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Build vs. Buy Software: How to Make a Decision?

18.03.2022 Yury Antonau,Darya Tryfanava
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Build vs. Buy Software: How to Make a Decision?

When it comes to software, businesses regularly struggle with the dilemma of “build vs. buy software.”

While developing a custom solution may seem like the best option for meeting a specific business challenge, it often requires a lot of resources to build, implement, and maintain. Commercial solutions allow you to jumpstart your business, focusing on challenges and productivity.

So, as an example, if a company seeks to optimize its business processes by introducing a CRM system. There are many ready-made options on the market, but none of them seems to be an effective solution. That’s when they need to develop a custom CRM, which will be tailored to their needs. But it is not suitable for every business.

Of course, each business situation is different, so it’s quite tricky to answer the “build or buy software” question. In this article, we will compare both options and explain under what conditions it is recommended to use each of them.

What Are the Main Factors to Consider in a Build vs. Buy Software Decision?

Every business owner should consider the advantages and the most significant features of both options. Pay specific attention to the cost, vendor, security, and business processes you need to perform.

Customized software works for a specific company, its target audience, and its requirements. Ready-made software is less functional, but available at all times. However, it often has a lot of unnecessary features. That’s why many companies prefer to develop custom solutions that meet all their requirements and don’t contain unnecessary features.

Custom software Ready-made software
Functionality Advanced, developed with the specific needs of your business in mind Average. There are features you may not need. Some valuable features may be missing.
Architecture & scalability Find a balance between scalability and current business requirements. Scalable. It depends on the software type.
Cost-to-quality ratio It depends on software type but is proportional to its impact on the company’s performance. Medium to high 
Maintenance Custom software development companies offer support and maintenance services, so it can be a better option in the long run. Limited. The provider may decide to stop supporting the app.

In a nutshell, custom software is tailored to the business, while off-the-shelf solutions force the business to adapt. Now, let’s take a closer look at the differences between these solutions.

Buy vs. Build Software: Pros and Cons

Advantages and Disadvantages of Building Software

Advantages of Building Software

Here are some reasons why many businesses prefer to invest in custom software development.

  • Meets your specific business needs. Custom software is created with your business in mind, and all the new features can easily be added as your business scales and grows. For instance, some companies have specific security rules that must be followed, while others may seek to offer consumers specific features that cannot be found in competitors’ offerings.
  • Automation of manual operations. Automating the manual processes that commonly occur in business can save time and expenses, as well as boost the efficiency of your team.
  • Saving money. If you opt for custom software, you don’t have to pay for irrelevant features that your business will never use.
  • Upgrading legacy systems. To help you achieve higher efficiency, custom software developers can decode your software solution using the latest technology.
  • Competitive advantage. You can gain a competitive advantage and come out ahead in your industry with the most efficient, connected, and scalable technology.
  • Greater control. You will have full control over user options, security measures, and system updates. In addition, full ownership allows you to market the product as software as a service.
  • Customization and scaling. Your software solution will include all the features you need to operate the way you want. You can start with an MVP and expand the software as your revenue grows.

Disadvantages of Building Software

  • High upfront costs. A customized solution will be more expensive than a ready-made one. However, ready-made solutions are not always the most cost-effective in the long term.
  • Time commitment. For people who are new to software development, it can be tricky to come up with specific requirements for the final product. That’s why it’s better to ask experts to help you define issues and provide solutions. Clear requirements will significantly enhance the development time.
  • Unsuitable vendor. Remember that an unsuitable development team can cost you a lot of time and money. It is essential to choose a reliable company that provides quality services. Therefore, you should spend time researching potential vendors. This way, you can be sure that you will get the best results.
  • Time to build. It takes a lot of time to gather information about your organization’s workflow processes so that a custom solution will be suitable and effective for your business.

Why Should You Consider Building a Custom Solution?

The key reasons for choosing custom software over an off-the-shelf solution are:

  • Cost-effectiveness in the long run. You may have to pay a significant amount for software development initially, but in the long run you will save a lot of money. Also, you do not have to pay licensing fees or for built-in features that are irrelevant to your business.
  • Increased productivity. By using software that suits specific needs, your team will be more accurate and significantly faster at completing tasks. Unlike off-the-shelf solutions, you can keep everything organized and in one central point.
  • Growth of your company on your terms. If any changes or improvements are needed, you can directly contact the developer to make the necessary upgrades. You don’t have to wait for an update that doesn’t guarantee the features you need, as in the case of an off-the-shelf solution.
  • Operates with third-party software. Your software can be designed so that it will be compatible with other applications, programs, and system software already running in your organization. This is a significant difference from ready-made solutions, which have limited compatibility options that affect the performance of your business.
  • A competitive advantage in the industry. Custom software allows you to offer more value to your customers. They will be more satisfied with your services and set you apart from the competition. In addition, your customized solution will have capabilities that your competitors don’t provide, allowing you to stand out in the industry.

