Build vs. Buy Software – Four Questions to Consider Before Deciding On Professional Services Software

The modern professional services organization relies on software that is purpose-built for their needs, but when deciding which technology is most appropriate for them, some organizations, particularly those with plenty of in-house expertise, consider creating custom-built software to meet their specific requirements.

Building a homegrown solution is almost certain to cost more than buying one, both in the short and longer term due to the amount of work needed to both create and maintain the software. But will other factors, such as getting the best fit for the business, justify the expense?

If your professional services organization is considering whether to purchase a pre-existing professional services software solution or create its own home-grown software solution, here are four questions to consider before deciding which route to go down.

1. What is the Start-Up Cost?

Financial investment is a major factor in the build vs buy decision, and companies should start by comparing the cost of developers’ time to the cost of a software license that will need to be paid at the start of software development.

One of the major expenses in building a homegrown software solution is the cost related to the amount of hours needed for developers to simply research and understand the requirements for a robust solution. This is before anything is even created. In addition, the amount of time spent developing this solution also means the amount of time not being spent on billable hours. A homegrown solution is, afterall, created by your own employees. This means that utilization hours related to these resources will likely drastically decrease, impacting not just how much you’re spending on software development, but how much less you’re making from clients.

In addition, your professional services business will need to determine whether this homegrown solution will be built on-premise or will be a cloud-based application. On-premise software requires buying hardware to run the program while a cloud app will require recurring payments for cloud storage.

Purchasing a license for a pre-existing software solution will not require using your own resources to develop the technology and cloud storage will most likely be included within the price of purchase. The total cost will depend on the amount of team members using the solution, so factor this into your start-up cost.

2. What are the Operational Costs?

After you have created or adopted your new software solution, who will provide support and how much time will the system take to administer? These are the operational costs of technology, which will result from either your team running the software or the team with the software company you’ve purchased it from.

During evaluation, it’s important to determine how much time it will take to administer the solution after it has been implemented. This must be determined for both home-grown and bought solutions. Will it take half of a person’s time per year, require the support of a full-time person, or maybe even need a small team to run?

An easy way to determine the operational costs of existing on-market solutions is to check reviews and get references from other businesses that already use the system. While in contact with a representative from the software company, you can simply ask how much effort it will take to run.

During operational cost evaluation, consider the following elements:

• Will users of the system require technical support?
• Will successful software implementation require training, change management, or adoption initiatives? How much will this cost?
• Does the software need customization or enhancements to suit your business? Who will develop these features and how much developer time will that take?
• What customer support is supplied by the vendor and is this bundled with the purchase?

When building a home-grown system, it is important to include the various operational demands into the overall cost. A major differentiator in build vs. buy is that a software provider will typically offer customer support. For a home-grown system, this will need to be supplied by your own team. Will the development team who built the software be available to provide user support? How much will that cost?

Another consideration is the opportunity cost. Tying up software developers and analysts from your IT or consulting teams to create, enhance, and maintain software means they are less available for other internal work or for more lucrative external projects. Also, if it takes three times as long to build a solution versus buying one, then what will the effect of that delay be on business performance?

3. What are the Business Requirements?

Procuring new software, whether by buying or building it, requires a thorough investigation of what the requirements are. It is sensible to check these against existing solutions that are already available because an existing solution will usually cost less.

One reason for deciding to build homegrown systems derived from your business requirements may be because business leaders conclude there is nothing out there that fits the bill. This may be because their operational processes are very different from those of other similar businesses, which would force massive customizations to any pre-existing solution. Some customization is expected for many solutions, but major overhauls are not just expensive, but can cause issues with the technology that break down over time.

During requirement evaluation, ask yourself, why are our processes so different? It may be that working this way creates a competitive advantage. But sometimes individual businesses’ unique processes have developed over many years, in part in response to limitations of the existing technology they use.

Look at how successful businesses in your sector operate. Rather than focusing on what the existing requirements are of different functions within your business, focus on the outcomes you want to drive. If your business currently has very different processes than other similar businesses, consider what the cost is of working this way and if it’s justifiable.

Will continuing down this road create extra administrative burdens? Could introducing new software be an opportunity to overhaul and improve the way the business works today? Choosing between homegrown and pre-existing software can change the way your business works forever.

4. How “Future-Proof” Will the Solution Be?

The solution you choose may integrate well with other software your business uses now, but how well will it work years from now?

Some businesses look at building their own solution because they want to control all aspects of it — deciding what enhancements are introduced and when, and tailoring integrations with other apps or solutions used by the organization. They may also want to create a tightly-coupled integration with other apps or solutions the business currently uses.

But one thing to consider is that in a rapidly-changing business world, flexibility is important. In two years’ time, you may decide to change one of the systems that you use. Are the new technological solutions you are adopting flexible? Do you think they will be able to grow alongside your business?

Technological solutions that can integrate smoothly with a wide range of other software applications will allow the business to adapt more easily to changing conditions. In addition, future-proof technology will work as business processes change and usage increases as the company grows.

Creating a wholly-owned home-grown solution enables the business to have complete control over what is built in the short-term. But this may be less true in the long term. If the developers who built it move on, then it may not be easy to continue enhancing and developing the system. The tightly-coupled solution that may have seemed so perfect when it was built may be limiting and inflexible two years down the line.

Buying a solution from an established software company that has a long-term development program means your business won’t have sole control. But technology companies today work closely with their customers and establish customer communities. These customers influence the future direction of the product, provide references and reviews, attend customer conferences, and ask for product enhancements that not only meet their needs but end up benefiting other customers. Choosing a software vendor who provides a solution for the long term may give you the best chance of relying on a future-proof solution.

Finding the Right Software for the Future of Your Professional Services Business?

Even if your company has deep technological expertise, there is rarely a strong case for building a home-made solution. The Kantata Professional Services Cloud is designed to support the unique needs of today’s businesses without the need for costly customization and onerous administrative overhead. With purpose-built technology designed to elevate performance throughout the professional services project lifecycle, your business can focus on clients, improve revenue, meet your unique business requirements, and future-proof your organization.