To Build or Buy: The Software Dilemma Businesses Face

It’s rare to find a business today that doesn’t rely on some type of software to keep its operations running. Whether you're a large enterprise managing complex global supply chains or a smaller business taking care of a limited number of clients - software almost always streamlines these processes.

Most businesses are used to subscribing to multiple software solutions for various departmental needs. Once a company achieves a certain size, the question of software cost versus value arises. At this point, organizations need to choose whether or not to continue purchasing their software or design their own.

Every business is unique, and each has its own set of requirements. By weighing both options carefully and understanding the pros and cons of the options, you’ll be able to make the right decision for your organization and its enterprise value.

What is Out-of-the-Box Software?

Out-of-the-box or ready-made software is the most common type of technology investment available. The solutions are often labeled as “enterprise software solutions” or “SaaS” (Software-as-a-Service) tools that are purchased at a flat rate or through a subscription model.

There is an abundance of ready-made software available in every industry. While some solutions are designed to improve or support specific business processes, others are intended to be the primary tools an organization uses to manage all facets of the business.

One of the largest advantages of purchasing ready-made software is how quick and easy the solutions are to use. While not all software options are designed the same, many come with quick integration timelines so the business can immediately start benefiting from the value they bring.

Some common ready-made software solutions include:

• CRM (Customer Relationship Management) Tools

• Task Management Platforms

• Cybersecurity Services

• Data Storage and Analytics

• Automated Accounting Processes

• Point-of-Sale and Inventory Management Solutions

Ready-made software can be highly versatile, but it also has certain limitations. Since most solutions are designed to cater to a larger amount of potential customers, many of the incorporated software features are more generalized. 

While some businesses may find them valuable, others may find they don’t use every “business benefit” the solution claims to provide. This means there is a higher potential for wasting resources and not getting the full value for the investment.

Advantages of Designing Your Software

Custom-built software offers a much different experience when compared to purchasing a solution off the shelf. Unlike widely distributed software, a custom software solution is designed from the ground up to support the specific needs of a certain business.

Designing your software guarantees the features you want to maximize the value of your investment. Instead of paying for a service or solution where you use only a portion of the software’s capabilities, you implement the specific elements that streamline your operations.

Although a custom solution can add a lot of value to your business, it requires significantly higher upfront costs to get going. Depending on the complexity of the requirements a business has, a custom design project can take considerable time to complete and require significant investment to create. Still, this could very well be a viable solution if it facilitates business growth.

Build or Buy Software: Factors to Consider

With so many options available for businesses, there is no right or wrong answer to whether purchasing or designing software is the best option. However, some important areas of consideration can help you to narrow down your best options.

Determine the End-Use of Your Software

Every piece of software you purchase has a specific purpose. But it’s important to make sure that this purpose lines up with your short- and long-term business objectives.

Even though many businesses have similar needs when acquiring new software - for example, managing finances, improving communication across distributed teams, or simplifying order processing - not all software solutions are created equal. Consider the industry you’re in and the important features that will help your business succeed.

For example, if you’re focusing on mergers and acquisitions, it’s important to evaluate how your software can specifically support you during this process. Ask yourself questions like:

• Can this software support my existing business processes and help to ensure smooth transitions across multiple departments?

• Will this software adapt as the business changes, either through organic growth or when acquiring a new business?

• How easily will this software integrate with pre-existing systems in both companies? If so, can it support future integrations as other new entities are acquired?

Consider Your Company’s Structure

Another thing to consider before deciding if taking on a custom software development project is right for your business is to think about how your business is currently structured. Smaller businesses that don’t have significant financial or staffing resources at their disposal will often find that larger-scale software projects aren’t feasible to execute.

Some smaller businesses may consider outsourcing their development projects to other design professionals, but it’s still important to think about the additional collaboration needed to make the development project a success. 

If your company has few employees who can help manage projects with external design teams, it may be too early to move forward with custom software builds. You can always use a ready-made solution temporarily while you wait to build the necessary infrastructure required to support a custom design project. 

Research Available Options

Adapting a generic software solution so that it matches your business needs can be a challenge and, many times, not doable. It’s no different than trying to fit a standard piece of furniture into a uniquely shaped room. You can make some adjustments, but the furniture might never really fit the way it should.

It's important to know how to distinguish between actual business requirements and nice-to-have software features. Don’t sacrifice the core functionality your business needs to operate effectively by opting to have nice-to-have software features.

If, when doing your research, you discover that many ready-made options fall short of what you need, it might be time to explore custom software development.

Evaluate Your Budget

When considering software options, your budget and the estimated return on investment (ROI) are the most critical factors to evaluate. Unlike custom solutions, ready-made software can offer more transparency regarding the initial investment required.

Think of it like remodeling your home. Custom projects can lead to unexpected costs, both during development and later for maintenance, upgrades, and security enhancements. The same is true for your software choices.

However, custom software also gives you full control over development. You decide how much to invest in each feature. While a ready-made solution might seem cheaper upfront, custom software can offer greater long-term value and affordability.

Make the Right Choice for Your Business

There is no question that there is a lot to consider when deciding between purchasing and designing your custom software. However, by considering the points discussed, you’ll make sure you're making the right choice for your business, which will help it achieve long-term sustainable growth.

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