Off-the-Shelf Software: Advantages and Disadvantages

Advantages of Ready-made Software

  • Reduced initial cost. If your resources are limited, ready-made software may be a better option, since it is usually more affordable to buy and adopt. But you may want to switch to a custom software solution when that option becomes more viable for you.
  • Faster deployment. Since ready-made solutions don’t have to be built from scratch, they can be deployed more quickly. Yet, such software is not typically a “plug-and-play” solution. Turnkey software often requires time and technical expertise for seamless and efficient implementation.
  • Community Support. You’ll be able to check feedback about software on the forums, and if there are any problems, you might receive community support as other users may face the same issues.
  • Try before buying. Many ready-made products offer a free version and free trial, so you can test the product for yourself and see how it fits in with your work process. But note: free and trial versions usually provide limited functionality.

Disadvantages of Ready-made Software

  • Less customization. Ready-made software has quite limited functionality and capabilities. It can’t be customized to meet the growing and ever-changing needs of your business. These limitations can stifle productivity, innovation, value, and growth. Also, your business can be placed at a major competitive disadvantage compared to competitors who use customized solutions.
  • Cost. Although an off-the-shelf solution may seem cheaper initially, it could end up costing more money in the long run. Some ready-made solutions will have licensing fees and other fees that need to be paid on a monthly or yearly basis, and it may not be able to keep up with changes to your company.
  • Hidden cost. While ready-made software may be more affordable to buy initially, its cost may increase over time. Subscriptions and licenses tend to be time-limited, so you’ll have to pay when they run out. Also, if your company grows significantly, you will have to buy additional licenses for new employees. So, it is essential to consider not only the initial cost of software, but also the long-term cost.
  • Less control. Since the software is not your property, you cannot change it to suit your commercial needs or control the security of all your data.
  • Incompatibilities and connection issues. Ready-made software may be incompatible with third-party software or products you may need later. Custom software may be the best option for connecting to other pieces of software that your business may need in the future.
  • Dependency. While using ready-made software, your business depends on the vendor company. If this vendor changes something or stops distributing the product, you will be forced to find a new one.
  • Unnecessary features. Off-the-shelf software often includes features you don’t need (so-called bloatware or feature creep). In some cases, these features hinder the performance of the solution.
  • Wide availability. Since off-the-shelf software is available to a wide audience, your business ideas can be replicated by your competitors.

Why Should You Consider Buying a Solution?

In some cases, it is better to buy software rather than create it. Your business would benefit from a commercial solution if:

  • Building software is not an essential part of your business.
  • There are solutions on the market that fit the specific business requirements.
  • The in-house team is limited and should focus on their core expertise rather than software development.
  • Rapid deployment has a higher priority than a fully customized product.

Comparison Table: How to Decide Whether to Buy or Build Your Software

It will be more convenient to explain the differences between buy or build options with a comparison table.

Build software Buy software
Pros
  • High customization 
  • Solving specific issues of your company
  • No dependency on third-party vendors
  • Full control over operation of software
  • Lower upfront cost
  • Meets your specific business needs
  • Automation of manual operations
  • Saving money
  • Upgrading legacy systems
  • The most efficient and scalable technologies 
  • Greater control
  • Customization and scaling
  • Reduced initial cost
  • Faster deployment
  • Community support
  • Free trial versions
Cons
  • High upfront costs
  • Time commitment
  • Unsuitable vendor
  • Time to build
  • Less customization
  • Cost in the long run
  • Hidden costs
  • Less control
  • Incompatibilities and connection issues
  • Dependency on the vendor company
  • Unnecessary features
  • Wide availability
Recommended to use If your company has specific needs and requirements, the best option is to build software.  If you’re looking for a basic, simple solution that solves a common issue, ready-made products offer a better price.
When it is preferable to avoid using it If your in-house resources are limited, and rapid deployment has a higher priority than a fully customized product, it’s better to opt for ready-made software. If you aim to implement customized and adaptable software, off-the-shelf products will be too limited. Such software is designed to provide a one-size-fits-all solution to common issues.

What’s Next?

When deciding whether to build or buy software, you should consider all the potential impacts on the growth of your business.

Custom software development requires more time and resources initially but can provide certain benefits, such as flexibility, better tailoring to your specific needs, and seamless integration with existing systems. But ready-made software tends to be more affordable and easier to deploy. So, you should carefully analyze all of your business requirements before making such a decision.

If you have more questions, feel free to contact us.

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