Business Software: When Should You Build Rather Than Buy?
One of the most crucial choices that many companies face when looking for a software system is the decision to build custom software in-house or invest in existing software solutions to meet their business needs. There are pros and cons associated with both choices but it is important that this decision is not rushed or driven solely by cost. This post explores in which circumstances it is best to build a software solution.
There are a variety of reasons why you might need a new business system, whether this be a CRM, ERP or LMS, and it is crucial that these triggers are carefully considered throughout the process.
These pain points should be the starting point for your decision. They are the key reasons you are considering new business software and therefore solving these problems should be your top priority.
Many decision makers often get sidetracked when thinking about the appearance or cost of software solutions, but if it doesn’t meet yourkey requirements then you will soon find yourself back at the beginning of the cycle.
Making your decision
Before choosing to build or buy a software system, there are many critical questions that need to be answered in order to make the most informed decision. These include:
- Is there an existing system on the market that meets your current needs?
- Do you need a completely bespoke solution?
- Is this a long-term solution?
- Have you considered ROI?
Answers to these questions will help you identify your requirements and evaluate if there are existing software solutions that can meet your business needs or if you need to build your own system.
Many businesses choose to build their own software. This can be extremely beneficial as any issues can be resolved in-house and the system can be completely tailored to your unique business requirements.
However, this option may not be feasible for all businesses. Reasons to build your own system include:
Lack of functionality
If you have undertaken a search of software suppliers in your industry and existing systems do not meet your functionality requirements, then you might benefit from building your own customised solution.
Building a system from scratch requires an expert team of software developers who are capable of building a cost-effective solution tailored to your business needs.
If these developers have the skills and tools at their fingertips, then you are in a good position to build your own software.
If you are currently involved in the technology industry, then building your own software may offer a competitive advantage. In which case, the huge investment of time and money is easily justifiable.
Upfront and ongoing support
Who will be responsible for providing end users with in-depth training and ongoing support? It is critical to consider the resources that you have available and plan in advance if you may need to expand the organisation.
Gaining internal buy in is crucial for any successful business change so having the tools available at the outset will put you on to a winner.
Before making your decision to build, it is crucial to be aware of the large amount of capital and investment that is required to create software from scratch.
The cost of this project will lie under capital expenditure rather than operating budget and therefore it is important to consider maintenance costs of this system as well. The formula below was developed by IT Project Manager Julien Chabe and can be used to estimate the total cost of a software prototype:
Cost of virtual server / month + X hours of specifications at £X an hour + Y hours of coding at £X an hour + Z hours of testing at £X an hour. Define X Y Z and £X and multiply them by 1.7.
Key advantages of building your own system
- Custom built solution is tailored to your exact needs
- Ability to resolve technical issues in-house with a faster turnaround if a dedicated team is in place
- A long-term solution that can be adjusted as your business needs change
The simple answer to the build vs buy dilemma is ‘only build when there is no option to buy’.
The costs associated with building a custom software solution from scratch are difficult to justify when there is an existing system on the market that meets the same requirements.
If you do decide to build your own software, ensure that you set realistic expectations of when this system will be available for implementation.
This won’t happen overnight so it is important that employees are aware of timescales and project objectives. It is also crucial to ensure that they are kept informed and updated along the journey.
Good luck with your decision!
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