands.
Integration issues: Pre-built software may not be compatible with other programs, can’t be integrated with other tools that your business uses and needs.
Long-run Cost: Although ready-to-use software seems to be cheaper initially, its costs may grow over time. With a subscription base you may invest each month and in the long run, understand that you spent the whole custom build budget.
Hidden cost: Initially after paying for the subscription you may see that it doesn’t match all the details of your business requirements. Modifying which can increase the costs exponentially.
The “Build or Buy” debate is always challenging. Each one has its pros and cons, so there are no easy answers to this. There are a lot of factors to be considered when making a decision. So it’s important to take some time on detailed analysis, the serious approach is essential to end up with the right option.
If you lean towards a third-party system, be sure to take the time to research the different vendors and solutions available. If towards a custom software platform, recognize the time, effort, and costs it will incur, along with the long-term benefits.