When Your Business Should Build vs Buy and Save Money
May 29, 2020
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When deciding whether to buy software or develop it in-house, your business needs to consider several key points. The most important is what is the scope of the problem that could be addressed with software, and how complex does the solution need to be to fit your business size and needs? Also, does your business currently have (or can you hire) experts capable of building, maintaining, and supporting the solution? Last, is using the software critical to your business operations, or can you afford to wait while the solution is developed?

Decisions to consider when building software for your business in-house are numerous. You have a problem that is unique to your organization, and no available software adequately addresses it.

For ad hoc applications specific to a single business process that could provide a unique competitive advantage. To solve a siloed problem that doesn't affect other areas of your business.

You have a strong IT department that will remain with the company for a long time with the resources to build, maintain, and support the application long term. This essentially provides your business a very fast reaction time to fill a gap in the workplace related to technology.

Now, what exactly your business builds is ultimately up to your business, however it should be something in which there does not exist a solution.

The benefits to building are that you get total control over development and features. Your business will rest assured knowing that the software and any reporting capabilities will meet the requirements. Building in-house allows your business to maintain rights of the software code, and creates a significant advantage over competitors if similar applications don’t exist.

There are drawbacks to building rather than buying. Ultimately where it will become the most expensive is the amount of time required to determine the exact business needs, write the code, integrate with other business systems, and adapt to user requests after deployment. Your business will also need to train employees on using and supporting the application. Staying current is challenging when business needs rapidly change and the applications integrated with your software release new versions that necessitate adaptations of your own software. An application built in-house will typically have lower functionality than a vendor's would.

Knowing when to buy software is just as important as knowing when to build. Overall, make sure to buy software that is critical to your business operations. There might be a common problem that available software is adequately developed and customizable to address. Keep in mind, the software would be used throughout your organization and might need to integrate with other applications.

There might be a fully justified reason to build software internally, however your engineering might have the skills required to build, maintain and support it long term. In this case, technology would not provide a competitive advantage. Your business might also suffer from a limited budget or just a lack of time to build and deploy it.

When your business buys software, it’s getting ready-made solutions, available when needed. With that comes greater flexibility and adaptability, as well as saving the thousands of hours that go into developing the application and working out the bugs. Normally, support agreements are in place to train and support your employees with the application with no additional burden on your support staff.

The main issues with buying software are mostly due to things out of your control. Normally unless your business has negotiated support agreements, the developer retains the rights to code and isn’t motivated to make changes at your request. Moreso, product functionality is determined by the vendor, and may not fit your exact business needs leading you back to rely on the vendor's support to fix issues.

Things your business should buy are traditional systems needed for day-to-day operations. These systems are made up of but not limited to your company website, customer relationship management (CRM) software, project management tools, marketing automation software. enterprise resource planning (ERP) software, treasury management system (TMS) software, and business intelligence (BI) software.

There are several factors to be considered when deciding to buy software or develop it internally. It's not a decision to take lightly, and all variables need to be considered before pulling the trigger.