5 Step Decision-Making Processes for Build vs. Buy Software
Build vs. Buy Software: Which is better for Startups? Many startup founders need help deciding which option is right for their business. In today's digital age, businesses are heavily dependent on technology to grow and operate. In fact, 81% of digital growth businesses credit their organization's success to innovation. When used correctly, technology will drive rapid growth and profits. However, it still takes planning and strategy to make the most of it. One of the biggest concerns in managing business technology is whether companies should buy their technology or build it from scratch.
When a company needs a new software solution to address a specific business challenge, they are often faced with the question: Should we build it ourselves or buy an existing solution? There are pros and cons to both approaches. Building a custom solution provides greater control and customization, but it requires a larger investment of time and resources. On the other hand, buying an existing solution can be quicker and easier, but it may not fully meet the company's specific needs.
To help businesses weigh the costs of building versus buying software, many organizations offer software build cost calculators. These calculators can help businesses estimate the costs associated with building a custom solution, including development time, personnel costs, and infrastructure expenses. By comparing these costs to the price of existing solutions, businesses can make informed decisions about which approach is best for them.
What will you and your organization need from this solution?
Discuss and clearly define the problem you want to solve and the scope of the problem. You should take the time to ensure that you are not getting a solution that does not scale or adapt as your needs grow or change. Be sure to define the codebases, APIs, frameworks, and tools the solution needs to work with so that you cover your base. In deciding whether to make or buy software, you will need to evaluate all relevant factors. You must assess factors such as project requirements, upfront costs, long-term maintenance, etc.
How will you Make a Buying Decision: Step by Step
Here are specific steps you can take to make an efficient and effective software solution purchase decision.
1. Analyze your needs
The natural starting point here is to analyze your needs. Both technical and non-technical, so we can start with the specific problem we want to solve, either by creating or purchasing the software. We can divide this into a few more separate levels. They are given by,
Functionality Requirements - What we want our solutions to do include specific functionality, Combination options, Automation features, and more.
Non-Functional Requirements - Technical issues outside of the solution's primary function. It includes issues related to user management, performance, security, hosting, and deployment.
Business Level Requirements - Issues related to the legal, financial, and operational implications of implementing a specific solution, including your relationship with the seller and, most importantly, your budget.
The first step is to list your requirements under each of these clusters. We can then figure out how we would rate each item in terms of its relative importance. An easy way to categorize each need as a must-have, or a must-have, Or you could use a numeric scoring system. At the end of this exercise, we should crystallize exactly what we want to do and how.
2. Explore the market
Obviously, when weighing whether to buy or develop successful custom software, we need a clear picture of what's going on especially. We need to do two things. First, to identify possible solutions, and Second you can evaluate and verify the suitability of each item against our specifications.
The key is to use an empirical approach here. We can achieve this by rating each option we identify against the detailed requirements we identified in the previous step and their respective importance.
If you selected a must-have system in the last step, we might rate potential solutions for how many requirements each category meets. If we use a more detailed ranking system, we need to rate the solution accordingly.
Another option is where some or all of our Terms are less flexible. We may use a more binary approach, so we may evaluate whether the solution meets our individual threshold requirements and promptly remove any inappropriate platforms.
At the end of this step, we should see a clear picture of two things:
Is there a suitable solution on the market?
If so, we will compare the suitability of the options.
3. Evaluate internal development resources
Suppose we are deciding whether to build or buy the software. We need to evaluate our ability to develop solutions carefully. This can look very different from organization to organization or even department.
In big business, the question might be whether we have enough development resources to change solutions as quickly as we need to. On the other hand, in the SME context, the challenge may be whether we have enough resources. In any case, we must start by translating our technical specifications into estimates of the required development hours. This gives us a realistic picture of how big a custom build can be.
This, in turn, informs our decisions about the potential cost and turnaround time of building a unique solution from scratch. A thorough analysis is extremely important here. Most custom development projects are time-consuming and over budget. Therefore, it is essential that you have a realistic idea of what you are going to do.
We will take a look at how new technologies and methods are fundamentally changing in this article. For now, the goal of this step is to decide:
If creating a custom solution is a viable option,
If so, how big is this venture?
4. The cost of your options
Next, we can start comparing and contrasting our options. Let's say we decide that there are just as many options available for both building and purchasing the solution we need. The most obvious point of comparison is the relative cost.
However, we saw earlier that direct cost comparisons were problematic. This is because most custom builds require payment upfront, while pre-built solutions are billed continuously.
Upon knowing this is coupled with the fact that custom solutions are generally much more expensive these days. Our analysis should focus on calculating how long an internal build would be financially appropriate.
If a custom build costs $10,000 to develop, licensing a commercial solution costs $200 per month. They will become equal after a little more than four years regardless of additional costs such as support and maintenance.
This is the period in which we can expect to use either tool. So a custom build might be a more feasible option. However, if we expect the same solution to cost $100,000 to develop and there are viable options besides the $200 per month price. This may be a more difficult case since it took more than 40 years to break even.
So we need a clear business justification about other aspects of the solution to build and buy software in this scenario.
5. Factor in further limitations
Our decision to purchase per model may be limited by other circumstances. That may completely change your calculations. Often these involve internal rules, processes, and policies that govern the types of tools and vendors that can be used.
For example, in the context of an organization, there can be very strict requirements on vendors with specific certifications to provide tools and services. Alternatively, internal policies related to the review and approval of specific vendors and tools may be prohibited. As long as the balance of cost advantage and convenience shifts to custom creation,.
In other cases, your decision to purchase a replacement may be limited by the specific situation you are experiencing. For example, if your payroll software suddenly stops working because it is 20 years old and has passed its useful life, you can find replacement software, which is therefore quite urgent. Chances are,
You won't even think of building your solution.
But you should go for the best platform and use it in time to pay your employees, even if it's not your best bet. This is a situation where we don't want to sacrifice the good for perfection. You may continue to think of other options, but the point is that sometimes you have to put out the fire right away.
So when should you build or buy the software?
Admittedly, the general approach is to buy ready-made technology. After all, it doesn't take a lot of time and resources to create something that's already on the market. It's also not difficult to set up. The software offered by a trusted brand is certified for quality and works perfectly. This means there is less room for error in that part of your operation.
So unless the software itself is your core product or core process, you better buy that software. This is not the end of the thought process. In fact, identifying the purpose of your technology is just the beginning. There are still other issues to consider.
Here's a checklist summary of the build vs. buy software debate:
Buy when
Software is not the core of the business.
You have a limited budget and need a cost-effective tool.
You are on schedule and have a goal of deploying quickly.
You don't have enough technical knowledge for complex software development projects.
Build when
You want to develop specific capabilities for your website or application.
You plan to sell your software as a product.
You have a specific set of eligibility requirements.
You can spend time developing.
You have the right professionals to carry out the project.
Conclusion
Build vs. buy is still a matter of debate for any organization that will have it for them. Every situation is different, and there is no single answer that is best for everyone. Organizations must do their analysis. However, some general principles can be done. If buying a solution is straightforward, with no obstacles, and solves problems appropriately,.
On the other hand, if there is no ready-made solution that adequately resolves the problem, it is often the right choice. Building a solution is the only answer. No matter how difficult or costly, the cost difference in monetary and time terms is so wide that it is worth spending some time researching the right solution to find the one that works best.
Because the cost of doing so is overshadowed by the potential cost of making poor choices, you can share problems in your organization, then do research, evaluate thoroughly, and make smart decisions. We can help you with the best MVP development, meeting your expectations.