There are software-as-a-service (SaaS) products for every nook and cranny of your business. From the obvious ones, like sales customer relationshipment management (CRM) and accounting, to niche providers offering specific services for your industry.
So that begs the question: When is it the right time to buy a SaaS product and when is it the right time to build custom software?
In this article, we will explore the key considerations and guidelines on selecting the right software to empower your team and elevate their productivity.
Let's get started!
What is a "build vs. buy" decision?
A "build vs. buy" decision happens in a number of situations. For instance, corporate development teams will evaluate whether they should build a piece of technology (build) or acquire an entire company (buy) in order to have that intellectual property.
In this situation, we are discussing "build vs. buy" when it comes to building custom enterprise software or buying an off-the-shelf SaaS product. For startups and small businesses, the decision to try out a SaaS product is an easy one.
For example, most SaaS products are priced so that a manager can put the $50 or $100 monthly subscription on their credit card without needing approval from higher ups.
This is not true for large organizations.
The request for proposal (RFP) and approval process in an enterprise can take months and require a multitude of meetings.
Why? Well, the buying decision impacts hundreds – if not thousands – of employees. Most SaaS products are priced on a per user basis, which means enterprise software can cost well over $100,000 per year.
There are also multiple stakeholders that need to feel comfortable with the solution. Lastly, security and compliance requirements must be met before the new system can go live.
Consideration 1: Your Team's Needs
The first need for any software project is correctly defining the requirements.
We have seen a number of projects go awry because teams were not aligned from the beginning, or because key stakeholders were not brought in until the last minute.
When considering new software, we recommend getting your key stakeholders together and having each of them share their must have, should have, and could have features. This helps to make sure that nothing is overlooked and that everyone's needs are heard and accounted for.
We also recommend having everyone list out future needs, how could this new software tool potentially grow and evolve as teams become onboarded and comfortable.
In the end, you should create a clear list of your "must have", "nice to have", and future feature needs. This is imperative not only when reviewing existing software solutions, but also when working with a software team to define the scope of a project.
At this point, you are ready to review existing solutions. We recommend creating a spreadsheet to determine if any of the solutions "check all of the boxes" of your feature list.
Consideration 2: Your Existing Workflow
Now that you have a set of crucial features and a list of existing solutions, you will want to determine how each fits into your workflow. For example, there is a big difference between software that can "plug in" to solve an immediate need and one that needs custom implementation or a change to existing company workflows.
With enterprise software, it can easily take over a year to properly configure and onboard complex systems. Hint: not all SaaS solutions will work seamlessly with every company.
It's important to understand how any new software might impact existing workflows. This is an often unconsidered results of using off-the-shelf solutions: causing changes to workflows or employee job functions that lead to unforeseen additional cost or time.
If you are hesitant about off-the-shelf software working for you, this is the time to evaluate how building software may be the better path.
When building your own software, the target audience only includes your stakeholders and end users. As a result, a custom solution can be tailored to fit existing workflows or completely revolutionize company operations. The key with custom software is implementing software that works best for you, instead of forcing your company to adapt to the software.
Consideration 3: Integrations and Data
The next consideration, beyond your company's workflows, is data. Data is the most valuable asset that an enterprise has, and no two organizations data looks the same. The ability to integrate a product with relevant systems and existing data is a top priority.
When purchasing software, you should carefully consider how it will integrate into existing data structures, as well as what your access to the new software's data is. It's common for the ability to export data to be locked behind a more expensive product tier, if available at all.
When building software, your team should again think about what data is absolutely vital and what data would be nice to have. Think about how you could enrich your existing data systems by bringing together disparate systems, or even automating entire steps with the right solution.
Data also brings us nicely to our next point: security.
Consideration 4: Security and Compliance
Regardless of whether you build or buy, security and compliance need to be central to the decision-making process.
In this case, security means a number of things. First, it means utilizing the latest technology and industry best practices to make sure that your system is secure from malicious attackers.
Security also includes having granular management of user permissions and access. Often, more advanced account controls are only available on more expensive plans. In addition, large organizations usually need advanced controls, like audit logs to track user activity.
For public companies, and companies of all sizes in regulated markets, they have the added requirement of staying compliant. From being HIPAA-compliant to following Sarbanes-Oxley and keeping up with international privacy laws, compliance is a moving target.
Consideration 5: Ownership, Support, and Future Needs
Another key factor when considering to build or buy is the long term cost of using an off-the-shelf solution.
When you buy software, you have no control over the feature roadmap or change in the cost of the software that you buy. SaaS software evolves to suite the needs of the majority of its customers. It is often not possible to extend or adapt SaaS solutions if your needs change, you may be stuck starting over looking for a new solution.
On the other hand, SaaS software requires no ongoing support and downtimes are somebody else's problem.
The biggest differentiator is that SaaS solutions are not an investment for your organization, they are an ongoing cost for your organization.
The minute you stop paying for SaaS software the access to your organizations' data is severed and the money you have spent on the solution no longer has value.
When Should You Build Custom Software?
Architecting and building custom software doesn't have to be an expensive proposition. With the right engineering team and reasonable goals, you can get up and running relatively quickly. Today there are a number of enterprise-grade open source platforms that you can build on top of.
Modern service companies also provide robust application programming interfaces (APIs) that you can plug into your solution to push you farther, faster.
Everything from Stripe (payments) and Plaid (bank accounts) to Twilio (SMS), SendGrid (email), and Slack (chat) has an API. You can focus on building the features and workflows your team needs to be successful, and extending your product with these APIs.
Moreover, the idea of building a single monolithic product are gone. A more modern approach is to iteratively build small services that each address a specific need. These targeted solutions can each have their own roadmap and enable you to build advanced software that fits within your timelines and budgets.
There are legitimate reasons to buy SaaS products and to build your own custom solution. Ultimately, the decision comes down to your company's specific needs and the existing solutions available.
When correctly scoped and architected, custom software development can empower your team and deliver a clear return on investment. And that's where we come in.
At Tragic, we have decades of experience scoping, designing, building, and supporting enterprise software. We have built everything – from custom contractor and employee portals to internal finance and accounting software – and understand which technologies are right for your specific use case.
Looking for help on whether you should build or buy software? Contact us today to get a free consultation from the Tragic team.