Build vs. buy software: Which solution is right for your company?

By: Christine

Building software can get expensive. Trust us, we know.

If the system you are building is complicated, you may need a large development team – and good developers are not cheap! However, licensing costs can sneak up behind you very quickly and soon cost your organization more than the cost of a proprietary system. Here are some questions our sales team asks to help you go through that decision:

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YOUR BUSINESS NEEDS

  1. Is this system involved in a key process within your business, or is it more peripheral?
    The more involved this system is with your line of business, the higher the risk is that your needs may not be fully met with an off-the-shelf package.
  2. Will you have to change your existing processes to make this system work for you?
    Change can be difficult to manage. Custom systems allow your company to maintain your most efficient processes and workflows.
  1. If my data is lost, how will it affect my business?
    Sometimes accidents happen. Your internet might go down during a severe storm, or your database might get corrupted. Does your company have a backup plan?
  1. When do I need the software by?
    Timelines are the hardest factor in this decision. For obvious reasons, pre-built licensed software can be commissioned quickly, while custom systems can take months to build.

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LICENSING

  1. How many licenses do you need today?
    This number will serve as your baseline for calculating annual costs (assuming your user count stays the same).
  1. Does this licensed package cover all of your business needs?
    Many times, you are limited by the license package you purchase. Most licensing companies have free or starter plans, and then dramatically increase package pricing for additional features and functions.
  2. How long is each license valid for?
    Licensing fees may seem small, but after you pay monthly for multiple users, it will add up! If you want help, contact our team to help you calculate your annual costs.
  1. When was the last licensing fee change?
    Just as Netflix continues to increase its subscription fee (much to the irritation of its customers), so might this product. As the company continues to refine its system for you and add additional functionalities, licensing fees may also increase. If you are a current customer, you may be grandfathered into the old rates for a few months, but don’t expect it to last forever.
  1. How many licenses will you need as you continue to grow?
    As your company grows, you will need to expand your team and grant them access to this system. Begin to consider at what point it makes sense to explore a custom system.
  1. Are you prepared to pay for a perpetual license for this system as you grow?
    Remember, as your business continues to grow, you will need to add additional licenses.

 

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INTEGRATIONS

  1. What existing systems do you need/want to connect to the new system?
    Start with a list of your current systems. What have you heard your employees or customers wanting? Is there an off-the-shelf package that can help you with this?
  2. Does this system already have a built-in integration to your necessary systems?
    If it’s already built and available in a package, there’s no need to build something again! Ask if there is an integration fee, and what your limitations are. There may be a limit or an extra cost associated.
  1. Is integration support included, or is it a separate fee?
    Sometimes, customers will offer integrations or APIs for free. Sometimes it will cost you.

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ONBOARDING AND CUSTOMER SUCCESS

  1. Think about the team members who will use this system.
    1. Will you need training?
    2. Does the customer have a training or onboarding program set up?
    3. Is training or onboarding limited?
    4. Will there be a learning curve?
    5. Do you have the appropriate staff in house to make this system successful?

      Many times, business leaders think that investing in a new system is going to bring change quickly. The system is only a vehicle – it’s up to you, your strategy, and your people to drive your company toward its goals. Make sure you have the right people on your staff to take you there.
  1. Is training an additional fee?
    Companies that offer licensing often have a robust onboarding system. They want to see you succeed because the more you use the system, the longer they can keep you as a client. However, there might be an additional fee associated – do your research!
  1. How will I measure my ROI with the system?
    Any investment you make should help you grow your business. What’s your metric?

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ABOUT THE COMPANY

  1. How long has the company been around for?
    Buyers measure companies by how long they’ve been around: the longer a company has been in business, the more likely they are to remain in business.
  1. Is there a chance this company will go out of business?
    If the company goes out of business suddenly, you may be put in a very difficult situation with having to find a new system. You may even lose your data.
  1. Is there a chance this company will get acquired?
    Acquisitions offer additional functionalities or access, but they usually also lead to a price increase that can happen at any time.

 

Build vs. Buy Decision Tree

It’s important to understand that this company will act as your partner to help you grow your business. However, there will be things beyond your control that can affect your operations. Asking these basic questions can help you understand whether this company will be a good partner for the future.

The decision to build a system or buy a system is more often art than science. Companies ultimately end up choosing a custom build if a proprietary system can unlock a competitive advantage over its competitors. No matter what path you choose in the end, your implementation of the system will decide how successful this initiative is. Choose wisely, execute with confidence, and always keep your end goals in mind as you roll out your new software to your team.


About Christine
Christine Librojo was the Sales & Marketing Operations Analyst at alligatortek.

alligatortek is a Chicago custom software and application development firm that began partnering with clients 25 years ago to develop game-changing applications for its clients. alligatortek is recognized as a best-in-class partner, innovator and employer. The firm is a two-time winner of the Chicago Innovation Awards and a 2015 Microsoft Partner of the Year. alligatortek is a four-time winner of the 101 Best & Brightest Companies to Work For in the Nation.

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