Choosing whether to build or buy software is a pivotal choice for business owners, especially startup founders, with far-reaching implications for their firms. This can be daunting, as it involves weighing numerous factors, from cost and time to market to the specific needs of the organisation.
As more companies increasingly adopt technology to provide quality services to their customers, the pressure to innovate quickly and efficiently adds another layer of complexity to this decision.
In this article, we will examine key considerations that can help you make an informed choice between developing software in-house or purchasing an off-the-shelf solution. By the end, you will have a clearer understanding of which approach aligns best with your business goals and objectives.
Although selecting a software acquisition approach might seem easy at first, however, it isn't. Below are some questions you should ask yourself. Note that how you answer this question will determine whether to develop or purchase applications in-house.
Before anything else, it's essential to analyse the functionalities and features you need in software to address your business challenges effectively. This process will illuminate whether readily available packages are adequate or if a bespoke solution is required to seamlessly integrate with your operations.
For instance, consider a business that operates within a niche market with specialised workflows, such as a company that manufactures custom orthopaedic devices. Such a company might find that buying software lacks the specific features needed to manage the intricate details of custom orders, patient data, and regulatory compliance.
In this scenario, bespoke apps would allow for the precise tailoring of functionalities to support unique processes, enhancing operational efficiency and compliance management. On the other hand, if the enterprise's needs are more general and align with common industry practices, getting ready-to-use products is usually the quicker and more cost-effective route.
Ask yourself: Will there be significant ongoing changes in the future? Are there numerous bespoke requirements that are critical for your business operations? Your answers to these questions will put you on the right track.
When budgeting for software, firms must consider initial costs and other related expenses. These can range from developer salaries and the necessary hardware, which can be substantial, especially for custom applications and include subscription fees.
Initially, off-the-shelf products might appear more economical due to their lower upfront prices. However, these solutions often offer monthly or yearly subscription models that provide access to a broad range of features with minimal initial expenditure. However, these charges can accumulate significantly over time, potentially making them less affordable in the long run.
On the other hand, opting to develop in-house requires a reasonable investment. You need to assemble a high-performance development team and pay salaries, which can be substantial depending on your project scope. Although the upfront costs are higher, this approach can lead to significant long-term savings.
Time-to-market (TTM) refers to the duration from the initial concept of a product to its availability for purchase or use. For instance, if you conceive an idea for a mobile app today, the moment it becomes downloadable on platforms like the Apple Store or Google Play signifies the end of its TTM.
TTM is critical, as delays can result in missed revenue opportunities, loss of market share, and diminished customer satisfaction. The faster a product or service is launched, the quicker it begins to generate revenue, enhancing the overall financial potential of the product.
When immediate implementation is crucial, opting for off-the-shelf software can facilitate a swift market entry, minimising any operational disruptions. This route is typically most suitable for well-defined needs where existing solutions can be easily adopted.
If you are not in a hurry to launch your product, probably because you understand the complexity of the project, building it in-house can be a better approach.
If your firm is positioned for growth and change, selecting the right approach to accommodate this evolution is essential. For instance, a retail company might initially choose off-the-shelf software to manage inventory and sales.
Yet, as they expand into online markets, the need for custom features specific to e-commerce – such as integrated logistics and advanced customer analytics – may necessitate a transition to custom applications or an enhancement of the existing system to maintain efficiency and competitiveness.
However, for companies with stable processes and well-defined needs, the purchase of readymade software may be more appropriate.
To determine if you need custom or off-the-shelf apps, you have to assess both the depth of technical expertise and the capacity to manage the complete lifecycle of a project with your team. If your developers are proficient in modern programming languages and frameworks, and if you have project managers with a track record of success, then in-house development might be a viable path.
However, the decision should not be made lightly. Consider the example of a mid-sized retail company that opted to build its inventory management system. Despite having a couple of programmers, the project encountered numerous delays and budget overruns because the inexperienced team underestimated the complexities involved in integrating the new system with existing platforms. This illustrates that having some technical skills isn't always sufficient for complex projects. Hence, exercise caution here.
For organisations lacking robust IT departments or those without access to skilled programmers, investing in off-the-shelf software could be the more practical and risk-averse approach as they are typically ready to deploy with minimal configuration. However, the option for a custom solution is still open for those without the necessary expertise because they can always outsource developers to help them with their projects.
Creating your software in-house means committing to the continuous process of bug fixes, security patches, and the development of new functionality. The costs and effort involved are substantial, and logistical challenges must also be considered.
For instance, if key programmers were to leave the organisation, you could lose vital expertise and resources necessary for future maintenance, potentially leaving a significant gap in your operational capabilities.
On the other hand, purchasing readymade software typically includes the benefit of vendor-provided ongoing maintenance and support. This might seem like an attractive proposition initially, but it is important to be aware of the long-term financial implications. Licensing fees, costs for customisations, and potential upgrades can accumulate swiftly, often more than initially apparent.
To navigate these financial undertows effectively, it's advisable to perform a preliminary budget estimation to uncover the hidden costs associated with both the buy and build options. This proactive step helps in making an educated decision, ensuring that the chosen solution aligns with both current needs and future growth.
