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Build vs. Buy Enterprise Software: The Ultimate Decision Guide

Build vs. Buy Enterprise Software: The Ultimate Decision Guide

Build vs. buy enterprise software is a critical decision that shapes how effectively your business operates. Choosing to build software gives you unmatched customization and scalability, making it perfect for businesses with unique requirements or long-term growth plans. In contrast, buying off-the-shelf software ensures faster deployment and lower upfront costs, ideal for businesses seeking immediate solutions.

Did you know that companies spend an average of 7-10% of their revenue on software solutions? Additionally, organizations using tailored enterprise software report a 50% boost in operational efficiency over time. Pre-built software, meanwhile, can cut deployment time by as much as 70%, saving valuable time for businesses working on tight schedules.

At PeytoSoft, we bring 15+ years of expertise in enterprise software development, offering both custom software builds and seamless integration of pre-built solutions.Cost-efficiency, scalability, and on-time delivery-tailored to your business needs. Let us deliver the right solution for you!

What Does “Build vs Buy” Mean?

The “Build vs Buy” decision is one of the most critical choices businesses face when it comes to enterprise software. It’s about deciding whether to develop a custom-built solution tailored to your specific needs or to buy an off-the-shelf software that is ready to use.

When you choose to build software, you are essentially creating a solution from the ground up. This allows for full customization, giving you the ability to design the software exactly as you need it. You get to control everything-from the features, to the design, and even how it scales as your business grows. For example, a company with complex needs or unique processes may find building the best option because it ensures the software adapts perfectly to their requirements.

On the flip side, buying software means you’re purchasing a pre-made solution that is ready for use right out of the box. It’s usually faster to deploy, and it can be significantly less expensive upfront compared to building. Off-the-shelf solutions are typically designed to cater to a wide range of businesses, so they may not be as customizable but can still offer robust functionality for common business needs. Many small to medium-sized businesses prefer this route because it offers speed and cost-efficiency. In fact, according to a 2023 report by Gartner, over 60% of businesses prefer buying off-the-shelf software due to the lower initial costs and faster deployment times.

While both approaches have their merits, the key difference between building vs buying is in the trade-off between customization and control (when you build) versus speed and affordability (when you buy). Understanding this difference is crucial to making the right decision for your business.

Advantages of Building Enterprise Software

When deciding whether to build or buy enterprise software, one of the most significant factors to consider is the customization that comes with a bespoke solution. Custom-built software gives you complete control over the design, features, and functionality. Unlike off-the-shelf software, which might offer generic solutions, a custom-built system is tailored to meet your specific business needs. You can design workflows, integrate with existing tools, and ensure the software does exactly what your business requires. This level of control can make a huge difference, especially for businesses with unique requirements. According to a Forrester study, 40% of companies cite customization as one of the top reasons for building their software solutions, enabling them to meet the precise needs of their operations and clients.

Another key benefit of building enterprise software is scalability. Custom software is designed to grow with your business. As your company expands, the software can be easily adapted to accommodate new users, larger volumes of data, and more complex processes. Scalability ensures that your system doesn’t become obsolete as you grow, saving your business time and money in the long run. In fact, a McKinsey report found that companies with scalable IT systems are 60% more likely to outperform their competitors in terms of revenue growth. By building software from the ground up, you create a system that is as flexible as your business needs, able to handle increased demand without disruptions or limitations.

Lastly, a custom solution offers you a competitive edge. By investing in a system designed specifically for your business, you gain unique features that off-the-shelf software can’t offer. This allows you to stand out from competitors, streamline operations, and offer a better experience to your customers. A Harvard Business Review article revealed that companies with customized software have a 40% higher chance of outperforming their competitors by being more efficient and responsive to market changes. Custom software allows you to implement innovative ideas that align with your strategic goals, giving you the agility and control needed to stay ahead.

At PeytoSoft, we have over 15 years of experience in creating enterprise software solutions that are reliable, scalable, and tailored to our clients’ specific needs. We’ve seen firsthand how a custom-built solution can transform a business, driving greater efficiency, reducing operational costs, and delivering competitive advantage. Whether you’re looking to build from scratch or enhance an existing system, our team of skilled developers is here to help you create the perfect software solution for your business.

Advantages of Buying Enterprise Software

When you’re considering enterprise software for your business, one of the biggest factors that may steer your decision is the speed of implementation. Buying software off-the-shelf means you don’t have to wait for long development periods. These systems are already designed, tested, and ready to be used almost immediately. For example, 75% of companies report that using pre-built software allows them to start seeing results in a matter of weeks, not months. This is a significant advantage, especially when you need a solution quickly to maintain your competitive edge in a fast-paced market. You don’t have to wait for a lengthy development cycle to get started.

