Building vs. Buying an Application

The software build vs. buy question has been around since the first lines of code were written and software applications were packaged up for purchase.

Although the decision whether to build or buy an application can be daunting and complicated, it doesn’t have to be. Narrowing the decision down to a couple of key points can make the decision relatively easy and clear.

Determine Application Value First

When initially thinking about a new application for your business, don’t give any thought to whether you will build or buy. Don’t start looking at options until you’ve clearly defined the value of the application to your business. Virtually every business needs core applications on which to run. Applications for accounting, customer relationship management (CRM), and project management are some examples of fundamental applications. We’re not talking about these types of applications that have clear business value and a lot of off-the-shelf, buy options.

What we are talking about is those applications that have significant operational and financial value to your business that are unique to your business. These types of applications can certainly be core to your business, but they are unique enough to your business that building an application is a viable alternative to buying.

Determining application value is an assessment of the impact an application will have in creating efficiencies to reduce costs or providing customers with something to increase revenue. The greater the value and impact of an application, the more you should consider the building of an application. You could view the assessment of an application’s value as a return-on-investment (ROI) exercise, but this really happens after you have begun to get proposals to build the application.

Process Alignment

Sometimes the building of an application is for the purpose of connecting other applications together or extending a purchased application with additional features and functionality.

More often we see clients that have a need to address a specific process efficiency or customer need that warrants the consideration of building an application. The success of any application is in large part due to how effectively the application and business process align. An application that you develop is almost always going to be better aligned with your business processes and user expectations. An application you purchase is almost always going to be less aligned with your business processes, which means you either have to customize the application or modify your processes. (When we reference buy or purchase, it encompasses all manner in which applications can be purchased including boxed software, downloadable software and online subscriptions.)

The consideration of how much you would have to customize a purchased application or change your business processes, and the associated effort and cost for each, is an important decision point when comparing the effort and cost to develop a custom application.

Apples to Apples Is Unachievable

The ideal situation is you can compare an application to purchase with having one developed to your specific needs. In our experience, this ideal situation rarely, if ever, presents itself. The development of an application to your specific needs is almost always going to make an apples to apples comparison with an already available application, a fruitless (pun intended) effort. We’ve seen companies get frustrated trying to force a direct, functional comparison between an application they can purchase and one developed specifically for their needs. If the application that can be purchased doesn’t hit the mark, then the custom application will always be a better functional fit. This is why you need to start with the value and impact of the application.

If You Build

Work with an application development firm that has the experience and expertise to not only design and develop the application, but that can also help you with the business and process issues around developing the application. Business and process issues you’ll want to lean on a partner to help with might include a rollout plan, a support plan, and pricing if you are developing the application as a product to sell.

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Ryan Frederick is a Founder and product person at heart. Ryan has had the privilege of being part of starting and growing several software and service companies. He has helped companies grow from inception to viability, through to sustainability. During the evolution of these companies, Ryan has served on company boards and been instrumental in capitalization activities. He has also helped companies to expand to international markets. Ryan combines a unique blend of business acumen and technical knowledge having originally been a developer who migrated to the business side. He now helps companies build great software products and solve data challenges for competitive advantage as a Principal at the product and data consulting firm, AWH. Ryan is an active angel investor, mentors and advises entrepreneurs and startups, as well as corporate innovation leaders. He launched a non-profit workforce development program to train under-employed adults on digital skills called i.c.stars. Ryan has authored a book on increasing the odds of success in creating products, being a Founder and starting companies by achieving FLOW that is to be released in the next few months. Ryan speaks frequently about the product, Founder, and startup journeys.