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To Build or Buy

That is the Question

Business owners require software applications to power their businesses and provide necessary tools for employees to execute business functions, integrate transactions with partners and service customers. We often meet with clients and prospects who are debating if they should develop custom applications to meet their needs or simply purchase an “off the shelf” (OTS) software products. (Note: for the purposes of this discussion — classify a web site as a software application).

Which approach is better?

There isn’t a “one size fits all” answer to this question. Pros and cons for both options must be assessed to identify the optimal solution. Key factors to consider include:

  • Deadlines
  • The problem the software is required to solve
  • Complexity of the application
  • Resource availability to build and support the software

The Case for Developing Custom Software

When a business problem is unique and/or complex; clients have very specific requirements; and the company has the necessary budget and resources to build; custom solutions are favorable. Advantages of custom software include:

  • Flexible: you can customize and develop features OTS products lack
  • Compatible and suitable: works well with a company’s unique processes and can more easily integrate with other software already being used
  • Complete control: greater ability to update as required (e.g. features, interface, ease of use, accommodate for different departments)
  • Simplicity: does not include unnecessary extras/features that add complications and make the software harder to use
  • Increased productivity: built specifically for a company’s requirements, people and processes leading to greater productivity
  • Reduced long term costs: investment pays off as a result of increased efficiency and productivity and there are no ongoing licensing fees
  • Scalable: easier to add new features as a company grows and/or as needs change for a well-developed application
  • Lower hardware costs: can be tailored to operate efficiently on a company’s current or future hardware infrastructure reducing overall hardware costs
  • Enhances business security: less likely to be targeted by hackers, limiting external threats
  • Produces competitive advantage: differentiates a company versus competitors constrained by OTS product limitations

The major drawback to OTS products is they rarely meet a company’s current or future unique needs even when an OTS product is designed for an industry. With the inability to customize the software to meet specific needs, it may be more costly in the long term to live with OTS product limitations.

The most common objection or misconception about custom software is it’s more expensive to build and maintain than OTS products. Clients are advised to conduct a cost-benefit analysis to compare options over a 2-4 year time frame to determine if building is in fact more expensive than buying. Clients are also advised to think strategically.

  • What’s it worth to offer better or faster service a custom solution enables?
  • What about the benefits to the bottom line if employees who are even 5% more efficient because of better software?
  • What if your software allows you to differentiate yourself from the competition to secure more sales?
Think big picture. Think long term. Just the cash costs alone to build custom could in fact be less without even taking into consideration other benefits.

The Case for Buying “Off the Shelf”

Purchasing an OTS product should be considered before embarking on a custom software project. Advantages of buying OTS can include:

  • Quick implementation: in some cases software can be implemented in days or weeks with some basic configurations afforded by the software
  • Lower development costs: the software provider is responsible for the costs to design, develop, test, upgrade and support the software
  • Fewer internal resource requirements: reduced internal personnel are required to support a custom build
  • Extensively tested: with a wide user base, the software is often more thoroughly tested, common issues have been identified, and bugs have been resolved
  • Immediate feature availability: custom software projects may delay access to juicy features you want for your business that are already available with an OTS solution
  • Reliable: periodic upgrades, patches and routine maintenance is included in licensing fees
  • User community: reference and training tutorials are usually available; or user forums discuss tips and tricks on using the software

If a company has a basic list of requirements and/or the requirements are unlikely to change, OTS software offering these features is the way to go. For companies with limited financial means in the short term, custom software may not be an option if it’s more expensive to build out versus licensing fees.

Summary & Some Final Advice

Custom software and OTS products have their advantages and drawbacks. Assess your goals, resources and business needs with a long term view to make an optimal decision before implementing a solution. Work with a trusted technology vendor who coaches you during the decision making process and ensure the implementation vendor is competent.

A poorly built custom application on the right technology; or a well-built application on technology that is outdated or dying can remove the very advantages you sought to gain when deciding to build custom. A perfect example of this is companies that built web applications using Flash technology in a world that was going mobile on devices that weren’t compatible with Flash. Suddenly the application was useless for users on a tablet or iPhone regardless of how well it worked in a desktop environment.

A third party application that is poorly implemented, unreliable or poorly supported also creates major headaches. A Pump client recently abandoned the rollout of an OTS CRM and sales management solution tailored for their industry after spending over a year trying to shoehorn it into their organization. Perhaps you’ve been to a user conference where providers were screamed at by customers because they failed to release a feature two years after saying they would. OTS is no slam dunk every time. Buyer beware.

Choosing software solutions are not trivial decisions and making the wrong choice has repercussions. Most unfortunate is when businesses end up living with the “failed” solution because they want to avoid going through the headache and cost of another implementation.

Don’t settle. Do it right the first time.

References:

http://www.cincom.com/pdf/CM071218-1.pdf

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http://www.businessnewsdaily.com/5175-custom-software-development.html

http://blog.goodcoresoft.com/six-benefits-of-custom-software-for-your-business/

http://www.trackvia.com/blog/technology/business-applications/top-5-advantages-of-custom-business-applications

http://www.businessbee.com/resources/technology/software/the-pros-and-cons-of-developing-your-own-software-versus-outsourcing/

http://blog.imageworksllc.com/blog/bid/312586/Custom-Application-Development-Vs-Off-the-Shelf

http://www.3csoftware.com/to-build-or-to-buy-comparing-custom-and-off-the-shelf-software-applications/

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http://balmorisoftware.com/newsletters/0408-1new.html6

http://www.kavi.com/documents/BvbArticle-web.pdf