Another big advantage of buying enterprise software is its cost-effectiveness, especially for small and medium-sized businesses. With a lower upfront cost, you don’t need to make a large investment in software development. According to a study by Gartner, businesses that choose off-the-shelf software can save up to 50% compared to custom-built software. This makes it an attractive option for those with tight budgets or who want to avoid the large financial risk of building a system from scratch. Instead, you can pay for what you need and avoid the cost of ongoing development and maintenance, which can become expensive in custom solutions.

One of the main reasons businesses choose to buy software is the assurance that they are getting proven solutions. These systems have been thoroughly tested by both the developers and other companies before they reach you. For example, 85% of organizations that use proven enterprise solutions report that these systems meet their needs without the extensive issues often faced with custom-built options. When you buy off-the-shelf software, you’re not only benefiting from the technical features but also from a wealth of real-world feedback, which helps ensure reliability and stability.

At PeytoSoft, we understand that every business has specific needs, even when using ready-made solutions. That’s why we offer expert services to integrate or customize off-the-shelf tools to better suit your operations. Whether it’s integrating an existing solution into your infrastructure or fine-tuning it for better performance, we help you make the most of the software you purchase. 90% of businesses using customized enterprise software report increased satisfaction because it better fits their unique workflow and processes. By choosing PeytoSoft, you can have the best of both worlds: a proven solution with the exact customizations your business requires.

Key Factors to Consider When Deciding: Build vs Buy Enterprise Software

When deciding whether to build or buy enterprise software, it’s important to consider various key factors that will affect the success and efficiency of your business. Each option comes with its own set of advantages and challenges, and understanding these aspects will help you make a more informed decision. Let’s explore the most crucial factors that should guide your choice.

Budget: What’s the Cost of Ownership Over Time?

Cost is often the most immediate concern for any business considering custom software development versus buying a ready-made solution. Building software from scratch involves not only the initial development costs but also ongoing expenses for maintenance, updates, and support. According to a study by Standish Group, around 50% of software development projects go over budget, making it essential to consider long-term costs.

On the other hand, buying software generally involves a lower initial cost. However, you may encounter recurring fees such as licensing, subscriptions, and upgrades. For example, the annual subscription for enterprise software can range from a few thousand to hundreds of thousands of dollars depending on the software’s scale and the number of users.

Choosing between building and buying comes down to whether you’re looking for a long-term investment or a solution that fits a short-term budget. If the solution is a core part of your business, investing in building custom software might offer better value in the long run, despite the higher upfront costs. For companies with tight budgets or quick needs, purchasing an off-the-shelf solution can be more cost-effective.

Timeframe: How Soon Do You Need the Solution?

Another crucial factor to consider is how soon you need the software to be up and running. Building custom software takes time-sometimes several months or even years-especially if your requirements are complex. According to the Project Management Institute, software development projects that are built from scratch have a failure rate of around 30%, primarily due to delays in delivery and unclear requirements.

If your business needs a solution immediately, buying software will likely be the faster route. Off-the-shelf software is ready to be deployed, sometimes even within a week or less. For example, solutions like SAP or Salesforce can be installed and running much faster than waiting for a custom-built system.

However, if your business can afford to wait and needs a highly specialized solution, building custom software gives you the flexibility to create a system that matches your exact needs. Custom development also allows for future scalability, so your solution can grow with your business, avoiding the need to switch platforms later.

Business Needs: How Complex Are Your Requirements?

Understanding the complexity of your business needs is crucial when deciding whether to build or buy. If your business requirements are very specific and unique, building your own software can be the best option. Custom software development allows for full customization of features, functions, and workflows, ensuring that the solution fits perfectly into your business operations.

For example, if you run a highly specialized manufacturing business, you may need an ERP system that integrates deeply with your production line, custom logistics, and supply chain operations. Off-the-shelf solutions may not offer the necessary level of customization or integration. In fact, according to a Gartner survey, 78% of enterprises that use custom enterprise software reported higher productivity and more streamlined operations compared to those using off-the-shelf solutions.

If your business requirements are more standardized, and you don’t need a bespoke solution, buying software can be a more efficient option. Many businesses find that off-the-shelf enterprise software meets their core needs-whether it’s for CRM, HR, or accounting functions-without the need for custom development.

Resources: Do You Have In-House Expertise?

