Build v/s Buy Enterprise Software - Here's how to decide what is better for your Business.

Whether to build software, or buy is a question that many businesses face as they grow. While each business is unique, some of the challenges they face are similar. Hence, some businesses do well with off-the-shelf, ready made software, while others find that tailor made software suits them better.

There is no single answer to this build-or-buy question. You have to decide for yourself what is more suitable to your business.

There are multiple types of readymade softwares available in the market. The main differentiation is in their mode of delivery.

Software As A Service (Saas)

This type of software is cloud-based. You need to sign up for an account, and you can start using it. Mostly it is used through the web browser, with dedicated apps on the mobile. The data is also stored on the cloud. Payment is usually subscription based, or some Saas tools have a pay-as-you-go model as well.

On Premise Software

Here, the software is installed on your company servers. The vendor configures the software for your infrastructure, and also set up user accounts and other required configuration. The software can be used through the web browser or dedicated apps. Having mobile apps for such software depends on the configuration.

Desktop Software

This type of software is generally offline and runs on the desktop. This software is preferred if the use case is limited to a few people (e.g. accounting) and data does not need to available and accessible to a large group of people at all times. Though the popularity of such kind of software is waning in the consumer space, in the enterprise space, especially for small and medium businesses, it is still quite popular.

Similarly, customized software can be delivered as on premise software, or desktop software, with dedicated mobile app if required.

Customized software development is a complex process, but the rewards are also higher, if done correctly under expert guidance.

This post will help you decide your business objective you wish to achieve with software, analyse your business situation, and help you understand the pros and cons of readymade and customized software, to help you make an informed decision.

Know Your Business Objective

The first thing to do is to analyse your requirements, and the specific issues that you wish to solve with software. The most important thing is to decide how much value the software will bring to your business.

A good software bring value by doing either of the following things:

  • Save time
  • Save money
  • Make more money with the same resources

You need to consider how your business will use the software, who will use it, and what is the expected outcome from the software. You need to determine which software features are absolutely essential for your expected business outcome.

Urgency

How soon do you need the software? A customized software takes time to build and test. Your active involvement in the building and testing process is required, so that the outcome is satisfactory. A ready made software, on the other hand, can be usable in a few days or immediately. Both have their pros and cons. You need to decide the time you’re willing to give to this process.

The Problem

Is the problem you are looking to solve with software, common to your industry? If so, there is high chance of readymade software available that will solve your problem exactly in the way you need. If the issue you’re facing or the business outcome you need is specific to your company, a customized software will serve you much better.

The Budget

Usually, ready made tools have less upfront costs. Cloud based tools (Saas) have low operating costs as well. The best way to decide how much you want to pay for the tool, is to first decide how soon the tool will pay for itself. This depends on how much value the tool brings to your business, or how big a problem it is solving for your company.

If you plan to use the tool for a long time, generally a customized software will serve you better. In the short term, Saas or ready made tools are more cost effective.

The Users

Who in your company is going to be using the software? Do they need training? The cost of training and testing the software with users will have to be considered. You might need to hire a consultant for training and implementing the software if it is complex.

The Outcome

The most important decision you need to make is what business objective you wish to achieve. Many times, there is software that can solve your problem in a much more efficient way by following a different process than the one you have in mind. In some cases, a brand new software might not even be needed - the problem can be solved in an equally efficient way by strengthening your workflow or by just building integrations within your existing software.

Pros of Buy

Instantly usable

Software as a Service (Saas) is a popular way of using software nowadays. In the Saas model, that application is hosted on the software provider’s serve (cloud) and the user typically has an account with the software provider for the software. This kind of software is instantly usable, as soon as you sign up. The sign up process is usually simple and well defined.

Tried and tested

Saas tools are usually built for specific purpose, for solving specific problems. Companies that provide such tools have many clients using them. Hence, these tools are usually well tested, and generally issue free. They are continuously updated and maintained, and updates are immediately applied to your account.

Lower cost in short term

Saas tools usually have a subscription payment model - either a fixed cost per month, or payment depending on your usage, per month. As such, this turns out to be more cost effective in the short term, compared to a custom made software that has to be paid in full at the time of completion. However, in the long run, the cost turns out to be more or less similar.

