Build vs. Buy: Factors to Consider When Making a Software Decision

To build software generally means to personally plan and code your software from the ground up. To buy software refers to the solutions that are available for purchase from a vendor or SaaS provider. 

Another example of a in-demand software product is an add-on marketplace, which enables companies to offer additional functionality without developing every feature in-house. B2B marketplaces help companies deliver comprehensive solutions, creating an ecosystem of compatible add-ons. 

Purchasing software is a smart, strategic choice for companies that recognize large-scale software development isn't their expertise.

However, some businesses may be concerned that the only way to support their specific use cases is by building a bespoke solution in-house. Others split the difference in favor of a hybrid approach, whereby they purchase a solution then build on it or create custom functions to ensure it fits their unique needs. This article will help to provide guidance on whether you should build or buy your software and the pros and cons associated with each choice.

Build vs. buy: The benefits and drawbacks

There are advantages and disadvantages to both building and buying company software. When facing the build vs. buy decision, many turn to Gartner’s Pace-Layered Application Strategy as a helpful decision-making framework.

The Gartner strategy categorizes software into three layers:

• Systems of record, which handle essential data and manage core transactions.

• Systems of differentiation, used to support workflows that give companies a competitive edge.

• Systems of innovation, which include customer-facing models, platforms, or applications that drive business growth.

Each layer may require a different build vs. buy approach. For example, companies typically license a Customer Relationship Management (CRM) system (systems of record). However, they may choose to develop custom customer-facing apps (systems of innovation) because they are central to the brand and offer unique features.

Let’s compare the two options side by side to help you decide which option best suits your company’s software needs.

Building pros and cons

Building your own software allows for a unique and complex solution that can’t be found on the shelf. Aside from providing a unique experience, building software has various other benefits:

• Customization: While there are off-the-shelf products that allow for varying degrees of customization, building your own allows for complete creative freedom with the design. You may even choose to customize integrations of pre-existing software for further control — for example integrating AppWise with pre-existing enterprise workflows.
• More Control: When you build your software from the ground up you’ll have complete control over your system updates, new features, and security measures. For example, if you wanted to utilize a subscription commerce model because it’s the only that fits your needs, you could do that instead of searching for a partial solution
• Seamless Integration: Building your own software can help ensure your new software and any other existing tools, such as the cloud marketplace, are blended together smoothly. 

Disadvantages of building software

• Costly: It can cost more to build software than it does to purchase it. This is because you will need to purchase all the pieces yourself. You will also be responsible for paying for system upgrades, repairs, platform migrations, and anything else that comes along that requires you to keep up with industry trends.
• Time Consuming: Just as with most customized projects, building your own system can take time.
• Responsible for Maintenance: Unlike buying software where the SaaS vendors are responsible for maintenance, building software requires you to keep up on and pay for any system maintenance, updates, and repairs yourself.

Buying pros and cons

Purchasing software provides a sense of security knowing that you will have automatic updates and system maintenance provided by the SaaS supplier.

Pros of buying software:

• Automatic Updates and Maintenance: As previously mentioned, a benefit of purchasing software from a vendor instead of building it is automatic updates and maintenance. These costs are bundled in with the price of the software
• Lower Costs: Pre-built software can allow for net savings over time. If you are working with a lower budget, then buying software may be the best option in the long run.
• Ready-to-Go Programs: As soon as the software is purchased, it is ready to be accessed and deployed upon acquisition.
• Built-in functionality to drive growth: Built-in software features can boost your organization’s competitiveness without future costs. For example, a marketplace platform may not need monetization right away, but built-in tools like payment processing, subscription management, and analytics allow for a smooth transition when needed, simplifying operations and securing transaction
• Scalable: Purchased software is often more scalable than custom-built solutions. Consider: Does the software need to handle increased traffic or more transactions? Built-in scalability ensures it remains robust and reliable as your company grows. 

Downsides of buying software:

• Level of Customization: This is not an absolute downside so much as an additional consideration to investigate. While many applications do allow for varying levels of customization, you have to ensure that the flexibility allows for any specific functionality you need.

Understanding your company’s needs

With the pros and cons established, the next step is to take the above into consideration and contextualize these points in relation to your business needs. This is done by establishing what currently works well within your organization and what needs to be improved — including the current hardware/software system. This is the same advice to follow for those deciding whether to build or buy hardware.

It is important to lay out a clear vision of your goals to prevent investing in an unfit solution, starting with thoroughly researching all of the options.

Research your options

With your end goal in mind, you must now explore all of your options. Remember that just because one solution works for a competitor doesn’t mean that it is a solution that is fit for your organization. Take the time to thoroughly research what buying or building software entails — including key features or integrations that may be required to complement the service. Review your finances to see which option fits well within your budget, configure what tools you already have vs what you need, and talk with your employees to see how they feel about the potential change.

Performing a build vs. buy analysis for your business

After considering the pros and cons and developing a better understanding of your company’s needs, you can then decide whether you want to buy or build your software. Buying is best for those who may not have the time or funds to build a customized software solution. Building is the best option for those who wish to have a more customized software solution and want the ability to have complete and total control of their own updates, integration applications, and system security.