Today businesses need more than a great team to run smoothly. Most companies rely on 3rd party software tools to get the job done. These can be everything from advanced ERP (Enterprise Resource Planning) solutions and financial management suites to task management platforms and automated security tools.
One of the main reasons companies subscribe to 3rd party solutions is because they are so accessible. Whether the business has 1 employee or 100’s, there are literally thousands of software solutions out there for all types of businesses that are easy to integrate and support multiple business functions.
But while 3rd party solutions can provide quick wins for growing businesses, many of these solutions hit a business value cap. This means over time they become less effective as the business grows and their needs change.
When that cap in value happens, businesses have two choices – subscribe to multiple software solutions at once or build their own in-house.
Why 3rd Party Tools are so popular
There are so many tasks and supporting workloads that most businesses have to manage on a daily basis. Most of these tasks are spread across multiple departments and teams to make best use of company resources.
But over time without the right tools in place, businesses will find they are wasting too much time on repetitive tasks and not getting the full value out of their staff members.
This is where 3rd party tools come in. Here are some of the reasons why subscribing to external software solutions has become so popular:
Highly Scalable IT Environments
Few businesses today don’t have multiple supporting business technologies. But not all organisations have the skillset or resources to manage their ongoing IT needs.
So more businesses are turning to managed service companies and SaaS (Software-as-a-Service) solutions to give them the scalability and cost control to manage their IT environments without the expense.
Simplified Accounting Processes
Many businesses have an accounting department in place to manage finances, payroll and various bookkeeping tasks. But managing all of these processes without the right technology in place is a hassle and prone to errors.
3rd party accounting solutions give businesses a way to add more structure and automation to their financial management processes.
Streamlined Communication
With so many businesses now having hybrid or fully remote working environments, communication across the organisation is key. But email and phone calls alone don’t cut it, especially when team members are in different time zones.
To help improve this situation, many businesses rely on third-party communication tools and task management solutions to help streamline workflows spread across multiple departments.
Advantages and Disadvantages of Custom Software Development
Even though subscribing to third-party software solutions is easy, and most businesses use this as a first step when improving their operational capabilities. But at some point these solutions don’t deliver on the value they promise to the business.
Some software solutions are designed and marketed as a “one size fits all” for businesses, but the reality is all cloud based options have limitations. Knowing this businesses should also know the pros and cons of taking software in house and building their own custom solution.
Advantages
Completed Customization Flexibility
The problem with most off the shelf software solutions is they are broad in scope and built within certain coding constraints. So the flexibility of third party solutions will be entirely dependent on outside developers.
But when you manage your own custom software design and integration you have complete control over how you customize the user interface and the flexibility you’ll have. This can be super valuable as you can dictate how complex or user friendly the software is and make it much easier to roll out internally.
Lower Long-Term Costs
Another reason businesses subscribe to third party solutions is cost, especially since many SaaS solutions allow businesses to subscribe to software on a month to month basis. But over time those monthly or annual subscription costs can add up big time.
When you build your own software solution the longer the software is used the higher the returns on the initial investment. Those long term savings can reduce Total Cost of Ownership (TCO) and give the business a valuable asset they can use for years to come.
Better Feature Use
Third party solutions come with a long list of features. But very few businesses can use every feature benefit. That’s where a customer software solution can be more beneficial.
Instead of being able to only use a portion of the software features you’re paying for, custom development projects let you decide which features to integrate.
Disadvantages
Higher Upfront Costs
Unfortunately custom software development comes with big upfront costs. These costs will depend on how much can be done in house versus needing to outsource certain elements of the project to outside teams.
Costs will also depend on the size of the project itself, with enterprise companies needing to invest anywhere from thousands to tens of thousands of dollars.
Longer Development Time
One of the biggest drawbacks of developing your own custom software is the wait time before you can use the solution. Depending on the size of your project this could be a few months to over a year before you can use the software.
In-House Development vs Ready-Made Software
So you’re wondering how to decide between buying from a third party or building your own? Here are the steps to follow:
Know Your Budget
Before you choose a solution you need to know all the costs involved. It’s no different than jumping into a kitchen remodel project. While the end result is always top of mind, you need to be realistic about what your business can actually afford.
The good thing about looking at third-party solutions is that costs are transparent and there are many tools to compare features. On the other hand you can also get quotes from custom software developers to compare costs between the two.
Consider the Importance of Control
You’ll also need to think about how important having some level of control really is to you. Third-party solutions are cost effective but rarely align with all business needs and have limited flexibility. If you’re still struggling to force a tool to work for your business and not the other way around, it may be time to explore the possibility of a custom software solution.
Break Down Your Short-Term and Long-Term Needs
Choosing the right software solution isn’t just about meeting your short-term needs – it’s also about your long-term business needs. While there are many tools you can buy and start using today, they may not be a long-term fit for your business. Software development projects take longer to complete but can give you more flexibility in the long run.
Know Your In-House Constraints
Before you decide to develop software in-house, take a look at your current staff count and resources. If you don’t have the people to tackle the project, outsourcing might be your only option. But outsourcing project management and software development adds extra costs so you need to compare those costs with the benefits of using an existing software product.
Pick the Solution That’s Right for You
There’s no one size fits all when it comes to software for your business. But by considering the points above you can make an informed decision for your business to automate and grow.
