Build or Buy? Choosing Between Internal Development and Third-Party Tools
Software is a vital part of most businesses, from marketing to law to medicine to home renovation. Whether you’re using project management software, financial planning tools, email solutions, or a customer relationship management solution, software is what keeps your day-to-day running smoothly.
Often, the solutions you relied on when you first started fail to grow with you. What worked in the past is no longer enough, so you may need to look into options with more sophisticated functionality and capability to scale your business processes and workflows. That brings up the question: is it better to buy third-party software solutions or design your own bespoke software?
The answer lies in your business needs, budget, and timeline. Here are some things to consider.
Why Third-Party Tools Are So Popular
Few businesses are in operation for decades—or even years—without needing to shift to meet the needs of customers or adapt to evolving markets. Third-party solutions make it quick and easy to introduce new capabilities without a major overhaul, allowing businesses to stay up and running during a pivot.
There are some other benefits to third-party tools, including:
- Continuously improved infrastructure: Most businesses have embraced digital transformation and require new features and tools to keep up when they scale. Third-party tools and scalable cloud services offer new features like data backup and recovery or applications for employees and customers.
- Financial control: No matter the industry, businesses have a lot of financial work to do. Software solutions with built-in financial management tools can streamline tasks like financial forecasting, payroll, business taxes, and inventory management for better operational efficiency. These tools are widely available from third-party vendors, rather than designing and building one yourself.
- Enhanced collaboration: Remote and hybrid teams are the new normal, so businesses are looking for ways to stay more connected with distributed teams. Solutions like Microsoft Teams and Slack help with collaboration and have specific features for remote employees, such as scheduling messages and quick videoconferences.
Advantages and Disadvantages of Building Your Own Software
Third-party tools are accessible and generally affordable for businesses, especially with different pricing tiers based on features and capabilities. It’s quick and simple for businesses to implement new solutions and gain the benefits, but they’re designed to be more general solutions—not tailored to your unique needs or even your industry.
Here are some advantages and disadvantages to consider:
Advantages
Unique Product Features
If you buy an off-the-shelf solution, it’s going to have a lot of general business tools and possibly some industry-specific tools. What you won’t get, however, is tailored features that are designed specifically for your business challenges.
Custom software offers a unique advantage here. You can design features according to the problems you’re trying to solve, exactly as you want, with none of the features you don’t need or use. It can be as complex or basic as you want, from the sophisticated capabilities to the interface.
Better Long-Term Value
Third-party software tools and services are affordable on a month-to-month basis. They’re designed to meet the needs of businesses at every stage, from bare-bones startups to enterprise corporations, and have pricing tiers to reflect that. But as affordable as they are, those costs add up month after month.
With bespoke software, you have control over the short-term and long-term expenses you incur. Just like a custom home renovation vs. buying a ready-made home, you have total control over the project and how you prioritize your budget. Splurge where you want, save where you need.
No Unused Features
Off-the-shelf solutions offer a range of features that are useful to businesses, but they’re not all going to be equally valuable. They’re designed to support a variety of industries and business models, so you’ll probably end up paying for some features you won’t need or use in order to get the ones you want.
With a custom project, it’s all up to you. The only features the solution will have are what you want, ensuring that you use it to its fullest potential. Over the long term, this maximizes your return on investment (ROI).
Disadvantages
Higher Expenses Upfront
One of the challenges businesses face with custom software is the upfront costs, which are typically much higher than an off-the-shelf solution. Unlike a quick implementation and subscription model, custom software solutions require significant upfront investment to design and build. Depending on the type of software you’re planning, it could be thousands or even tens of thousands of dollars from start to finish.
Longer Development Timeline
Another challenge with custom software is the time it takes to design and build. You could have an off-the-shelf solution up and running immediately, without much fuss, once you decide on what you want. Custom software development—even on an expedited schedule—still takes months from ideation to a functional finished product.
Which Is Right for You?
Still unsure which type of solution is best for your business? Here are some questions to ask:
- What is your budget? Like kitchen remodels or other multi-step projects, custom software development always starts with a budget. You need to know what you can afford and what’s realistic to see if a custom solution is a smart financial move for your business.
- How much customization do you need? Custom software is helpful, but a lot of businesses can gain benefits from a third-party solution with helpful features. If you have complex workflows or niche requirements, a custom solution may be the better choice.
- How quickly do you need software? Custom software is a long-term investment. If you have the time to wait, it may be worthwhile for you. Otherwise, an off-the-shelf solution gives you the features you need right now, with minimal disruption to your day-to-day operations.
Help Your Business Grow with the Right Software Solution
Software needs often evolve as a business scales. Both third-party and custom solutions offer pros and cons based on your budget, industry, and specific business needs, so evaluate your options to choose the solution that works best now and in the future.
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