Build vs Buy Software – How to Make the Right Decision?
Build software vs buy software: which one to choose for a startup?
It is a common question for startup founders. They find it quite challenging to decide between both options.
The booming demand for different software applications to boost and streamline business activities using modern technology is expected to support market growth. The app development software market size was estimated at USD 131.4 billion in 2020 and is anticipated to grow at a CAGR of 24.3% from 2021- 2028.
When it comes to leveraging advanced technology solutions, should you develop them with the help of an in-house team or purchase them off the shelf?
It is pretty necessary to solve this query. There is no best answer, and usually, it is not an either/or choice. The right decision is to do a little bit of both.
You and your team have individual goals, challenges, and skills. Identifying which path to choose needs analysis of your existing situation and assessing the options against different criteria.
While there will be pluses and minuses connected with the Build software vs buy software choice, leveraging a powerful framework will help your team to succeed.
So, where to start and how to choose the best option?
Making the right choice depends on five key considerations. Let’s explore it first.
Key considerations to making the right choice
1. The problem that you want to solve
It is necessary, to begin with, a clear and precise definition and understanding of the issue that you are trying to figure out. The conventional strategy will help to develop technology solutions that resolve core organisational issues and generate unique competitive benefits.
In today’s automated era, marketers from different industries and regions want to discover fresh approaches to connect with their customers, whether it is through mobile, web, email, or similar other channels.
2. The in-house expertise
It is essential to be realistic about what is achievable. In today’s age offering and supporting software that addresses the needs and competitors of current solutions is a tough nut to crack. It needs dedicated workforces with specialised abilities.
- On the bandwidth side, you might require freeing up a resources team having experience in dealing with feature detection, development, training, testing, documentation, maintenance, and any additional significant activities.
- On the knowledge side, along with usual product development, compliance, and training abilities, you will require manpower with know-how on the latest mobile (iOS, Android) and web development standards.
- On the support side, you need to set up processes to manage bug fixes, deal with new feature requests, and comply with the maintenance of existing OS regulatory changes.
Obtaining or freeing up employees can be pretty challenging. It is one of the key reasons organisations opt for a custom software development company.
With them, they can rest assured that there is a fully-staffed team of expert developers, designers, managers, support, and customer service specialists who focus on building software and maintenance. They fulfil their evolving needs leaving room for future expansion.
3. The costs
Every team has a predefined budget, and success depends on keeping up with the budget. Teams fail to focus on hidden technology costs.
When you consider buying software solutions, it is much easier to baulk at upfront costs since they are specifically rated and packaged by the solution provider. With building software, things might get highly blurry. Along with the initial development and hosting expenses, many costs lie under the surface.
Here are some of the familiar hidden costs that occur when you opt for in-house development.
- Technical Debt: With a tailor-made solution, you want ownership for the long term. It means calculating time and money to deal with further code changes, knowledge base and internal team updates, and even struggling with extra storage and infrastructural expenses.
- Time to value: Building software is a lengthy and time-consuming procedure. There is a cost with waiting until development gets finished before users can start using it. It also boosts rapidly with the software complexity.
- Opportunity cost: It is the cost regarding what your team has developed in the time spent on the specific software solution. If developers are not spending enough time developing software for marketers to send individual messages, what are they developing, and how do they bring the business forward?
4. The timing
Next, focus on timelines. Even basic in-house software gets developed within a short time frame. Large custom development software is generally inclined to delays and overrun schedules.
If you want to accelerate time-to-market, buying software helps you execute quickly. The result is less time to get working functionality and more time to customise, optimise, and accomplish quick wins.
One of the best ways to keep pace with the timelines is to focus on requirements gathering and cross-functional alignment in the initial phase. Even though it may not be the most thrilling aspect of the to-do list, it will pay off in dividends.
Working based on clearly defined requirements will help prevent you from pushing the dates further out.
5. The needed flexibility
You need to focus on addressing today’s requirements along with keeping an eye on the future. There will be software that supports your needed use cases. What is important is that you not only focus on present-day needs but also consider the long-term impact of your decision.
Opting for the buying software option means giving up on a control level. Different software aspects such as uptime and performance, integration, error fixing, and the entire product roadmap control by the software provider.
On the other hand, building software in-house does not always provide wide-ranging flexibility and innovation. Development turnover, changing priorities, and emerging complexity and technical debt may tie down your team to an in-house solution, and the shifting expenses might be even higher.
You can purchase off-the-shelf software to begin and execute faster and leverage flexible APIs, interfaces, etc., to further develop and innovate on top of that software.
In-house Software Development
Building software means your internal IT teams create the entire project. It needs reallocating manpower from another project and team reorganisation. When you lack resources in your firm, insourcing means you need to hire a new workforce.
The main reasons to opt for in-house development are:
- To control decision-making and the capability to move faster and accurately.
- To balance in-house and outsourced services with existing business goals, for example, offering a platform to foster talent.
- Integration plans can add a fresh sourcing approach or build custom software.
Purchasing off-the-shelf Software
Buying software refers to contracting a specific project or an overall organisational activity to an external service provider who is an expert in the relevant service. Each problem has different solutions and software, outsourcing models.
The main reasons to opt for development outsourcing are:
- You can access specific skills and knowledge when you outsource your project. Outsourcing partners have specialised proficiency and well-trained talents that might not be available in your in-house team.
- You can leverage flexible team capacity and extensibility. You can expand a team to address deadlines without any financial commitment to recruiting in-house talents. After project completion, you can shift back to an in-house team.
- Needed project skills and proficiency might not be your company’s primary focus. So it is better to stay focused on your core competencies and outsource your project needs.
You can buy software when,
- The software system is not the core of your business.
- You have no sufficient technical knowledge to deal with a complicated software development project.
- You have a plan and want a quick deployment in the market.
- You have a budget and require a cost-effective system.
You can build software when,
- You need to build unique features for your website/app.
- You want to address the needs of a particular set of functionalities.
- You have the right team of skilled professionals to manage the entire project.
- You want to sell your software system as a product.
- You can spend enough time with the software development process.
In a Nutshell
Making the best choice between building in-house software and buying off-the-shelf software can be highly complicated.
You need to ensure an in-depth evaluation of different aspects such as management, maintenance, monetary expenses, opportunity expenses, and time to value. Equipped with this information, you can make an informed decision for your organisation.
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