Now that you understand what to consider when choosing between custom applications and off-the-shelf, let's take an in-depth look at each approach.
This method involves acquiring ready-to-use software with features that are not unique to a business. Several other companies can also purchase the same product and use it for their daily operations.
Let's consider some of the advantages and disadvantages of this option.
The table below highlights some of the pros and cons of acquiring readymade solutions.
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Advantages |
Disadvantages |
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It often proves more cost-effective compared to custom solutions. For instance, a mass-produced app like Microsoft Office is significantly cheaper due to economies of scale. |
It may not perfectly fit specific business needs. Customisation, if available, is generally limited, which can result in inefficiencies or additional costs. |
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One of the major benefits is the immediacy of deployment. Some readymade products are available and can be released into the market instantly to accelerate workflow. |
There can be compatibility problems with existing systems, which may require further investment in workarounds or additional software to bridge gaps. |
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Established vendors provide reliable products that have been tested extensively. This reduces the risks of bugs and errors, ensuring stability in operations. |
Most options require ongoing subscriptions or fees for updates and support, which can accumulate over time, adding to the total cost of ownership. |
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Vendors typically offer regular updates and customer support, which enhances security and functionality. |
Dependence on the external vendor for updates and continued support can be risky. If the vendor discontinues the product or goes out of business, it may lead to significant disruptions. |
In this approach, a business may choose to design, create, test, and maintain its software tailored to its specific needs. Build products are not available for general use as they are the properties of the company that makes them.
The table below explores the benefits and disadvantages of the build option.
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Advantages |
Disadvantages |
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Creating software allows for complete customisation to meet precise operational requirements. This ensures that every feature and function is specifically designed to align with the company's workflows and objectives. |
It involves higher upfront costs compared to off-the-shelf solutions. The total expense includes design, development, testing, and ongoing maintenance. |
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Custom-built applications can be seamlessly merged with existing systems, enhancing overall operational efficiency. This integration capability is particularly valuable for companies with complex processes or those using legacy systems. |
The process from conception to launch can be lengthy. It involves planning, development, and testing phases, which can delay the time to market. |
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It can grow with the business, adapting to changes in scale and scope without the need for significant modifications. |
Building requires skilled personnel, such as developers, project managers, and QA testers. Finding and retaining the right talent can be a challenge. |
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Custom solutions can provide unique features that offer a competitive edge, potentially enhancing customer service and user experience. |
It carries the risk of failure due to factors like project mismanagement, technological challenges, or evolving requirements. |
If you don't have a team yet, consider whether you have the resources to hire remote software developers, as this will significantly influence your project's success.
Confronted with the unique challenge of globally streaming large data volumes, Netflix found that off-the-shelf CDN solutions fell short in scalability and performance. By constructing their own CDN, Netflix not only enhanced streaming quality but also cut costs, thus gaining a competitive advantage through an exceptional user experience.
At Deazy, we simplify software development. Our global ecosystem features pre-vetted, high-performing development teams ready to enhance your projects. If you're a startup, scale-up, or established enterprise contemplating software outsourcing, our tailored solutions are created with your business in mind.
Some of our offerings include the following:
Take our collaboration with Popeye's UK as a case study.
Initially, they considered using their franchise's existing marketing platform but opted for a bespoke solution to enhance their customer experience across Popeyes and Burger King Scandinavia. Our team rapidly developed a new CMS and web interface, along with iOS and Android apps, featuring unique functionalities like QR code scanning for in-restaurant offers.
This project required swift, focused efforts due to the imminent decommissioning of Burger King Scandinavia's existing systems. The success of the initial build led to further developments, including an ordering platform coordinated through a single product manager to ensure a smooth, cohesive process for Popeyes UK.
Here is what the CTO has to say:
"To undertake such an extensive and high-pressure project in a relatively short period was a real challenge, and Deazy's partners delivered every step of the way. Working with Deazy made everything much easier – all their partners are vetted, so we get high-quality teams without the need for lengthy recruitment processes." – David Carey, CTO at Popeyes Louisiana Kitchen UK, UAE and Burger King Scandinavia.
Ready for custom software build? Contact our team today.
The decision to build custom software or purchase off-the-shelf solutions is pivotal and should align with your company's unique needs and strategic goals. Assessing the cost implications, scalability, and specific requirements of your operations are crucial steps.
Remember, while bespoke solutions offer tailored functionality and competitive advantage, they also demand significant time and resource investment. Conversely, readymade solutions can provide immediate deployment and cost efficiencies but may lack specific customisations.
Therefore, it is essential to thoroughly evaluate both paths to ensure that your choice not only supports current operations but also adapts to future growth and changes in the industry.
Build vs buy refers to the decision between developing custom software in-house (build) or purchasing off-the-shelf solutions (buy) to meet business needs.
Buying software can be cost-effective, offering quick deployment and lower upfront investment compared to the time and resources required for building custom solutions.
Companies often buy applications to leverage reliable, tested solutions that provide immediate functionality and support, allowing them to focus on core business activities.