When to Buy a Packaged Solution and When to Build your Own

The build vs. buy question has been haunting technology decision makers for decades. Is it better to build a completely custom business application in-house, or should companies buy off-the-shelf software from a vendor? The answer is not straight forward as both routes have pros and cons but understanding the advantages and disadvantages can help your organisation make a decision. We think the decision centres around the following four points.

1. Cost as a consideration

Buying software is often the cheapest option at the outset. Packaged solutions benefit from economies of scale: the development process is undertaken once, but a multitude of users pay for the software, essentially sharing the cost.

Yet the high expense of custom-built solutions can be mitigated because a custom solution can pay off in the long run by simply delivering more for your business. Custom solutions also side-step perpetual upgrade fees or any ongoing licensing that needs to be paid. The key is, of course, to look into the total cost of ownership.

That said, it can be difficult to predict the eventual cost of a custom solution as many custom-built applications significantly overrun their budgets at the development stage while also bringing high maintenance costs. One advantage, therefore, of packaged solutions is that the cost is predictable, removing the risk that a solution will incur damaging cost overruns.

2. Implementation time

Here, packaged solutions are clear winners. Even when accounting for implementation and training a packaged solution can be up and running far faster than a solution built from the ground up. If your company is in a hurry to get a solution up and running a packaged solution is the way to go.

In fact, it’s not unknown for custom software development projects to never come to fruition. Cost is one concern, but it is often the lack of internal project management skills that simply cause custom solutions to falter.

One exception lies here: companies with particularly unique software requirements could find that a packaged solution requires so much customisation that implementing a packaged solution is simply not viable. In these cases, a custom-built solution can address functional requirements more quickly.

3. Fit for purpose?

Building a custom solution implies unlimited flexibility to create a feature set that fits your business like a glove. Whether these features would be easy to build in practice is another matter, but a well-built custom solution will likely be more fit for purpose than a package purchased off the shelf.

However, many businesses have rather standard software requirements. The accounting functions required by a hotel group is likely to be broadly similar no matter where in the world the hotel group is located. Likewise a car dealership, clothing retailer or hospital. Where the required functionality fits a mold, a packaged solution might simply be the most logical choice.

Nonetheless even where packaged solutions are not a close fit companies should consider the extent to which packaged solutions can be customised or augmented with other applications. With many solutions now delivered via the software as a service (SaaS) model, integration and customisation are much easier than it was in the past.

4. Internal knowledge and competencies

Finally, companies should consider their existing core competencies before embarking on a custom software solution. Though much of the project management elements and all of the development elements of a custom solution can be outsourced, a complete lack of internal software development knowledge will put a custom project at far greater risk.

With zero internal expertise, a company will struggle to understand whether a custom solution is viable, to measure its progress or to ensure a completed solution that is fit for purpose. In addition, packaged solutions would typically have been implemented many times over.

Your integrator would be able to provide the necessary advice to ensure that integration is successful and that your company’s processes are adapted to make the best of the new solution. On the other hand, your business could largely be on its own with a custom solution.

In conclusion

As with many technology decisions, there is no easy yes or no answer in the packaged software vs. custom solution debate. Instead, your company should evaluate its choices against the four points we addressed, each of which may push the decision in a particular direction. Find that it is a finely balanced decision? Altivate would be glad to help.

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