Build vs. Buy: How To Decide on Software

To buy or to build... that is the question businesses must ask when deciding to buy off-the-shelf software or create custom software to satisfy their business needs.

Deciding whether to buy off-the-shelf software or create custom software is a lot like choosing between a ready-made meal and cooking a meal from scratch.

• Do you opt for the convenience and quick setup of pre-made software, much like grabbing a meal from the store that's ready to eat within minutes?
• Or do you invest time and resources into developing custom software that perfectly suits your specific needs, similar to cooking a meal that fits your exact taste preferences and dietary requirements?

It's a big decision for any business (or hungry person). Let's imagine we're planning dinner...

Buy: Buying off-the-shelf software

Buying a ready-made meal from the store is similar to purchasing off-the-shelf software. It's quick, easy, and requires little effort. You simply choose a meal that checks all the boxes, pay for it, and you're ready to eat it within minutes. All the hard work prepping, cooking, and assembling the meal is already done for you.

Similarly, buying off-the-shelf software means you don't have to worry about creating something from scratch. The software has already been developed and is available for purchase. All you need to do is find a suitable software that meets your business needs, pay for it, and start using it right away.

Benefits of buying off-the-shelf software

• Cost-effectiveness. Off-the-shelf software is usually cheaper than custom software since the development costs are spread out among multiple buyers.
• Ease of use. Often have a user-friendly interface and are designed for ease of use, making them accessible to all levels of technical expertise.
• Quick deployment. Since the software has already been developed, it can be deployed almost immediately in your organization. This quick setup is ideal for businesses needing immediate solutions.
• Proven solutions. Established software has a track record of reliability and performance, having been tested and used by many customers.
• Updates and Support: Typically, off-the-shelf software includes updates and customer support provided by the vendor, which can reduce the burden on your internal IT team.

(Related reading: open-source vs. closed/proprietary software.)

Build: Building your own software

Now, consider the option of cooking your meal from scratch.  Instead of purchasing a ready-to-go meal, you take the time to look for a recipe, purchase the ingredients (substituting out those capers it calls for — yuck), prep, cook and assemble it to make the perfect meal.

The same goes for developing custom software — you have complete control over the ingredients, process, and final outcome. Everything is designed and customized exactly to your specifications and preferences.

Benefits of building custom software

• Tailored to your needs. Custom software is designed to meet your specific business needs. You have complete control over its features, design, and functionality.
• Increased efficiency. Since custom software is tailor-made for your business, it can improve overall efficiency by automating tasks and streamlining processes.
• Scalability. As your business grows, custom software can be easily scaled to accommodate increasing demands without the need for major changes or replacements.
• Competitive advantage. Custom software can give your business a competitive edge by providing unique solutions that may not be available in off-the-shelf options. (This sometimes goes by the phrase “Buy for parity, build for competitive advantage.”)

Developing custom software requires time, resources, and expertise in software development — it’s not to be taken lightly.  It involves both a thorough understanding of your business processes and needs, as well as a practice of continuous testing and refinement to ensure optimal functioning.

How to choose: buying vs. building software

When it comes to software for your business, buying an off-the-shelf solution or building custom software isn't always a straightforward decision. You need to consider your specific requirements, budget, urgency for deployment, and other factors. Here are some key questions to guide your decision:

What are your business's specific needs and requirements? Does your business operate in a way that pre-made software can fulfill, or do you require custom features and functionality to meet your unique needs?

Are there ready-made solutions that fit your needs? Often, software already exists that meets your requirements, though it may require a few minor adjustments. There's no reason to reinvent the wheel if you don't need to.

Is there a competitive advantage to building custom software? Custom software can offer unique functionalities that differentiate your business from competitors, potentially streamlining operations in a way pre-made software cannot.

What is your budget?  Buying off-the-shelf software may be more cost-effective in the short term, but investing in custom software could provide long-term benefits for your business.

What are the costs associated with both options? Consider both the upfront and long-term costs. Buying software might seem cheaper initially due to lower startup costs and spread-out expenses like licensing fees. However, custom software could be more economical over time, especially if it eliminates unnecessary features and ongoing fees.

What is your timeline for the software? If you have an immediate need for a software solution, buying off-the-shelf may be the better option as it's already been developed and tested. However, developing custom software can give you a more tailored and efficient solution if time permits.

Does your team have the expertise to build and maintain custom software?
If your in-house developer team is capable, creating custom software might be a viable option. Otherwise, buying might be more practical.

Do you need on-going support and maintenance?
Off-the-shelf software typically comes with vendor support and maintenance, while a custom build requires your team to provide ongoing internal support.

In some cases, it may be beneficial to use a combination of both off-the-shelf and custom software. For example, you may use off-the-shelf software for general business processes and then integrate custom software for more specific or unique needs. Ultimately, the decision should be based on your particular business requirements and resources. 

(Related reading: IT cost management & CapEx vs OpEx spending.)

Final considerations

The choice between buying ready-made meals, cooking from scratch, or a combination of both depends on:

• How specific and complex your needs are
• How much time you have
• What your budget is.

Similarly, in software, choosing to buy vs build should be based on your specific business needs, available resources, and financial constraints. This decision significantly affects how well your organization's requirements are met and how flexible your solution is in the face of changing needs. Consider the pros and cons of each option carefully before making a decision.

Whatever route you choose, remember to reassess your software needs and periodically adjust as needed. The software industry is ever-evolving: what might have been the best solution a few years ago may not be the most efficient or cost-effective one today.