There has always been an eternal debate on build vs. buy custom software. It still exists. Companies at times get confused whether to build custom software or buy pre-built software. Neither of them is bad. But, it depends on various factors which will determine whether to build custom software or buy pre-built software (off-the-shelf software) from the market. Custom software allows a lot of flexibility when it comes to integration with existing systems but, is costly as compared to off-the-shelf software. Whereas, off-the-shelf software proves costlier at a later stage due to its higher licensing costs. Let’s take a look at some of the key factors to determine whether to build or buy custom software:

Size of business and scalability

If the size of your business is small and the required solution is not too complex, you can buy readymade software available in the market. Such types of software have basic features and can be customized only to a certain extent, or at times cannot be customized at all. But, if your business is on a large scale and if you are planning to expand your business rapidly, it is advisable that you hire a team of developers and build custom software. Since you’ll be hiring a team for custom software development, they can also upkeep your software regularly with technological changes, bug fixes, and upgrades. Hence, if your business size is large, you can definitely opt for building custom software development instead of buying one. Because if you buy a readymade solution, chances are that during expansion, you’ll have to build a custom solution. And, switching to an entirely new system will be cumbersome and costly.

Will you be incorporating cutting-edge technology?

It also depends on the type of technology being used by your business. If you choose to buy readymade software, it might have used an outdated technology which might make you miss out on opportunities to provide a cutting edge to your business processes or your customers. If you plan to build custom solutions, you have an option of choosing and leveraging the latest and cutting-edge technologies viz. IoT, Machine Learning, Big Data analytics etc. which will help in bringing a competitive edge to your business and thus help your existing customers. Such cutting-edge technologies will also help the business stand against your competitors as well as in gaining new customers.

Time and budget constraints for your software solution

If your business solutions are less complex and you don’t have much time on hand to build custom software, or if your budget is low, you can always buy the pre-built software. It’s not always necessary that building custom software is going to cost you too much. It completely depends on the technology being used to build custom software and the features you decide to put in it. If the custom software has simple features, it won’t be too costly; though any custom software typically costs more than readymade software. But, the cost of maintaining pre-built software is far more than that of maintaining custom software.  

Compatibility needs to be a priority

Compatibility of your existing systems with new software being introduced is very important. If your business is undergoing a digital transformation and if there are legacy systems which will be integrated with new technology, then building custom software is advisable as it will have all the features required to be compatible with legacy systems and still have cutting edge technology. In such cases, if pre-built software is bought, it might not be compatible with the business’s legacy systems and your company might end up spending more on making the pre-built software compatible with legacy systems than it would have spent on building custom software.

ROI potential

The toughest question to be answered is will this product justify the investment? The decision to build vs. buy depends on the amount being invested and the return gained out of this investment. Custom software, if built according to the requirements as well as if meets the customers’ expectations will have higher chances of giving a good ROI as compared to pre-built software. However, if it is observed that the ROI is less compared to the amount invested, it is advisable to buy pre-built software. But it should also be noted that the pre-built software is not as flexible as custom software so the amount invested to custom or license the additional features of pre-built software might turn out to be more than the initial investment of custom software.

So should you build or buy custom software?

So to conclude, build vs. buy decision depends on various features viz. compatibility, time and budget constraints, ROI potential, size and structure of the business, type of technology being incorporated etc. While building custom software there are various other factors viz. is the company ready to hire a full-time in-house development team or an outsourced team for constant upgrades, bug fixes and support & maintenance of the custom software. If not, the company can buy pre-built software and integrate it as much as possible with its existing systems. However, they’ll need to spend on licenses and technical personnel’s fees when they buy such software from the market. Hence, after considering the above factors, one can decide whether to buy off-the-shelf software or build custom software.