Are you struggling to quantify the value of building software in-house versus purchasing an external Software-as-a-Service (SaaS) platform? Plenty of consultants will tell you how building your own software is easier than ever; however, creating your own software program also has a host of problems you need to be ready to tackle, such as maintenance or system failure. Buying a pre-made program from an established is the easiest option for most companies, although this choice can have issues as well, such as less customisation.
Today, we’re examining the pros and cons of both options to find the right solution for your company.
THE DECISION FRAMEWORK
There are prime considerations you need to take into account when deciding whether to build or buy software for your company, which we have set out in this three-part decision framework:
You’re bound to face problems in your business. The main thing to figure out is which of your problems are going to solely affect your company or industry and which problems are faced by most companies. If you work in a popular industry, you’ll find a host of pre-made software programs for your businesses. If you’re in a more specialised or new field, you’re not likely to find a lot (if any) SaaS platform and may need to have one built.
Building in-house software programs can be incredibly expensive, and you’ll need to budget accordingly if that’s the route you decide to take. You will also need to take into consideration your annual maintenance and hosting costs. On the other hand, pre-made software solutions will only have a one-time, annual, or monthly fee that includes support, maintenance, and hosting.
How quickly do you need the program? Building a software program can take months or even years, depending on the complexity. If you need it now, you’ll want to buy a pre-made solution that you can have up and running in a few minutes.
5 FACTORS FOR YOUR CONSIDERATION
Now that you have created a framework, let’s dive deeper and look at these five factors to help you evaluate out which option is best for you:
If you want complete control of your SaaS platform, building will be the best choice for you. You’ll make all decisions related to your platform, which may sound enjoyable until you realise you have to figure out every single detail from colour schemes to margins.
If you’re willing to relinquish some control of your SaaS platform in exchange for convenience and ease, buying might be the right option for you. Depending on your needs and industry, you’re likely find a platform that meets all your requirements.
2. Monetary Cost
If you have an extremely large budget, you may be able to afford to build your own in-house software; however, you have to bear in mind not only the initial cost of building your platform, but the maintenance costs as well. These can include allocations for support, upgrades, hosting costs, system repairs, platform migrations and keeping up with software industry trends. Depending on the size and complexity of the platform, you may spend anywhere from several hundred to several million dollars.
The SaaS platform of your choice owns all costs associated with building and maintenance, and charges you a subscription fee for ongoing access. Because the SaaS vendor gains efficiencies across a large customer base, they can often charge an amount at the fraction of the cost that you would pay to support a one-off application.
If you have a large budget, you may be able to afford maintenance for a software program you built yourself; however, you must take into consideration what maintenance costs you will face, including: fixing bugs, setting up user profiles and passwords, user training, upgrading and meeting industry standards. If you receive a large uptick in users, you’ll need to pay for more bandwidth and staff.
If maintenance seems daunting, buying a pre-made SaaS platform is likely your best choice. Your subscription fee includes all maintenance fees, and you will receive a team of support experts who specifically work with the solution full time.
4. Opportunity Cost
Tying in closely with budgetary concerns is opportunity cost. When you allocate funds for one sector of your business, you are losing funds for another sector. If you create a highly specialised app that takes up 60% of your development budget, you’re going to have significantly less funds to spend on other opportunities that may arise.
SaaS solutions cost a fraction of what building software does, meaning you will have more money for other sectors of your business in addition to more time to focus on other aspects of your company.
5. Time to Value
When debating between building and buying a SaaS platform, think about the goals you want to reach using newly-created software. Building a software program internally from scratch can take more than a year. How long will it be before you can make any headway toward those goals? Can you afford to wait that long?
Buying a SaaS platform allows you use the software in a matter of minutes, giving you instant access to a complete program, A SaaS platform purchase provides the fastest window to connecting your goals to actions.
Deciding whether you want to build in-house software or buy an established SaaS solution is complex and can feel overwhelming. Let your assessment process be guided by the decision framework and make sure to evaluate relevant factors like control, monetary costs, maintenance, opportunity cost, and time to value. Armed with these inputs, you can make an informed decision for your business.
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