Building custom software requires significant in-house expertise. Do you have a team of skilled developers, architects, and project managers who can handle the project? If not, you may need to hire additional talent or work with an external partner. According to the Harvard Business Review, hiring top talent in software development costs businesses an average of $130,000 per year per developer.

On the other hand, buying software eliminates the need for this level of internal expertise. If your team lacks the resources to manage a full-scale software development project, purchasing a solution may be the best option. Many businesses rely on third-party vendors for maintenance and support rather than building out their own internal teams.

However, if you don’t have in-house resources but still want to build a solution, working with an experienced software development partner like PeytoSoft can be an effective alternative. We can help you at every stage-from development to cloud migration and production support, ensuring that you have the expertise needed to build the right system for your business.

Here’s a table with percentages to provide more context on build vs. buy enterprise software based on different factors. This will help compare the costs, timeframes, and other aspects that affect your decision.

Factor Build Software Buy Software
Initial Investment 50%-100% higher than buying Lower initial cost
Time to Deploy 6 months to 2 years 1 week to 3 months
Customization 100% custom to your needs Limited customization (10%-50%)
Maintenance Costs 10%-20% of development cost/year Annual licensing fees: 5%-15%
Ongoing Support In-house resources needed Vendor support included
Risk of Over Budget 50% of custom projects exceed budget Minimal risk
Scalability Highly scalable Limited scalability
Long-Term Cost Cost-effective after initial years Higher long-term due to licensing
Business Fit Best for unique needs (70%-100%) Best for common needs (40%-70%)
ROI (Return on Investment) Can be higher (30%-60%) in the long run Typically lower (10%-30%)

This table helps you understand the percentage differences between building and buying enterprise software. Depending on your business needs, resources, and goals, one may be more beneficial than the other.

Build or Buy in Action: A Real-World Example

Imagine you are the Chief Technology Officer (CTO) at a fast-growing e-commerce company, EcoGoods, that specializes in environmentally friendly products. Your business has been growing rapidly, and as a result, your current inventory management system is no longer sufficient. You need something that can handle increased demand, multiple warehouses, and real-time updates for your inventory across the country. The question is: should you build a custom system to fit your exact needs, or buy an off-the-shelf solution?

Option 1: Building a Custom Solution

EcoGoods decides to build a custom inventory management system, knowing that their business has unique needs that can’t be met by an off-the-shelf solution. They want a system that not only tracks stock levels across warehouses but also integrates with their supply chain, provides real-time syncing, and can predict demand based on past sales trends.

The company hires a development team with expertise in Spring, Spring Boot, and ReactJS for the front-end interface. The team spends several months designing and developing the software, ensuring it integrates with EcoGoods’ existing systems for order management and shipping. After deployment, the system is able to handle multi-warehouse management, real-time updates, and predictive analytics, which has a direct impact on stock efficiency and sales forecasting.

The key advantages of building in-house:

  • Customization: EcoGoods’ system is tailored to their specific needs, including integration with their supply chain and advanced forecasting tools.
  • Scalability: The system is built to scale as EcoGoods grows, ensuring it can handle higher volumes of orders without performance issues.
  • Competitive Edge: With features like real-time syncing and predictive analytics, EcoGoods gains a competitive advantage over companies using generic software.

However, it wasn’t all smooth sailing. According to a report by Forrester, 62% of companies cite cost overruns as one of the top challenges in custom software development. In EcoGoods’ case, the project took longer than expected and exceeded initial budget estimates by 25%. But the system was fully customized to meet their needs, and the ongoing support from PeytoSoft ensured any issues were quickly addressed, making it a long-term success.

Option 2: Buying Off-the-Shelf Software

After some initial research, EcoGoods also considers buying an off-the-shelf inventory management system. They look at a well-known software solution that boasts real-time inventory tracking, multi-warehouse management, and easy integration with shipping carriers. The software is ready to go in just a few weeks, and EcoGoods could be up and running with little to no downtime.

The key advantages of buying:

  • Quick Implementation: The software is ready to deploy in a matter of weeks, which means EcoGoods can start using it right away.
  • Lower Initial Cost: The software is much cheaper upfront, with $15,000 in initial licensing costs compared to the estimated $50,000 required to build custom software.
  • Proven Track Record: The off-the-shelf solution has been used by thousands of other companies, so it’s relatively low-risk.

However, there are some significant drawbacks. The solution doesn’t perfectly align with EcoGoods’ business needs. The company has to make do with standard features, and while the software integrates with popular shipping carriers, it doesn’t support their custom supply chain management system. As a result, EcoGoods has to spend additional money on custom integration-another $10,000.

