“Should we buy off-the-shelf software or build something custom?”
As a Chief Technology Officer (CTO), Chief Information Officer (CIO) or Founder, it’s an important question that will inevitably come up in your business as it grows, whether it’s a startup or a larger company.
In this article, we discuss the five key questions to help you make the right decision and look in detail at the advantages and disadvantages of each approach.
Each approach has clear benefits and drawbacks, but which one is best for your business needs? Buying the wrong software will slow growth and impact your current processes. Building the wrong custom software can cost you triple and result in a bad product.
The 5 Key Questions for Build vs Buy Software
To make the right decision, you’ll want to consider the following questions:
1. How difficult would it be to modify your workflow to match a generic technology platform?
Off-the-shelf software caters to a broad audience, and often includes generic workflows and features. If your current processes are highly specialized or unique, adapting them to fit a pre-built solution might involve significant compromise.
2. How important is future flexibility to change and modify your business and workflow?
Businesses evolve, and your software needs to keep pace with these changes. Off-the-shelf solutions may have limitations when it comes to customization or scalability.
3. Does your workflow or process provide a competitive advantage?
Your unique workflows might be a key differentiator in your market. Using generic software can mean adopting the same tools and processes as your competitors.
4. What are your time constraints for implementing a software solution?
The timeline for deploying a solution is often a critical factor. Off-the-shelf software can usually be implemented more quickly than a custom solution, but this comes with trade-offs.
5. What are your financial constraints?
Cost is always a major consideration. Building custom software requires an upfront investment, while buying software usually involves lower initial costs but ongoing licensing or subscription fees.
While these questions are important to ask, your team should understand the advantages and disadvantages of building versus buying.
In the next section, we will look at the advantages and disadvantages of building versus buying software in detail.
The Advantages of Building Custom Software
Building custom software comes down to a few significant benefits for an organization. Below are 9 advantages broken down in detail.
1. Customization
Customization is the most significant appeal of building custom software – you have complete control! No need for workarounds, hacks, or unnecessary integrations. With custom software, you define the business rules and workflows and then integrate them into the various systems you already use. The entire product is built around your specific business.
2. Ownership
As many businesses grow, their processes and workflows change. With custom software, you own the product so you can change, modify, and grow it to fit your evolving needs. No constraints, licensing feeds, or restrictions apply when you own the product.
3. Competitive Edge
Custom software can give businesses a tremendous competitive edge over other companies. With off-the-shelf technology, any player in the industry will have access to the same features and functionality. With custom software, companies can leverage the more efficient, connected, and scalable solutions to reduce costs, speed up workflows, and drive growth.
4. Application Support
With custom solutions, you have direct access to the team that created the software. Whether a bug emerges or changes are required, the product team is available to support the needs of the business.
5. Technology Freedom
Custom software gives you the ability to select a technology that works with your existing infrastructure and team.
6. Ongoing Enhancements
When your business invests in custom software, you have complete control over the product roadmap. You don’t need to rely on the software vendor’s roadmap when you can define your own. You’ll have the ability to get feedback from departments and prioritize features and enhancements based on your growing requirements.
7. Design & Branding
Custom solutions allow you to control more than just the look and feel – you own the product design. When you build your own software, you write the copy and messaging, and you get to define the naming conventions and business terminology. The software will feel more natural to your team, which means less confusion and more productivity.
8. No Configuration Needed
Custom software solutions are designed specifically for your business needs – there’s no need for custom configuration. When your organization purchases large, off-the-shelf software like Salesforce, SAP, and Oracle, you’ll need experts to set up, configure, and build the solution for your organization. You can do this internally or outsource to a firm at a higher premium.
9. Future Built
Like your business, custom software is a growing product that will continuously improve and evolve to fit your changing business needs. With a custom software solution, you can build with the future in mind. Perhaps you want to add a new product line or new department or future automation, the seeds of future growth can be designed into the underlying architecture.
The Disadvantages of Building Custom Software
While there are many small and large benefits to building a custom solution, there are significant disadvantages to this approach. Below are three drawbacks of note.
