When It's Better to Build vs. Buy Your Software

Feri Fekete

Feri Fekete

August 27, 2020  -  5 min read

CEO's Guide to When It's Better to Build vs. Buy Your Software

The advice you’ll find online can be misleading when researching whether you should build vs. buy software.

It’s true that much of the time companies can find an affordable ready-made software solution that does what they need. Whether it’s communication tools like Slack, product management tools like Asana, or customer service systems like Zendesk, there are thousands of ready-made software solutions on the market.

But, despite the number of SaaS tools you can easily subscribe to, there are a couple scenarios where it makes more sense to build your own custom software. And, contrary to what you may read elsewhere, it’s never been easier — or more cost-effective — to do it.

When you need to build your own software

The arguments for building your own software vs. buying it ready-made off the shelf involve primarily two factors: cost and control. Look at how the software fits into your business model. If the software is integral to your business, the advantages of having your own proprietary software lean very much in favor of building it yourself.

When the software is core to running your business

Companies depend on software for a wide variety of tasks: to deliver services, manage staff, design and manufacture products, and more. When your core competency depends on software, you’ll want to make sure you have complete control over it. The efficiencies and capabilities your software makes available to your organization are a source of competitive advantage. They help distinguish you from others in your findustry and can fuel your growth.

It’s unlikely you’ll find existing software solutions that do what you need and still provide you with a strong competitive advantage. If that software is available, your competitors are probably using it, too. Moreover, existing generalist software has the downside of not fitting your specific needs properly. We see this when off-the-shelf software fails to integrate well with other systems in use at organizations.

Those companies that are seeking to elevate their position through digital transformation, for example, benefit greatly from building custom software to handle a specific workflow or address an important problem. This transformation through proprietary software then becomes a way for them to overcome competitors.

When you’re selling the software

If you’re among the legions of businesses today selling a product based on the software as a solution (SaaS) platform, you’re going to have to build your software. Otherwise, you’re simply a reseller of another company’s software product. If you have a truly unique idea, then presumably no one else is offering software that will fit the bill.

During your earliest days, you can certainly take advantage of existing software. For example, you can use other software to create landing pages, wire frames, and prototypes if you have yet to validate your idea with users. At this stage, it doesn’t make sense to invest in software if you haven’t validated the need for it.

But as soon as you validate your hypothesis, you will need to build the real thing.

Building your own software is easier than ever before

Other articles you find online will tell you it’s often cheaper to buy software than to build your own. They’ll tell you that building your own software will probably fail, and you’re unlikely to gain the array of features and control over the outcome you want in the end.

There’s a problem with the underlying assumption, though: that you’re going to build your own software in-house.

Creating an in-house team of developers is only one way to build your own software. The more sensible approach for most companies is to use an external software development team.

Advantages of outsourcing software development

For the vast majority of companies, building software in-house brings too many challenges for it to be a viable option. Hiring and developing your own team of software developers takes time and a significant investment, as well as the infrastructure to manage them. Also, software development is a supporting function for most businesses, and thus not one to keep in-house, even when you need to build your own software.

Outsourcing your software development to a solid firm gives you access to considerable advantages over building it in-house:

  • A specialized team
  • Industry-leading tools and best practices
  • Flexibility to scale
  • Faster time to completion
  • Better compliance

These advantages come with the added benefit of lower cost than setting up your own team to build software. In fact, history is full of examples of companies that chose to build their own software in-house, and in the end paid a much higher price tag than they anticipated. In some cases, this has even led to bankruptcy of the company.

A good development company will include skilled project managers who keep the team focused on priorities. With proper scoping and product strategy, costs can be pushed lower by building just enough functionality. You’ll enjoy fast and predictable release cycles with a partner that is accountable to a timetable.

Finding the right outsourcing partner

Outsourcing development when you build your own software is more common than ever before.

Now you have many options when choosing a partner, including whether to hire freelance developers or a firm, location of your partner, and so on. In our recent report on outsourcing tech to Hungary, we saw that companies in North America and Western Europe are increasingly looking to the global market, including Hungary, for better software development talent at more cost-effective prices.

Learn more about questions to ask when hiring a software development company and let us know if you’d like to schedule a free consultation to find out more about how we help companies build their own software.

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Feri Fekete

Feri Fekete

Co-founder of VeryCreatives

VeryCreatives

VeryCreatives

Digital Product Agency

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