For modern businesses, software is the lifeblood of operations, marketing, customer relationship management, and more. Most businesses have embraced some degree of digital transformation and leverage technology to optimize time and gain a competitive advantage. And with multiple solutions designed with industry-specific features, there are benefits to buying off the shelf.
However, some businesses still rely on custom-built software solutions to have control over the features, release cycles, and more. So, which is the right choice for your business?
What Is Custom Software?
Custom software is a solution that’s designed for a specific organization’s needs and tailor-made to address market gaps that aren’t satisfied by the current solutions. There can be custom solutions for every existing enterprise solution, such as enterprise resource planning (ERP), customer relationship management (CRM), and inventory management systems.
Choosing a custom software solution can be more expensive than comparable market solutions, ranging from $50,000 to $1,000,000. However, the upfront investment comes with seamless integrations, custom-designed features and functionality, and greater control over the release cycle for patches, upgrades, and modifications.
However, a custom solution will still need regular maintenance and upgrades like system upgrades, security patches, new feature rollout, and more. Because the solution is your own, you will need a team to manage maintenance and upgrades.
What Is Enterprise Software?
Enterprise software solutions, or off-the-shelf software, is software that’s designed to address the needs and demands of medium to large organizations or complex businesses, rather than small businesses. These solutions are designed to integrate with commonly used software solutions for various aspects of operations, including customer relationship management, database management, and business intelligence software.
For many businesses, enterprise solutions can be deployed quickly, integrate seamlessly, and include a range of common features for businesses and industry-specific solutions. There are few customization options, but there are different configurations or subscription tiers to find the best fit for a business. Off-the-shelf solutions are also managed by vendors that assist with implementation, training, support, upgrades, and more, relieving the burden on an internal team.
Build vs. Buy: Decision Criteria
Choosing between building a custom solution or relying on an existing solution assumes that there is a reliable off-the-shelf solution that exists from a reputable company. It also assumes that your company has the resources to build and support a custom solution.
If the answer to both of these questions is “yes,” then you can evaluate your choices. The decision ultimately comes down to a few factors:
Purpose
What is the purpose behind the software solution? Most businesses require multiple software solutions to operate effectively. There are standard solutions that can be satisfied by one of the many options on the market, and industry solutions, such as point-of-sale for retailers or practice management software for law firms, that are specific to the industry.
The other category is differentiated solutions. These software solutions can differentiate a business or customer experience, offering a unique advantage.
Ideally, software that doesn’t differentiate your business or has a viable solution for your industry should be bought. Differentiated solutions are more difficult to find on the market, and they’re the ones that may be best custom-built.
Company Culture
Custom software requires an IT team with a proven track record of innovation, speed, and delivery. If they don’t, a custom solution can be an added challenge that may be more trouble than it’s worth. If they do, then the sky is the limit.
Package Fit
You can’t take an existing solution and make it fit your functionality needs or technical architecture. It’s an exercise in futility. You need to know your requirements first, then you can determine if the existing solutions or a custom solution is the best fit.
From a functionality standpoint, your solution must be able to perform your core requirements without added modification. Try to avoid customizing bought software, as it tends to be more expensive and less suited to your needs than building from the start.
Time to Value
Purchased software often offers faster speed to value, but that’s only once you’ve begun the process. You need to research, try demos, plan implementation and integration, and train your team, which can take time.
Generally, buying will be a faster process than building a custom solution. It’s important to consider how long you can realistically wait for a solution that does everything you need or if it would be more efficient to buy.
If you’ve ever done a major house renovation, such as a kitchen or bathroom remodel, you have to provide input on the details to shape the finished project, adding to the timeline. Custom options, such as cabinetry, take longer than buying ready-to-install options. Custom software is similar.
Investment and Cost
Investment and cost encompass a few different considerations: the upfront cost, cost of ownership, and return on investment. The initial cost to buy will almost always be cheaper than building, but once deployed, the costs can change.
Generally, purchased solutions have maintenance, modifications, upgrades, security patching, browser upgrades, and other enhancements included in the subscription costs or annual maintenance costs. In a custom solution, these costs are highly variable.
However, with a custom solution, you have control over the cycle. The enhancements that matter most to you will be prioritized first, but that comes with development and testing costs. You also have to consider the costs of your team maintaining software, pulling their attention from other critical work.
Think of it like selling a home as-is or investing in renovations prior to listing. You may get the house sold faster as-is, but you stand to lose a lot of value.
Which Solution Is Right for Your Business?
With so many solutions on the market, it’s easy to buy the software you need for business operations and some industry-specific functionality. However, there are times when no solution exists on the market to satisfy your needs and differentiate your business. It’s important to carefully evaluate your needs and budget to determine which option is best for you.
Author Name: Dalip Jaggi
Author Bio:Entrepreneur, technologist, and passionate business leader sum up the core of Dalip Jaggi, co-founder of Revive Real Estate, a PropTech company with a goal to democratize house flipping. Since its 2020-inception, Revive has since become the smartest solution for homeowners to maximize their home’s sales value across the nation.