1. Larger Upfront Expense
Custom software typically costs more upfront than off-the-shelf software. This more substantial expense can be a deal-breaker for many businesses when deciding whether to build or buy. It may take a year or more to generate the returns to offset the initial investment, which may not be practical for many businesses. Always make sure to calculate ROI and weigh risk when budgeting a custom software project.
2. Takes Time to Build
Custom software takes time to build. While using an agile development process can get you initial working versions of software reasonably quickly, a fully-featured product will take much longer to deploy. If your organization doesn’t have time, then a custom solution might not be the best choice.
3. Building the Wrong Product
Many businesses invest a lot of time and money into building custom software to build the wrong product inevitably. This is a major risk when considering custom software. With proper product strategy and a research-driven approach, though, this risk can be severely mitigated. Learn more about how to manage your budget and ensure we’re building the right product.
The Advantages of Buying Off-The-Shelf Software
There are many immediate and long-term benefits of buying off-the-shelf software. Below are seven reasons for when to consider a pre-build solution.
1. Faster Implementation
The most beneficial aspect of buying software is the implementation speed. Most off-the-shelf solutions are immediately available. While others might take some time to configure and customize, they will be live for your organization within weeks. If the timing of a solution is urgent, then buying software might be your best choice.
2. Lower Upfront Cost
Off-the-shelf software is typically much cheaper to buy and implement. There may be an upfront cost as well as a recurring monthly or yearly license fee. If budget is a concern or there’s a lack of immediate resources, then buying software may be a more viable solution for your organization.
3. Ongoing Enhancements
Most quality off-the-shelf solutions are continuously improved. The vendor will typically do research, get feedback, and test new features to ensure they deliver value to customers. When you buy software, you’ll have access to these new features and enhancements at much of an additional cost.
4. Dedicated Support
Off-the-shelf software solutions typically have a dedicated support team to help onboard and support your team. While support may come at an additional cost, it can be very beneficial to many businesses.
5. Community
Many successful off-the-shelf software solutions have a robust community of users, experts, and support reps answering questions and sharing ideas. These communities typically have wikis and question-and-answer forums to support users.
6. Add-ons & Integrations
Many software solutions have add-ons and integrations that further extend the scope of features. Some platforms have apps that you or third-party developers can build to add functionality not built into the core product offering. Many solutions also have integrations into common third-party systems that your organization may also use.
7. No Development Risk
Off-the-shelf software has been tested and used by many other companies. The use-cases, process, and implementation pathway are clear and require almost no risk compared to custom software development.
The Disadvantages of Buying Off-The-Shelf Software
While off-the-shelf software may be quick to implement and cheaper upfront, there are some downsides to buying software. Below are three reasons why buying a pre-built solution may not be right for you.
1. Limited Functionality
The single most significant disadvantage of buying software is limited functionality. Off-the-shelf software is meant to be generic enough that any business trying to accomplish a particular goal could use it. In many cases, the limited functionality of an off-the-shelf solution may be prohibitive to many companies. This is especially common when your workflow or process is unique or different from the conventional approach.
2. Incompatibility or Custom Integrations
Off-the-shelf software may not be compatible with other software and services that you currently use or may require in the future. In some cases, you may need to build custom integrations or solutions which can be costly and fault intolerant.
3. Slower Enhancements
While many off-the-shelf software solutions offer a roadmap and access to newer features, their timeline may be slower and not share the same priorities of our business.
Customizing an off-the-shelf product
Deciding whether to build or buy can be complex. However, the decision doesn’t have to be linear. In fact, you could take a hybrid approach. Another option, which is not uncommon, is a hybrid of off-the-shelf software and custom software. In this approach, a business will buy software and then build custom software on top of its off-the-shelf software.
This is common for organizations that want core requirements and data used in a large system like Salesforce, SAP, or Oracle, but then want to build a suite of custom software for their teams, customers, and other internal workflows.
Know When to Build vs. Buy Software
The question of whether to build or buy boils down to cost and control. If you have low costs and need generic levels of control, then off-the-shelf software is your best option. On the other hand, if you need more control over your solution and are willing to make an investment, then custom software may be right for you.
If you think a hybrid or custom solution is right for you, then please contact us. We’d be happy to discuss your options.
