Part 2: To build or buy new software?
In the second part on building or buying software (originally posted on the Fleetio blog, we’ll explore some specific things to think about and look for when purchasing software or building it yourself. The software game is constantly changing and there are many things to consider. Hopefully this post will help get you started!
First, let’s highlight the pros and cons of each argument:
Building software from scratch
Pros:
- 100% control over development, features and functions
- Better visibility into cost of development, support and maintenance
- Leveraging existing infrastructure or resources (if you have an IT or development team)
- Control over training and support of the system
- Taking advantage of tax breaks for depreciation
Cons:
- Higher cost in human capital and resources
- Dedicating team members to managing and maintaining software
- Lack of focus on strategic focus
- Additional costs for staffing support team, buying hardware, security, storage, etc.
- No economies of scale — 100% of the burden will fall on your company
Buying software from a partner
Pros:
- Niche software providers have a lot of domain expertise and leverage customer feedback
- Outsource technical learning, knowledge and training
- Maintain focus on company core competencies and strategy
- Lower cost of development and maintenance
- Reduced overhead by outsourcing infrastructure
- Take advantage of economies of scale
Cons:
- Loss of 100% control over development, features and functions
- Less visibility into software operations, maintenance activity and support activity
- Entrusting software adoption and usability to a third party
- No tax breaks for capitalization in SaaS
Now that we’ve reviewed some pros and cons, let’s look at some specific things to look for when making a software decision:
What’s required to build
The following is a list of things that might be required to manage your own software solution internally:
- Hardware — Servers, network connectivity equipment, associated costs
- Recovery — Backup systems, disks, disaster recovery planning
- Software — Security, support, maintenance, etc.
- People — Management, IT, support, training, DBAs, system engineers, etc.
- Data — Space for storage, racks, bandwidth, power, cooling, etc.
- Tools — Ticketing system, monitoring, reporting
- Service levels — Uptime, operational guarantees, hours of service
- Documentation — Best practices, training documents, reports plus keeping all up to date
What to look for in a partner
- Proven — Track record of performance, number of customers, scale
- Reliable — What type of SLAs are in place? What does support look like? Are they a vendor or a partner?
- Comprehensive — How much can be accomplished using their tool? What’s included in the cost?
- Focus — Are they focused on SaaS delivery in your specific market or niche?
- Cost — Upfront, ongoing, cost of time and training; are add-ons included?
- Feel — A lot can be said for how you feel about the partner. Do you trust them? Do you think they have your company’s best interest at heart?
Hopefully, these ideas will help you be better prepared the next time you evaluate a software purchase or a build a software of your own.
Choosing the right partner can definitely result in cost savings, better scaling capabilities, increased flexibility, guaranteed service levels and an evolving solution set.
Good luck and let me know if you have any thoughts or questions!
