When Should a Company Develop Their Own Software?

When the need for new software programs arises, companies find themselves facing a tough choice of either going with “off-the-shelf” options or beginning a custom software development project.
February 17, 2022
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When a company recognizes the need for software to solve a particular problem, one of the choices they must face is whether to buy the software off the shelf or venture into the world of custom software development. However, the choice between the 2 options largely depends on what the intended goals are for the software and several other factors involved in this important business decision. 

Thankfully, companies beginning to explore these options aren’t the first nor the last businesses to actually do so. There are many common situations where it makes more sense for companies to invest in building their software rather than purchasing a standardized version. 

What truly calls for customization?

If the company realizes that all of the available software currently on the market doesn’t have the kind of features or services they’d like to have in their app, it’s a more logical choice for building a customized application whether internally or with a custom software development outsourcing team. Most commercially available apps take a “one-size-fits-all” approach, which may limit what an organization can do with the app. 

With custom-made software, developers have the room required for integrating all of the features and customization needed for one specific company. For example, if the company does some specialized tasks (such as manufacturing processes) that are unique from the rest of the industry, it will always be hard finding the right software for optimizing such specialized tasks. The way to go in such situations is the customized app or software route. 

When is the cost of ownership lower?

Most of the time, commercially available tools require organizations to either pay an upfront fee or a monthly/annual subscription. If they do the math and determine that building their own is cheaper than the subscription or the upfront fees in the long term, then they should take the time to create their own version. 

For example, some professional apps cost over $50,000 per license per year. If a company intends to use such apps for years and building it internally costs $100,000, it makes more sense to build the app themselves than buy a ready-made one. Such cases aren’t so common, but they exist in specific industries. 

Are there integrations required with the company’s current systems?

Another reason why businesses commonly consider building customized software is when the available options on the market don’t integrate with the systems already in use at a business. For instance, if they are looking for accounting software that integrates with the other custom applications (such as inventory and human resources platforms) that they’re already using, building their own is always the obvious choice. 

Integrations are some of the most important factors companies must consider while choosing which software to use. Software that doesn’t properly integrate with the other tools they’re using will always hurt the user experience of workers and general workflow. If a company already utilizes custom-built applications, they may find themselves constantly needing to build their software if integration is an attribute they really care about. 

What are the security needs of the company and software?

If a company has security concerns with the readily available commercial software, it’s always best to custom-build something to the exact specifications required. For those running an organization with high-security risks, building their software internally gives them the control required for important factors such as access control.

For a government entity, NGO, or highly-targeted niche by hackers and other cybercriminals, using commercially available tools isn’t advisable. This mainly applies to web applications that involve storing data on the servers of the app developer. Using commercially available tools might expose organizations, as malicious actors often target widely used platforms because they can gather more information about their potential vulnerabilities.

Before choosing between commercially available software or custom software, companies must always assess their organization’s security risks. This may mean that the company must incur a relatively higher cost building their tools internally, but the peace of mind, money, and time that they’d have wasted dealing with the side effects of data breaches that have become an everyday thing is a much higher cost.

Is brand identity a concern?

Having software built and tailored to the exact needs of an enterprise makes it easy to integrate brand identity into the UI. Most commercially available tools don’t give users the freedom to change the UI colors, icons, and other graphics features. This means all users essentially have the same interface as everybody else using the same software. 

If brand identity matters to a company (and it should), then they might have to build the software internally so that they have the flexibility of integrating every aspect of their brand into the software. This becomes even more important if the software is customer-facing because differentiating their brand from the rest is a crucial aspect for companies looking to stand out in the market. 

Is the developer of the software a competitor?

If the organization in question is a software development business themselves, they’ll most likely opt to build their own custom software especially in cases where the programs required profit or were built by a company they compete with. For instance, if the company happens to exist in the same industry as a company that makes accounting software, using a competitor’s app to handle accounting tasks will put their company at risk of losing a competitive edge. 

For this reason, most big tech companies end up custom building the tools they use for their day-to-day tasks because they can’t trust those built by their competitors. If Facebook (or Meta) wants a remote collaboration tool, they’ll likely not use Google Meet because Google is one of their major competitors. In such a scenario, they’ll either opt for other companies that they don’t compete with or build their own tool that’ll serve their purpose. 

Choose Wisely

Building custom software internally has several advantages over using commercially available tools. However, every company should take the time to weigh the pros and cons of going with any option for their unique cases. For some, out-of-the-box solutions will meet or even exceed any current needs while others require totally customizable options.

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