Additionally, the software is limited in terms of forecasting and predictive analytics. It doesn’t have the advanced features EcoGoods was hoping for, which means the company is forced to rely on manual workarounds, causing inefficiencies in their workflow.

According to QuickBase, 56% of businesses cite lack of customization as the primary disadvantage of buying software, and EcoGoods finds this to be true. Over time, they realize that the software does not scale as effectively as they hoped. As their business continues to expand, the limitations of the system begin to show, and they are faced with the decision to either switch to a better solution or invest more in customizing the software.

How PeytoSoft Can Help: Bridging the Gap Between Build and Buy

At PeytoSoft, we understand that every business has different needs, and choosing whether to build or buy is a critical decision. In EcoGoods’ case, we would have been there to assist throughout the journey, no matter which direction they chose.

If EcoGoods had chosen to build the custom system, our team would have worked alongside them to design and develop the software using the best technologies available, ensuring that the system meets their unique requirements. We would have provided ongoing production support to ensure the system continues to run smoothly, and our quality assurance team would have made sure it was secure, user-friendly, and scalable.

If EcoGoods had opted to buy the software, PeytoSoft would have helped with customization and integration, ensuring the purchased software fits seamlessly with their existing systems. Our cloud migration expertise would also ensure the software is running on the most reliable, cost-effective infrastructure possible, minimizing the risk of disruptions.

The Takeaway: Making the Right Choice

In the end, whether you choose to build or buy, the key is understanding the long-term needs of your business and choosing a solution that will give you the best value. For EcoGoods, building a custom solution gave them the flexibility, scalability, and unique features they needed, despite the higher upfront cost. However, buying software would have been a quicker, less expensive solution if they didn’t require the same level of customization.

At PeytoSoft, we provide the expertise to help businesses like EcoGoods navigate these decisions. Whether it’s developing a custom software solution or helping you integrate off-the-shelf software, we’re here to ensure your business gets the best value and the highest quality solution, delivered on time and within budget.

When Should You Build Enterprise Software?

If your business has unique needs that cannot be met by existing software solutions, building your own software might be the best option. Custom-built software allows you to tailor everything to your exact requirements, whether it’s special functionality, complex workflows, or unique integration with other systems. According to a report by Gartner, custom software is preferred by 43% of companies that need something highly specific that can’t be solved with generic solutions.

Building software also gives you the scalability you need for future growth. As your business expands, you’ll want a solution that can grow with you, not one that becomes outdated or too costly to scale. A custom solution can be designed with scalability in mind from the start, allowing you to adjust the software as needed. For instance, Salesforce, a custom CRM solution, saw a 30% increase in business growth within a year of implementing a scalable custom system that allowed them to integrate new features and tools based on business needs.

Finally, building software means you have full ownership of the product. You don’t have to rely on third-party vendors to make changes or updates. This control can lead to more security, flexibility, and long-term cost savings. According to a study by Harvard Business Review, businesses that build custom software often report a 25-30% improvement in operational efficiency because the software is designed to work exactly as needed, without unnecessary features or limitations.

When Should You Buy Enterprise Software?

There are also clear situations where buying off-the-shelf software is the smarter choice. If your business has a limited budget or a tight timeframe, purchasing software can be the most cost-effective and fast solution. According to a survey by Capterra, 58% of businesses with fewer than 50 employees prefer buying software rather than building it because of budget constraints. Purchasing software means you avoid the upfront costs of development, ongoing maintenance, and the long timeline of building custom solutions.

If your business follows standardized processes and your needs don’t require complex or custom features, buying off-the-shelf software can be ideal. Many software solutions already come with a wide range of features that suit most businesses’ needs. For example, software like QuickBooks or Salesforce provides a comprehensive set of features that work for a wide range of industries without needing significant customization.

Immediate usability is another major advantage of buying software. If you need a system that is ready to use right away, buying can save you months of development time. You can have it up and running in just a few days or weeks. According to TechJury, about 60% of businesses report that they go with pre-built software because it is easier and quicker to deploy, especially for industries like retail, healthcare, and finance that need to adapt quickly.

Final thoughts

When it comes to deciding between build vs buy enterprise software, the choice ultimately depends on your unique business needs, budget, and timeline. Both options offer distinct advantages, whether you’re looking for a custom solution tailored to your needs or a ready-made system that can be implemented quickly.

At PeytoSoft, we understand the complexities of this decision. With over 15 years of experience in enterprise software development, cloud migration, and system automation, we can help you navigate the best path for your business. Whether you decide to build or buy, our dedicated team will ensure that you get the highest quality product, on-time delivery, and the best value for your investment.

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