Build or Buy Software - What You Need to Know Before You Spend
Should I build my own software or should I buy software? This question is asked by every new CEO and Startup owner. This decision can either make your business or break it, and the answer should be taken case by case. Below, we will give some tips and pointers in helping you and your company decide which course of action to follow.
In this new and constantly improving digital age, more companies than ever are looking to run and grow their businesses with technology. You’ll find companies come to a software company with an idea, and expect the white label software to fill the holes of their ideas. In fact, 81% of digitally mature businesses credit their organization’s success to innovation.
When correctly deployed, the correct software can be the differentiator between you and a competitor. But if it’s not deployed and used correctly, it can be the only reason you aren’t retaining your customers.
Build vs Buy - What’s best?
If you are a non-technical founder of your company, it may be hard to decide what to do, especially when the price points between building and buying are so different. From an owners perspective, you need to do what’s best for your company. Should you invest a chunk of cash early on and have fully autonomy of your company’s software? Or should you pay a steep monthly fee for a white label software that is also being sold to each of your competitors?
First, you’ll need to set your goals as an owner and as a business. Your long term goals and vision will guide you in this process, and from there, you can weight your options and see what your best options are. If you’re in this for a quick year or two and hoping to sell quick, building software isn’t for you. But if this business is your baby, and you plan on being for at least a few years, you’ll need your own software.
If you build your software, you’re able to change what it does as your company offerings and services change with time. If you buy software, you’ll either be changing the company you buy through, or simply keep your company within the parameters of what your white label software company is offering you.
Cost
As anyone would, you are going to gravitate to the cheaper option. Unfortunately, when it comes to any sort of IT project, the cost will quickly pile up. Whether it’s yours or you are buying from someone, you’ll need to account for initial build costs, testing, upgrades, support, and many other miscellaneous fees that come with IT work. Just over 15% of all IT projects will go over 200% of the initial cost that was quoted. That doesn’t count for the projects that go over by 90% or more. With those being the numbers, you’ll need to get creative with getting the cost down.
When it comes to building a pre-made software, its still going to have some serious cost. You need to consider that in the long run, and that should be your goal, to have this for the long run, you are going to pay roughly the same price as building. The attractiveness of this option comes with the idea that you will never in charge of hiring a new developer to build/fix something, you won’t have to worry about paying an in-house developer, and you won’t have the lump-sum cost out of pocket initially.
In the end, you’re going to save the amount of headaches you have to buy a pre-built software. But, you’ll be trading headaches for customizability and features. Is it worth the trade?
Design
Whichever route you decide to go, your software needs to be very easy to use, both internally and externally. The seamless interaction with software is top priority. Both your customers and your internal employees should forget that the software and the company are two separates pieces, but feel like they go together.
The design should both match and be built to emulate the same experience that you want your customers to have, regardless of their touch-point with your business. Whether they walk into your store front, visit your website, or download your app, everything should feel like it was made under one umbrella. Design is more important than most non-technical co-founders realize.
Security
The next step in making a decision is knowing the amount of security your software will need. Above all, you need to make sure both your company’s and your customers data is secure and protected. Both softwares will obviously have their own level of encryption, but ensuring that you are blocking all malicious attacks at all hours, thats goal #1.
Maintenance and Support
Many would initially think these two sections are the same, and they’re not. Although they feel like the same, you will need a team thats dedicated to providing both. If a page on your app is broken, you’ll need to have a maintenance group come in and fix the issue and ensure its working properly. For support, you’re going to find a lot of it is user error. Someone needs to be available around the clock to “fix” those issues, and confirm they are, in fact, user errors.
With buying software, you’ll find there’s a full team dedicated to both of these tasks. With that being said, its much easier to have your problem viewed as “small”, and you get pushed to the back of the line. In a situation where you had the software built, you will find that the original development team is much faster to respond to your issues. After all, they were the ones to build the software, not hired as glorified customer service.
Pros and Cons of Each Approach
You should build software when:
- You want to stand out from the competition
- You plan to sell your software as its own individual product
- You have time for a full development
- You’re confident in the group of developers you’ve found
You should buy software when:
- The software is not absolutely essential for the business
- You’re on a tight budget starting your business
- You can’t find the right technical co-founder
- You have very limited time before you need to deploy a software for your company