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Enterprise Software: Build or Buy?

How to determine when its best to build - or buy - your next enterprise software solution

As companies consider software solutions to support their efficiency or growth goals, the inevitable question is, “should we build it or should we buy it?”  

Often, the implication of this question (and the final decision) go far beyond assessing usability features and programmatic options of each of these possible routes. There are typically meaningful differences in cost, time, and efforts required to deploy either option.   

When it comes to deploying software to increase your sales, improve service and delivery of your product to your customers, gain better insights into your operations, or (insert your goal here), few other decisions will have as much impact on your business.

Regardless of your industry, you’ll probably find multiple software solutions on the market that will claim to solve most of your problems, and then some. And it's true that many of those solutions will have the ability to solve many of your problems. Even still, most companies struggle to find a single solution that addresses their issues top-to-bottom.

Another challenge to finding the right solution occurs when departments don’t work in unison to find a solution that works for the entire organization.

Its common, for example, for the marketing department to implement one kind of software, the sales team implemented another kind of software, and the fulfillment team implemented yet another kind of software - with no regard for whether those solutions will work well together, or for the enterprise at large.

This approach, while common, causes problems for an organization. It leaves each team on an island with their respective software. Without proper support and integrations, each department winds up deeply entrenched in legacy software creating inordinate amounts of redundancy and ineffective communication silos. This slows work and greatly reduces the combined IQ of the company.

This challenge is often referred to as “IT Debt” and it creates a significant drag on company efficiencies and, ultimately, profits. We’ve worked with companies that are forced to dedicate as much as 70% of their technology budget maintaining legacy systems - merely treading water with inefficient tools - rather than on investing that budget back into the business or accruing to the bottom line.

To determine the best solution for you, I encourage you to consider the following for each solution you review.

Total cost of each solution (direct and indirect):

1) Time required to research options. Regardless of your industry, you’ll likely find there are at least a half-dozen options for you to consider.

2) Time to trial each option. Once you select your best solution, you’ll likely want to engage in a trial period, rolling out a “soft-launch” for a few of your key users to gain feedback. If this solution comes up short, you’ll have to double-back and review other options more closely.

3) Ongoing support costs on a monthly or annual basis. Some products will charge you based on a flat monthly or annual fee, while others are will charge you on a per-seat basis, meaning the larger your company, the more you’ll pay to use the software. Note: We find the per-seat licensing sometimes incentivizes companies to only roll the software out to the most necessary players, leaving other team members on the sidelines relying on the manual transfer of information in order to make an impact.

4) User adoption costs. The next phase of a software rollout involves user adoption. Training, managing & enforcing use, and customizations. For the first 6 months or so, this will take a complete buy-in and dedication from management if the software is to make the anticipated impact.

5) Integration costs. If you are unable to find a single software solution, you may need to implement, develop integrations, (and pay for) multiple software to address end-to-end needs.

6) New team member costs. Depending on the scope of the software solution and available support from the provider, you may also need to hire a CTO or IT Manager to maintain the systems, if you don’t have one already.

Advantages and disadvantages of each solution.

1) Can you update the system easily and how will it impact other software integrations (if applicable)?

2) If you choose a solution, will you still need a temporary fix until it can be implemented, or another secondary solution to solve what the primary solution can’t quite manage?

3) Will the solution scale with your business as-is, or can it be further developed to do so?

4) While roll-out is not a one day or even one month process, which components of each solution are ready out of the box and which require heavy lifting before you can even begin using it?

5) Nothing is perfect, but is at least one solution good enough?

6) Which solution will create the least amount of friction for existing systems and users?

Who will be the ultimate users (stakeholders) of your solution.

1) Are all the right people in the room from day one?

2) Beyond who will be the users of your solution today, who will be using it in 3-5 years?

3) Is training readily available as new users join the user base of the solutions? These may be new hires to your company or new teams as your roll out the software to the organization at large.

For many companies, buying software is a perfectly feasible solution when full consideration is given to the process from the entire team. When that’s the case, we at Ventive recommend leveraging SaaS (cloud-based) software because they are typically well supported, faster to implement, and frequently include extensions, integrations, and robust APIs that will allow data connectivity and syncing quicker out of the box.

However, if you’re having difficulty finding a perfectly fitting solution, or foresee it becoming cost-prohibitive, a custom solution is likely the most cost effective, long term solution for you. And that’s where we at Ventive shine.

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