Build or Buy Software?

All businesses use a core set of technologies to support their business operations.  Larger businesses generally support several functional areas ranging from operational functions to accounting. Businesses rely on these technologies to increase their efficiency and improve their ability to scale and grow the business.  Many smaller and mid-size businesses rely on a core application, such as Quickbooks or Peachtree, to initially support their accounting, billing, and invoicing functions. However, the areas of the business which give rise to the need to create an invoice are often handled manually using spreadsheets and word documents.


So, what are the options when businesses reach the threshold and recognize that what is being used today won’t support the processes required for the business volume they hope to be achieving in the near future?  There isn’t a single clear cut answer for every organization, but there are several common considerations that should be examined in order to determine what is right for your company.

  1. One very good option is to purchase off-the-shelf software built for your type of business.  When buying off the shelf, you should plan on implementing new processes that fit the software you are purchasing in order to obtain the maximum benefit.  Be aware that one size does not often fit all, so in more cases than not, you will need some level of customization to fill any gaps in the functionality you need to support your business operations.  It is important to go through a software selection process before making major investments in technology for your business. We recommend using a vendor who does not resell any off-the-shelf software. Instead, use a vendor who is familiar with the industry in which your business is engaged, who has an understanding of businesses processes and who is familiar with multiple types of software used to service your industry.  This allows your business to gain an unbiased opinion of multiple packages, the functionality within those packages, and how well they may suit your business.  It also allows for a gap analysis of each software and what customizations and integrations may be needed in order for it to be most effective for your company.
  2. Another possible course is to augment your current software to provide better support for key processes.  Changing processes in any business is hard, so if you are pleased with your core software and there are few or no limitations to its supporting your future growth, it makes sense to investigate having software extensions designed and integrated with your core software to support your other key processes.  These areas can include mobile technology, integration of one or more of your current packages with a custom application designed to fill in the gaps, and web applications that further support your external employees and/or clients.
  3. When it’s your processes that make your business unique and valuable to your clients, you don’t want to change your business processes to align with software. Or, if your business processes include multiple specialty industry segments, a custom application should be considered.  Custom applications capture unique processes across organizations, create a way for the company to work together to increase operational efficiencies on every level, and provide real-time visibility to clients via reporting tools.  If you are outgrowing your current system and are considering a custom application, make sure to use vendors who understand your industry, can analyze processes, and who have a track record of providing solid custom tailored software solutions.

Regardless of whether you decide to build or buy, make sure key stakeholders are involved in the entire process and engage a steering committee in your company to assist in making key decisions throughout the process.  Your level of commitment to providing information and working with vendors determines the success of your project.

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