The explosion of third-party apps and ‘off-the-shelf’ software-as-a-service (SaaS) has made it easy to find a tool for every problem, but that convenience comes with a cost.
The heightened risk of data loss or cyberattack, the struggle to integrate different tools, and the combined cost of several solutions may add up to more than a consolidated approach.
Building a solution in-house also creates challenges – it may not adapt over time, if you can engage developers at all in a scarce labour market.
So, how should a small business decide its best option? There are four key questions for businesses weighing up buying a solution or building one in-house.
1. How unique is your problem or need?
Some businesses use processes and technologies to solve a unique problem in a way unique of its competitors.
Does solving this ‘unique problem in a unique way’ give a competitive advantage? If the answer if “yes”, then it may be worth investing in a bespoke solution.
Off-the-shelf technology can seem convenient but for some solutions, there isn’t an app for that. Even if a dozen different SaaS apps could be coerced into playing together to deliver results, integration becomes a burden.
2. Will your technology need a pool of skilled labour?
Finding personnel who can work with advanced systems is a win, but its rarer to find the few familiar with unusual software. The same goes for third-party platforms, where the more unusual your software stack is, the less likely you are to find someone who knows how rare application A interfaces with unusual application B.
People are just as important as the technology and you need to consider not only immediate capabilities but how knowledge will be shared and retained.
3. How important to your business is best practice?
Small business must determine whether to focus on best fit or strive for best-in-class.
Certain technology might be superb for one function but be less stellar for others. Integrating them with other solutions can create overlaps or redundancies.
Finding the best fit can take time, and if there’s one thing business leaders don’t have, it’s time. Pitcher Partners’ recent Business Radar report finds leaders already fear they are stuck in the weeds on operational matters.
Beyond best fit and best-in-class is a third option: building on an existing platform. Open-source programs can be adapted to suit a small business’s specific needs, often at a lower cost than building a new platform.
4. What value do you put on your software investment?
A final question for small business that can sway the build-or-buy decision comes down to cost, and not just the price you will pay for the technology.
What is the cost to your business of software that underperforms? What value can be captured if you have a more efficient or streamlined technology stack? How much will you need to invest in training and development? And how would a potential buyer of your business assess the value of your decision?
A poor score when a prospective bidder undertakes their technology due diligence could sink a deal, while solid, proprietary software can have value as intellectual property.
Look closely and get advice
Investing in technology is clearly necessary but the fear of making an expensive mistake can leave business owners too afraid to act.
Taking a deep dive into the business’s current technology strategy ensures leaders are fully informed to help tackle the build-or-buy question.
