Software Solutions – Build or Buy?

Blog | November 12, 2013

Reading time: 3 min

Company leaders are faced with business changing decisions every day. The best problem solvers on earth have struggled with this question for years: do I buy software solutions for my business needs or try to build those solutions in-house?

Twenty years ago this question was perplexing. A company could invest into a vanilla third party solution to solve 70 percent of a business problem – or, it could invest in a custom solution that would eventually solve 100 percent of that business problem while tying up internal resources for months (or years). There were many points to consider in the decision; the cost to buy, the labor to build, the labor to support a vendor software, as well as the cost to support an in-house solution. Many times these possible solution comparisons were too close to call, oftentimes ending in no decision at all.

As the years have passed the emergence of SaaS (Software As A Service) has made a significant impact on this issue. SaaS or hosted solutions have become increasingly configurable. Increased configuration allows these solutions to be less vanilla and conform more easily to existing business processes. SaaS providers typically focus on solving a specific set of business problems. These companies have to become experts in the business process for which they provide a solution. As their customer base grows, they quickly uncover best practices and incorporate those best practices into their product. Good SaaS companies continually evolve and solutions that may have solved 70 percent of a problem now solve 90-95 percent.

Business leaders are realizing that in-house solutions can be a fast answer, but are rarely robust, easily upgradable, or scalable. In-house solutions can show some quick returns but are often outpaced in ROI by a hosted solution provided by a proven vendor. Once in-house solutions are in place, they are difficult to change or grow with the business process they support. Internal resources are quickly allocated to support or create solutions for multiple business processes, and building a large in-house solution to a business process normally means a support function from IT after the solution is built with rare opportunity for upgrades. Hosted vendor solutions must upgrade often in order to stay competitive in the marketplace. The latest and greatest versions are released quickly, often at a pace of several versions per year. In-house resources just cannot keep up with support and changes to compete with a quality SaaS vendor product.

Companies that embrace SaaS solutions are getting by with smaller internal support staffs. While those staffs are smaller, they are quickly becoming experts in supporting hosted software solutions. These internal resources are becoming very proficient at adapting to hosted software installation, configuration, and support.  In effect, these internal teams are taking the hosted solution and using it to create the perfect solution by integrating it into current processes.

Business leaders are getting the best of both worlds. A hosted solution developed by process experts that can solve complex business issues, and a lighter internal staff that can focus on fine tuning those solution results. Making decisions to move companies forward with enhanced technology solutions is becoming easier.