Almost all businesses today rely on software to help fuel their growth. Whether it’s a web conferencing tool, ERP (Enterprise Resource Planning) system, or order automation platform, software solutions can add significant value and increase efficiency for most organizations.
Table of Contents
One of the reasons why so many businesses are increasing their use of new software systems is because of how accessible they are. It doesn’t matter what industry you’re in – there are countless third-party solutions available that are easy to subscribe to and integrate into your business ecosystem.
However, while many companies have gotten used to the idea of subscribing to multiple tools and services to help drive their business, at some point, many need to decide on whether or not it’s more efficient to build their own system.
Before you decide on whether developing your own software tools or using third-party applications is the best option for you, there are some important things you should consider.
Common Reasons Businesses Rely on Third-Party Tools
Most businesses require several moving parts to keep operations running smoothly. While hiring more employees can help to manage everything, many staff capabilities will be limited by the environment they’re working in and the available tools they have at their disposal.
To maximize the output and value of their staffing resources, many businesses will use various third-party tools. Below are some of the most common use cases that these solutions can support:
- Various IT Services – Most businesses have already transitioned a good portion of their business to digital. This includes companies making use of cloud-based technologies or more advanced security protocols. Third-party tools can be used to support this digitized framework, enabling businesses to take advantage of data storage and backup, network monitoring solutions, and various cybersecurity protections.
- Accurate Financial Management – Managing business taxes, employee payroll, demand forecasting, and expense tracking is often a complicated process and highly time-sensitive. Third-party solutions can be used to help support accounting professionals with improved automation and increased accuracy when handling these important business processes.
- Improved Team Communication – With many companies more willing to support remote-working teams, investments in new tools and communication solutions have become critical. There are near limitless amounts of third-party applications designed to streamline communications between employees and their departments while helping to track work progress from everyone contributing to company-wide projects.
Pros and Cons of Developing Software In-House
While there is no shortage of business tools or solutions that organizations can source through third-party vendors, at some point these tools may not provide the same level of value as having a custom-build solution.
Rather than needing to rely on an external vendor to build and maintain tools critical to running a business efficiently, you always have the option of developing your own solution in-house – making zero sacrifices on form and function.
However, it’s important to understand and balance the pros and cons of taking this approach:
Pros
Fully Customizable Features
Just like when renovating a home, the primary benefit of creating your own company software is that it can be completely customizable to your unique needs. You’ll have full control over the user interface, integration options, and overall scale and capabilities from the ground up.
Better Long-Term ROI
Constantly subscribing to third-party tools can eventually lead to significant costs over time. While custom solutions require larger upfront investments, the system will belong to you, helping you avoid long-term subscription or licensing fees.
Maximum Utilization of Features
One of the problems with third-party tools is that they’re typically designed to meet the needs of a broad market. This means that they may often have features your business never uses. Custom software gets rid of these issues and allows you to create features you’ll actually use, allowing you to get full value out of your solution.
Cons
Higher Upfront Costs
Unfortunately, software development projects can require significant upfront investments in resources. This means that in most cases, it will take some time before the company can see tangible returns from its software projects.
Time-Consuming Development Periods
One of the main downsides of developing your own software solution is the time it takes before you can start benefiting from it. Third-party tools are highly accessible and typically good to use out of the box. This differs from a custom solution that can take several months before being ready for testing and use.
Tips for Choosing Between Developing a System or Subscribing to External Tools
Below are some tips you can follow to help you decide whether or not building custom software is right for you.
- Know Your Budget – Just like when you’re choosing a home remodeling project, you’ll want to consider how much you’re willing to spend upfront for a business solution. It may make more sense to use a third-party tool until you’ve identified exactly what you need and received quotes on a custom development project.
- Consider the Amount of Control Needed – While third-party tools may be more affordable upfront, this often comes with the sacrifice on how customizable they can be for your business. If you’re too restricted when using external tools to manage elements of your business, it may be time to consider a custom project.
- Research Tools Ahead of Time – Before you rush into developing your own software, be sure to research all available third-party options. This can save you from needing to make major investments into a solution that already exists in the market.
- Balance Your Short and Long-Term Needs – You’ll want to consider how long a custom software project can take before it’s finished. If you need a solution for your business right away, third-party tools can be the right option – at least temporarily until you’re able to allocate resources to a longer-term development project.
- Understanding Your Staffing Restrictions – Think about your ability to manage an in-house project. If you don’t have the necessary staffing resources to handle in-house development, you’ll need to outsource your development team – which comes with added expenses. Think about the feasibility of this scenario over using an out-of-the-box tool.
Make the Right Decision for Your Business
There is no definitive answer as to whether or not your business should build a software solution in-house or continue to rely on third-party tools. It will depend entirely on your own needs, budget restrictions, and your in-house team’s capabilities.
However, by considering the points discussed above, you’ll be sure to make a smart decision that gives your business the automation and efficiency it needs to continue growing sustainably.
Entrepreneur, technologist, and passionate business leader sum up the core of Dalip Jaggi, co-founder of Revive Real Estate, a PropTech company with a goal to democratize house flipping. Since its 2020 inception, Revive has since become the smartest solution for homeowners to maximize their home’s sales value across the nation.
No Comments
Leave a comment Cancel