Fewer Hassles Regarding backup and data

Readymade tools have a data integrity and backup mechanism built it, or the developers usually provide it as a service. Saas tools have a backup and integrity guarantee as part of their offering. Hence, there is usually less hassles here regarding data backup & integrity

Better chance of being always online

This applies specially to Saas tools. Due to the nature of the tools, they are almost never unavailable. This is important if the tool is fulfilling an essential function in your business.

Usually large support team 24/7

Software product companies usually serve a large base of customers for the product. Hence they generally have a dedicated team handling support queries for their product. They also have a development team constantly working to iron out bugs and issues. If you encounter any issues with the software, chances of getting them resolved quickly are higher.

Cons of Buy

Data Security & Sharing

If your application is hosted on the cloud, your data is also stored on the cloud. This means that confidential data should be carefully protected using a strong contract agreement and encryption.

It’s a good idea to read the privacy policy of any Saas provider before signing up for an account with them.

In case of in premise software, the data and metadata gathering and storage mechanism of the tool needs to checked and appropriate steps need to be taken to protect sensitive data accordingly.

At mercy of service provider

Policies & terms of use of the software service provider, Saas providers need to carefully studied. There are situations in which your account may get disabled or banned, in case terms of use or operational policies are (unwittingly) violated. In case such a thing happens, you are at a risk of losing access to your data.

Not Customizable

Readymade softwares are built with the broadest possible use cases in mind. As such, they sometimes might not be deep enough to cater to a few niche requirements that you might have. Such products are not customizable, and hence there is no room for flexibility.

Possible Data Migration Issues

Your existing data format might be incompatible with the pre-built tool, thereby making importing your existing data into the tool or exporting your data from the tool a hassle. In this case, significant time and effort could be spent in making the data compatible with the format of the tool, without losing it’s integrity.

Pros of Build

Exactly according to requirement

Customized software is built exactly according to your requirements, This means that all your use cases are covered, and all your issues are resolved, no matter how big or small, in achieving exactly the outcome that you want. As such, maximum value can be extracted from customized software if built properly.

Cost effective in the long term

Customised software is usually considered to be more expensive. This is so because all of it is usually paid for up front, rather than a pay-as-you-go or subscription model. However, if designed properly, built with good quality, achieving the required objectives, custom software will pay for it self multiple times over it’s lifetime. Cost of such software is much lesser in the long run, as compared to readymade software.

Your ownership

Customized software is built for you, and hence owned by you. You need not worry about data sharing agreements, privacy policies or terms of use, other than the ones that you decide. The software, the data that it generates, and the data that is consumed is under your ownership. There is no question of losing access to your data or account, in such a case.

Future updates possible

All businesses need to update their workflows sooner or later to meet the latest challenges like scaling and growth, market changes, etc. In such a case, it is possible for you to update your software to suit your new requirements as well. This means that all your existing data and users can continue to work in, with added updates.

Increases Brand Value

Your own software can carry your own branding. This means that the software can increase your brand visibility, especially is the software is customer-facing. This in turn enhances your brand value in the eyes of your users, especially if the software is polished and well built. Various studies have show that beautiful, polished software has higher user engagement.

Cons of Build

Expensive in short term

Custom software needs to be paid for upfront. The costs are sometimes high, depending on the requirement and complexity of the software. However, if done properly, such software turns out to be more cost effective and valuable in the long run.

Maintenance responsibility

The maintenance and management of the software needs to be taken care of by the owner. Typically, the software vendor which has built the software will also maintain it as part of AMC. If the software is on the owner’s infrastructure (server, computers), the owner will have to provide the vendor access to it for maintenance.

Data security responsibility

Data security is part of the design of the software. A well designed software will ensure that backups are regular and reliable, and that the data is secure. In case of customised software, the owner needs to ensure that the data is secure. Having a reputable software developer is very important.

Need reliable experts

Right from finalizing the requirements to ensure a stable and clean design, a reliable technology expert is needed, who can bridge the gap between the software developer and business requirement. The expert is also required to understand the development cost, running and operating costs, etc. so that the business owner is able to take them into consideration. Some businesses prefer to hire such experts in house, who can ensure smooth development and operation of the software. If you have a reliable and reputable software vendor, you can outsource this part to them, as they typically have a team of experts in all areas of technology.


Having a good customized software developer vendor is a pre-requisite to having your software work properly for you business. After all, the value of the software depends on how much benefit it brings to the business, regardless of whether it is built or bought.

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