Deciding on a new piece of software for your business isn’t always straightforward, especially as an organization grows. Today, there are literally hundreds of thousands of applications businesses can subscribe to help them manage their operations and knowing which ones to choose can be overwhelming.
However, while many businesses are able to extract needed value from multiple third-party services or software applications, at some point, the decision on whether to buy or build comes up.
The truth is, subscribing to or building a custom application both have their own pros, and there is rarely a right or wrong answer when it comes to choosing a patch. But before you make a final call, below are some key factors you should consider.
Why Are Third-Party Tools the Common Business Choice?
Most businesses today rely heavily on technology to help them keep pace with competitors and meet the growing needs of their customers. For most organizations, adopting a variety of third-party tools offers a cost-effective way to achieve these goals.
Below are some of the most common reasons why businesses often view third-party tools as the preferred choice:
- Scalable Infrastructure: Building custom solutions from scratch can be a longer undertaking that many businesses may be too intimidated to approach. Third-party tools, however, provide a faster option for establishing scalable infrastructure that helps businesses adapt to new industry changes.
- Short-Term Financial Needs: As a business grows, managing finances gets more complicated. To stay on top of budgeting while taking care of important business functions like invoicing, inventory management, and payroll, businesses will often subscribe to different financial applications or services to help them manage all of these responsibilities effectively.
- Remote Workforce Friendly: A large benefit of using third-party tools is their ability to be used from all parts of the world. This is especially useful when trying to connect a distributed workforce while keeping everyone on task. Platforms like Slack, Microsoft Teams, and Asana are just a few of the many options businesses have to help drive more accountability, even with fully remote employees.
Advantages and Disadvantages of Custom App Development
Although third-party services and applications are by far the easiest format for filling business technology gaps, there are also some significant advantages and disadvantages to consider with custom app development projects.
Advantages
- Customizable Product Features
Unlike off-the-shelf software solutions, custom app development projects allow businesses to dictate exactly how product features should function. This is similar to completing a home renovation project in that you’re given full control over every element from start to finish.
This is a great value-add for businesses that have more unique operational components and can’t find a third-party solution to fit all their needs.
- Increased Long-Term Value
One of the biggest draws to cloud-based services and applications is their affordable subscription models. However, if you look closely at many of these pricing models, over time, they can be quite costly for the business to maintain.
Developing your own solutions from scratch may require higher upfront spending, but over the long term, the ROI provided by them can be substantial for the business. Because you have control over the solution’s initial and ongoing costs, you’ll be able to better plan for financial budgets and forecasts without the surprise price increases that can occur with outside vendors.
- Zero Feature and Benefit Waste
The challenge of off-the-shelf software is that it often fails to meet all of the business’s needs. Most of the time, companies are only able to take advantage of a small percentage of all the advertised benefits and features of third-party tools since they’re not necessarily designed with their needs in mind.
However, when it comes to custom-built software, there is often zero feature or benefit waste. Since the business controls what features are used and which are left out, it means the business can get full value from its investment from day one.
Disadvantages
- Heavy Spending Upfront
The largest downside of starting your own custom software project is the initial costs required. Depending on the size of your business and the complexity of your application, initial costs can range anywhere from a couple of thousand dollars to tens of thousands.
Another thing to consider is that just like during a home renovation project, there may be unexpected costs that can arise during development. These costs can quickly derail company budgets if you’re not careful and make it harder for you to incorporate all the features you were hoping for.
- Extended Development Timelines
Another common challenge with custom software projects is the amount of time it takes before you have a working product. If your business is in desperate need of a solution, it can be very difficult to wait for several months before being able to access important automation features for the organization.
Practical Tips for Deciding Between Third-Party Tools and Custom Development Projects
If you’re currently trying to weigh all your options and still not sure whether purchasing or building your next software solution is right for your business, there are some practical tips you can follow:
- Set a Realistic Budget: Before you can make a good decision regarding new business investments, you first should have a realistic budget in place. By understanding the financial limits of the business, you’ll be able to judge whether your focus needs to be on smaller incremental spending or extracting better ROI long-term.
- Consider the Amount of Customization You Actually Need: The reality is that while having a lot of customization flexibility seems important, very few businesses really need it to gain enough value from their technology investments. Take the time to consider just how unique your business needs are and if a custom solution may be more than what you require.
- Think About How Long You Can Wait: A big consideration when deciding between purchasing or building a software solution is the wait time. Suppose your business needs something in place right away. In that case, it may be better to invest in a third-party solution at least temporarily until you can wait for the longer development timelines of a custom build project.
Find the Right Solution for Your Business
As your company grows, choosing the right software that can keep up is essential. By considering the factors discussed, you can feel confident that you’re picking an option that is both cost-effective and capable of supporting your business’s long-term growth.
The author, Dalip Jaggi, is Entrepreneur, technologist, passionate business leader, and Co-Founder of Revive Real Estate.