Build vs. Buy Software: Pros, Cons & Six Questions to Consider before Taking the Plunge

To build or not to build, that is the question! Shakespearean humor aside, the decision to build vs. buy software is a heavy one to weigh. It’s a dilemma that most business owners face at some point.

There are very clear benefits and drawbacks to each approach. One can be a much better option than the other depending on the needs and constraints of your business. In order to make the right decision to build vs. buy software, you’ll want to consider the following questions:

  1. How small or large is your business?
  2. Do you plan to grow it significantly?
  3. Will your business structure evolve over time?
  4. Does the success of your business potentially hinge on whether it incorporates cutting edge technology?
  5. What are your time constraints for implementing a software solution?
  6. What are your financial constraints?

We’ll go over the major pros and cons of custom software solutions and “off-the-shelf” software, addressing how the answers to each question above can help you weigh in on the best solution for you. We’ll also highlight some of the common misconceptions about building vs. buying software that can sometimes lead people to make the wrong decision for their business.

The Case for Custom Software

Scalability

If you have big growth plans for your business, a custom software solution is likely the way to go. That’s because custom software can be modified much more quickly and easily so that it expands, grows, and changes with your business. So even if you find an existing pre-built piece of software that meets most of your technology needs today, the chances of it still doing an adequate job as your business grows and evolves will rapidly diminish.

You will then be faced with having to move to a better solution later on down the road. Switching to an entirely new system can be far more cumbersome, time-consuming, and disruptive to your business flow than the small, frequent, and incremental upgrades that are typically made to customized software.

Competitive Edge

In today’s world, cutting edge technology is shaping just about every industry. If you choose an off-the-shelf software solution, you take the risk of starting your business off with outdated technology and missing out on opportunities to get ahead of the game in your industry. With a custom software solution, you can gain the competitive advantage by leveraging the most efficient, connected, and scalable technology.

Developing smart product technology and leveraging IoT-based solutions in the right context can do wonders for making your business more productive and more enticing to your new and existing customers. Essentially, custom software can help you really stand out against your competitors.

Faster Growth

With the capability, scalability, and customization of proprietary software solutions comes the added benefit of faster and better results. When business software is tailored to include all the functionality you need in the ways you need it the most, your business can run like a well-oiled machine. Software that is customized to your workflow and optimized for today’s connected world can push production and profitability through the roof, and lead to exponentially faster business growth.

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The Drawbacks of Custom Software Development

Expense

Custom software typically costs more upfront than pre-built software, which, depending on the size and profitability of your business, can be a deal-breaker. You’ll want to ensure that the revenue your business generates can comfortably cover the costs of building, maintaining and upgrading custom software.

Keep in mind, however, the common misconception that a pre-built software solution will always be the most financially sound one. Over time, the use of pre-built software can create a loss of revenue that far exceeds the additional cost of maintaining custom software. This is because pre-built software often sucks valuable time and resources from your business as your employees do their best to compensate for not having all the features they need to run optimally.

Time to build

With the right software development process you can get usable chunks of software in a timely manner. But launching a fully-loaded custom software solution takes time, which you may or may not have enough of.

Off-the-Shelf Software: The good, the bad, and the ugly

As you explore your options to build vs. buy software, you’ll need to weigh the short-term with the long-term. Here are the mostly short-term benefits of purchasing pre-built software:

Lower Upfront Cost

If cost is a major concern and you have limited resources to launch, pre-built software may be your best solution since it is typically cheaper to buy and implement. Just keep in mind the potential long-term financial drawbacks we mentioned earlier. You may want to switch over to a custom software solution once that option becomes more viable for you.

Faster Implementation

Since it doesn’t need to be built, off-the-shelf software can get up and running faster. However, allow us to dispel the common myth that launching pre-built business software doesn’t require extensive IT involvement. Despite the convenience that is implied with the term “off-the-shelf,” these are not typically plug-and-go types of solutions. Smooth and successful implementation of pre-built software often takes time and technical expertise.

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The Limitations of Pre-Built Software

Limited Functionality

Pre-built software is pretty rigid in its functionality and capabilities. There isn’t much wiggle room for customizing it to meet your unique requirements or for optimizing it to accommodate the growing and ever-changing needs of your business. These constraints can stifle productivity, innovation, value, and growth. It can also put you at a competitive disadvantage. Your canned software won’t stand a chance at outperforming the competition if your rivals are using custom-tailored solutions.

Incompatibility & Connectivity Issues

Pre-built software may not be compatible with other programs, devices, or products that you are using today, or ones that you may need to implement in the future. Custom software, on the other hand, can be built with compatibility in mind, and can be tweaked later on to connect with more and more devices and other pieces of software that may become necessary for your business to incorporate in the future.

So the build vs. buy software decision ultimately boils down to whether your priorities are to launch fast and cheap, or to invest in your ability to soar to the top, hard and fast.

Learn more

Interested in speaking with an expert to get a better idea about whether a custom software solution is within your reach? We invite you to schedule a free consultation with one of our experts.

Check out our free ebook for some real examples of failed software projects (and how not to make the same mistakes).

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