Many modern businesses are faced with the question of whether to build or buy their software systems. This question doesn’t just come down to costs. It also involves efficiency, effectiveness and the long-term goals of a company.

Business owners who are on the build-or-buy cusp must understand the advantages and disadvantages of each in order to make an informed decision about which direction is best for the company as a whole.

PROS OF BUYING

• COST – Whether you hire an outside company or build it in house, custom building is almost always going to be an expensive endeavor.
• TIME – Building software will take significantly longer than buying software, which may delay implementation of your marketing and sales strategies.
• ONGOING SUPPORT – You have to consider the secondary cost of ongoing support for a custom built application which is essential for proper maintenance. It is common to see enterprises abandon their home built system when the development has moved on. This leaves you with no ability to make changes required by business trends, regulations or 3rd party integrations. The latter point is a notable consideration given that 3rd party external systems like CRM, ERP, payment gateways, etc. are constantly evolving.
• ACCESS TO NEW FEATURES - external software vendors are compelled to keep improving their systems by adding features, keeping up with industry trends, etc. Especially with Cloud/SaaS based software, you get these new capabilities for free, whereas a home-built system will need ongoing investments,

PROS OF BUILDING

If your company has complex software needs that aren’t common to other businesses, it may be difficult to find what you’re looking for on the market so the primary benefit to building is the ability to customize the software to your needs including:

• Features that are specific to your unique business model
• Integration with your existing proprietary software
• The ability to highlight the services that only your company offers in the marketplace

CONCLUSION

Simply looking at a list of pros and cons is a risky and oversimplifies this decision making process. Here are a few questions you should answer for your company:

• Is the software a competitive advantage? If your answer is no, do you really want to allocate development resources that could be used for other more productive projects?
• Are you building a large business that will allow you to spread the cost of building across multiple business, clients, etc.? If not, again we have to recommend buying rather than building.

Making a decision about whether to build or buy your software is dependent on the type of company you own, the simplicity and complexity of your processes, and the amount of money you are willing to spend. The most important thing is to FULLY consider both options and not to let a particular department or individual overly influence your decision.

NOTE: If you’re still having trouble making your decision CIO Magazine has some great resources available.