Buy vs. Build Software: Which Option Is Best for Your Business?

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To Buy or To Build, That is the Question 

As a business owner, you have likely encountered the buy vs. build software debate that today’s businesses experience. It can be challenging to choose the best option because there are pros and cons to both buying a cloud software solution or building custom software in-house. Like any business decision, the right choice will depend on your business type, needs, budget, and long-term goals. The last thing anyone wants to do is make a hasty decision, which can waste significant time, money, and resources. This article will discuss several factors to consider before choosing to buy or build software for your business.  

1. Cost 

Above all else, cost is a significant factor to consider. Typical costs include everything related to the software lifecycle, from the initial investment to the steps necessary to build, test, deploy, update, and maintain the software. The Standish Group reports that 53 percent of IT projects cost 189 percent of the original estimates. Indeed, many businesses do not realize the complexity required to launch cloud software solutions. Thus, the costs can be surprising and unpredictable.  

If you choose to buy, the vendor will be responsible for the costs of building, testing, and maintaining the software. Your business will not have to set aside a significant investment to launch the software, which is ideal for companies with a limited software budget. With this option, businesses will only need to pay fixed subscription fees to access and use the software solution. 

Since cloud-based software companies typically have a vast customer base, they can usually charge lower costs for customers. Additionally, businesses will need to consider the costs of training employees to use the software, which will vary depending on their technical experience.  

On the other hand, you may choose to build a custom software solution. Building software is a major investment, as your business will be responsible for everything mentioned above. Indeed, this includes everything from development and testing to maintenance and launching the software. Additionally, companies will also need to pay for hosting, securing, and optimizing the software. If your business does not have a software development team, you will need to hire a team that can fully invest in building this project. Furthermore, any software changes can be time-consuming and costly. This may explain why an estimated 70 percent of software costs happen after the software has been launched.  

2. Control 

Depending on your business objectives, you may require a certain level of control over your software regarding the implementation, features, customization, and scalability. If you choose to buy software, you will typically be limited by the amount of control a particular vendor can offer. Of course, many vendors will be happy to accept your feedback regarding software improvements and additional functionality. Further, some platforms are more flexible than others in terms of the third-party integrations they can support.  

Perhaps your business prefers to buy software but has specific requirements not readily available from most vendors. In this case, it’s helpful to find a vendor that offers flexible integrations and additional services and features that can meet these requirements. This can give your business a level of control that helps you meet your goals. 

Alternatively, your business may have unique needs that require complete control over the software lifecycle. When you build custom software, you can create the software custom-tailored for your specific business. Of course, this option has some cons, such as the risk, cost, and responsibility of building, deploying, and maintaining a large-scale software solution in-house.  

Furthermore, the build option requires a talented software development team to invest the next several months in implementing your software solution. If one or more team members leave before the project is finished, your business will have to go through the costly and time-consuming process of finding and hiring new developers. The new developers might also have to rebuild the previous developers’ codebase from scratch. Indeed, this is time that could be spent on focusing on other important business goals.  

3. Connectivity 

Like any business, it’s expected that software needs will vary based on the type of business, products and services offered, and essential integration requirements. Indeed, buying software that automatically connects to necessary integrations will make it easier for businesses to meet their objectives and focus on growth. For example, companies storing sensitive payment data likely will need to connect to payment processors and gateways so they can process transactions. 

Perhaps your business uses several applications that most software vendors do not offer. In this case, your business may choose to build a custom software solution. This can make it easier to connect to integrations crucial to your overall business success. It’s important to note that this option will require your development team to piece together several solutions compatible with your current ecosystem.  


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4. Timeline 

Every project has a specific timeline for when the software should be launched. This will vary based on how your business will use the software. If you need a solution fast, the best option is to purchase a ready-made product. Indeed, this will provide immediate value to your business and reduce the costs and time of building software. If you choose this option, the steps involve: 

  • Researching and choosing a SaaS platform 
  • Customizing the platform for your business 
  • Launching the software 

When looking for the best option, ask vendors for ballpark estimates of how long it will take to implement your software solution to market. Specifically, ask for estimates from similar business use cases. In general, a standard timeline from purchase to go-to-market is anywhere from 3 to 9 months.  

If time is not of the essence, you may opt for building software internally. The tricky part of building your software solution is that you may not have any timelines to reference for how long it will take. This is because you are making a custom solution with unique functionality. Instead of a vendor being responsible for meeting deadlines, your team will be accountable for building a complex project. While the time will vary greatly depending on the project scope, ballpark estimates range from 9 to 18 months before the software goes to market. 

5. Maintenance 

Another consideration that may fall through the cracks is maintenance. Your software must be maintained, which involves monitoring performance, addressing errors, and improving the platform on an ongoing basis. For those that choose to buy software, the vendor will handle maintenance. In turn, businesses will have more time to focus on increasing revenue. If you choose this option, it’s recommended that you receive a service-level agreement (SLA), which will clearly outline the responsibilities of all parties involved in the use and maintenance of the software.  

If you decide to build software in-house, this places all of the maintenance on your shoulders. This includes everything from training employees and achieving compliance to upgrading and fixing errors. Keep in mind that the cost to maintain a large-scale codebase will increase over time. Unless your business has the time, resources, and qualified staff to maintain software, this may not be the best long-term option.  

6. Compliance / Scope 

Depending on your type of business, you may need to meet specific compliance requirements. This will vary based on your industry, what kind of products and services you sell, and what types of data you collect about consumers. In general, it will be easier to achieve compliance by purchasing ready-made software from a reputable vendor that already meets your industry compliance standards or can help you with the compliance process.  

If you build software, meeting compliance will be a time-consuming and expensive process. This involves implementing specific security measures designed to protect sensitive data on a global scale. Unless you have an expert security team solely dedicated to this ongoing task, your business may be better off choosing a ready-made solution instead.  

7. Scalability 

One of the final factors to think about is scalability. What are your long-term goals with the software? Will the software be used by just your internal company or also for your customers? These answers will help guide your decision toward the best option.  

If you choose to buy, the major benefits include: 

  • Ready-made software solution built quickly 
  • The vendor handles maintenance, security, and updates 
  • Only pay for fixed subscription fees to use software 

If you choose to build, the major benefits include: 

  • Custom software tailored to your specific needs 
  • A flexible platform that offers more control to scale and integrate new features 
  • Requires major investment of time, resources, and staff (not a quick option) 
Which Option Is Best for Your Business? 

After reading this article, we hope you have a better idea of the main factors to consider when choosing to buy or build commercial software. No matter which decision you make, it’s essential to determine your business goals for implementing a software solution. If you need something built quickly and want a hands-off approach, buying software is a logical choice. However, building software can be a worthy investment if your business objectives are unique and you have the time, resources, and budget to launch a custom-made platform.  

At TokenEx, we are a SaaS platform offering something different compared to most prepackaged software companies. Indeed, our flexibility allows us to meet many businesses’ needs perfectly. Although enabling this flexibility requires organizations to build out low-code integrations with our platform, our Transparent Gateway makes this process much quicker and easier than most other manually built integrations. Thus, this option is still less expensive and time-consuming compared to building out your software from scratch.  

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