Custom vs SaaS – Which Solution is Right for your Business?

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When clients contact us for a consultation it’s usually because they’ve already concluded that custom software development is the right solution for them. 

 

You might be thinking that custom software development is best reserved for highly niche projects; but could you end up overlooking the best value solution for your business?

 

What is SaaS?

Software as a Service (SaaS) – sometimes referred to as ready-made, off-the-shelf or out-of-the-box software – is a method of software delivery and licensing in which software is accessed online via a subscription rather than bought and installed on individual computers. For most businesses, this will take the form of a monthly fee per user with popular solutions including Salesforce, Slack and Google Apps.

 

How Much Does SaaS Cost?

The minimal upfront investment and the initial low monthly cost of SaaS solutions make them an attractive option for many business processes. Indeed, SaaS can offer the perfect solution for many business processes. After all, why would you invest in creating new accounting software when Xero or Quickbooks offer everything you need? Although, it’s not necessarily a choice between one and the other, for instance, during a recent project we’ve created a system which interacts with the Xero API to extend functionality rather than rebuilding the functionality from scratch – after all Xero did 90% of what our client required but the remaining 10% was critical to the business, we just custom developed this aspect and interacted with Xero directly.

 

The cost of this license model, which sees businesses pay for the often integral software for as long as they require it, can be affected by multiple factors over time. 

 

Tiered Pricing

Tiered Pricing is a popular pricing strategy used by SaaS providers. Offering a low cost (or even free) basic subscription makes the software highly accessible for businesses looking for basic features and/or few total users. As a business grows, however, the cost of the software will likely grow too as additional users are added and more features are required. 

 

As an example of tiered pricing, check out G Suite’s plans.

 

While it’s possible to forecast the expense in the short to medium term, it would be difficult for most businesses to accurately forecast the cost of SaaS over the lifetime of its use. 

 

Price Increases

The total cost of subscription can also increase over time if the software developers increase their prices. 

 

MailChimp caused controversy when it changed its pricing model, inflating the cost for most users. This couldn’t have been foreseen by users and has resulted in many looking for alternative solutions, which takes time and, therefore, costs money in itself. 

 

The Cost of Inefficiency

Custom software is designed and developed to meet the needs of the end-user, helping you to run your business as efficiently and effectively as possible. SaaS lacks the advantage of being created with these specific requirements and processes in mind. As a result, an optimum workflow can be hindered, costing time and money in the form of reduced efficiency, slower production time and an increased risk of errors.

 

Another potential pitfall of ready-made software is it not meeting all your needs – now or in the future – resulting in the need for your business to invest in multiple different software licenses to achieve their overall goals. Not only does this add to the ongoing running costs of the business, but can also cause time wastage due to duplication of processes and data. The inefficiency, frustration and confusion caused by juggling multiple software packages is something software developers hear about a lot at the client consultation stage. 

 

SaaS Pros and Cons

 

Pros

  • The provider ensures the availability and accessibility of the software
  • Low up-front investment
  • Backed by on-going maintenance/development
  • Typically short launch cycle

 

Cons

  • The SaaS provider typically acts as a data processor which may reduce a business’ overall control of their data
  • No guarantees about how long the system or software will be available
  • Features may be subject to change
  • May be subject to unexpected price increases 
  • Might not meet all requirements resulting in the need for multiple different licenses

 

Custom-Built Software 

There can be no denying that custom-built software costs more upfront than SaaS solutions once you factor in design, development, analysis, testing, maintenance, and your own time spent in meetings. However, this initial investment might offer better value compared to the sometimes-exponential increase in SaaS costs as your user base and business requirements grow over time. 

 

Using the G Suite pricing model as an example again, we can visualise how monthly costs might increase over time as your business grows from 10 users with basic features (£46/month) through to 100 users with enterprise features (£2000/month). 

SaaS Cost over Time
SaaS Cost over Time

Now take into consideration that your business might require multiple SaaS licenses to support its processes and we can see how costs could quickly exceed those of a custom-built solution. 

 

Custom-Built Pros and Cons

 

Custom-Built Pros

  • You get exactly the features you need and have more control over the system
  • You have more control over the system;
  • Don’t have to compromise your procedures to fit the software or juggle multiple pieces of software to achieve the desired results

 

Custom Built-Cons

  • The development cycle takes time – that’s why we use Agile practices to deliver a usable product as quickly as possible
  • Initial investment costs are higher
  • Ongoing maintenance required to ensure that the system continues to function – 
  • Management data becomes your responsibility

 

In Conclusion

 

Choosing whether to go for custom-built software or SaaS will come down to the needs and requirements of your business so we’ll always explore the available options with you during your consultation. (In fact, we use various out-of-the-box solutions ourselves, from our accounting software to HR platform.)

 

However, it’s important to remember that while the upfront cost of custom-built software can lead many to believe it’s the more expensive option, those license fees can add up over time and investing more in the short term can save you time and money in the long run. When you factor in potential inefficiencies, unforeseen requirement changes, errors caused by data duplication etc. you might find that custom software development is the most cost-effective and valuable solution for your business after all. And remember it’s not always necessarily a choice between one or the other and sometimes an additional “layer” can be added to a SaaS product to provide only key functionality which is specific to your business.

 

 

We’d love to hear what you think about the big custom vs ready-made software debate. 

Did you try SaaS before investing in custom development? Perhaps you’re yet to take the plunge? 

Whatever stage you’re at, Core Blue would love to hear from you. People are at our core, and our custom software is developed with end-users in mind. Get in touch today to arrange a free consultation.

 

 

 

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