Need new tech for your business? The build vs. buy dilemma
Photo by Christopher Gower on Unsplash
Businesses of all types need a tech stack to run. It may be Software-as-a-Service (SaaS) solutions, practice management software, customer relationship management (CRM), or your own custom tech stack. Whatever the tech, you need it to keep your organization streamlined.
But business needs change as time goes on. You may be reevaluating your options for tech and considering moving past the off-the-shelf solutions.
For some businesses, custom software that’s designed with the exact features and functionality you need makes sense. For others, existing solutions may fit the bill. So, how do you decide? Here’s everything you need to know.
Consider your timeline
Timing is an important aspect of your business. It affects when you launch products or marketing campaigns, when you execute sales, and when you decide to make investments into your business.
If you have a problem that needs a quick solution or one that bridges the gap, an off-the-shelf option may be the best choice. These tools are easy to acquire and get up and running quickly, often integrating with your existing technologies for smooth and hassle-free onboarding.
If you are considering custom solutions, it can take longer for the design, build, installation or onboarding, and integration. It’s worth the wait if you’ll be getting custom features and functionality that will enhance your business processes, but keep in mind that you may need a temporary solution in the interim.
Evaluate your team’s knowledge and expertise
One important consideration when you’re planning new tech is how it will affect the team members who use it the most. Not all software solutions are user-friendly, and most don’t offer the same degree of value to every department. This is why businesses rely on a tech stack to satisfy different needs.
Think about your team’s technical knowledge and capabilities. Do you have an in-house IT team, or will you need to outsource implementation and upgrades? This plays a role in whether you build your own solution and maintain it in the long term.
You should also consider who will be involved in the in-house development for the custom solution. A lot of time and resources go into designing, building, and implementing a new technology, and an in-house team will be tied up with this project instead of being available for day-to-day tasks.
If you don’t have the necessary skill sets on your team already, you will need to outsource a team for development and plan the necessary resources. For some businesses, an off-the-shelf product is more feasible.
Calculate cost of ownership
Every tech upgrade has a budget, whether you build your own or buy an existing solution. Much like a home renovation project with custom cabinetry vs. ready-made solutions, you need to consider the costs if you rely on available solutions or start from scratch.
Generally, off-the-shelf solutions are more affordable—they’re designed to be. They often have the upfront costs with a monthly subscription fee and different pricing tiers to suit businesses of different sizes and capabilities.
However, that often means you are locked into a certain period of time with your subscription and need to consider future tiers as your business scales or expands.
Building your own solution is typically more expensive upfront. You have to pay for the design and development process, whether you’re outsourcing or relying on an in-house team. You may also need a temporary solution while you’re waiting for the custom technology, which adds to your costs.
However, the benefit is the lower cost of ownership and value you derive from a custom solution, especially if it has features designed just for you.
Weigh both options carefully. Calculate the total cost of ownership (TCO) for a custom option and an off-the-shelf solution. Make sure you consider the available features, what you will use the most (and may not need), future pricing tier upgrades, and the benefits in time or cost savings.
Predict scalability
Few businesses can rely on the same solutions when they scale that they did when they first launched. Your business will likely be the same, growing and expanding as customer needs evolve or the industry shifts. You want technology that can keep up with that, especially if you’re choosing a custom option.
There are pros and cons to both buying and building in this scenario. Most enterprise software solutions are designed for scalability and versatility. You can add users, upgrade pricing tiers, add on features, and include extensions that fit your business needs instead of paying high prices for overpowered capability.
There is a limit to scalability with off-the-shelf solutions, though. When this happens, you will need to seek out other solutions that better fit your needs or venture into custom software solutions.
With custom software solutions, you can design your technology exactly as you want. It’s made completely for your business needs with features that are most beneficial to you, and some modularity to improve or adapt features as your business needs change. Usually, this means you’ll get more shelf life out of the solution and its tailored features before needing to seek other solutions.
Evaluate system compatibility
Features are important in business software, but don’t ignore integration. Most of the leading industry tools are designed to integrate with the most popular solutions for common business needs like email, CRM, project management, e-commerce, and communication, but not all. Often, they’re designed to work for a broad target audience with commonly used integrations.
If an off-the-shelf product doesn’t integrate with your existing stack, you won’t benefit much from its features, no matter how good they are. Make sure you consider your current systems and ensure the solution you’re considering has the compatibility you need.
With a custom solution, you can plan the integrations from the ground up to ensure that everything works together. The downside is that this can take a lot of time and testing to make sure the integrations flow as they should.
Prepare for maintenance
Business technology is dynamic and needs maintenance over time. With off-the-shelf solutions in a subscription format, you may be able to rely on the vendor for upgrades, patches, and other maintenance tasks. It’s a convenient option that ensures you have high performance even without an in-house IT team.
The downside of third-party vendor maintenance is that you’re relying on someone else to keep your system running smoothly. You can’t plan when the updates and upgrades take place, leading to disruptions and downtime while you work around their schedule.
With a custom solution, you have the burden of maintenance and upkeep in house but the control flexibility to decide what happens and when. If your business requires continuity and can’t handle the risk of working around another schedule, you may be better served with a custom option. It’s similar to custom renovations in your home and planning the schedule.
Is build or buy better for you?
Choosing to purchase an off-the-shelf business software solution or building your own is a big difference in cost, maintenance, time, and capabilities. For some businesses, off-the-shelf solutions offer all the features they need. But for others, building is the best way to get a valuable, cost-effective option that streamlines business processes.
Business owners, have you built your own software solutions? Have you considered it? Let us know!
Dalip Jaggi
Author: Dalip Jaggi
Entrepreneur, technologist, and passionate business leader sum up the core of Dalip Jaggi, co-founder of Revive Real Estate, a PropTech company with a goal to democratize house flipping. Since its 2020 inception, Revive has become the smartest solution for homeowners across the nation to maximize their home’s value.