Custom Software vs SaaS: When to Build, When to Buy

Custom Software vs SaaS: When to Build, When to Buy

Strategic framework for choosing between custom development and SaaS platforms. Cost analysis, timelines, and ROI for different business scenarios.

Build vs Buy Matrix

**Custom Software**: - Upfront cost: £50K-500K+ - Timeline: 3-12 months - Ongoing: £5K-20K/month - Flexibility: 100% - Speed to value: Slow

**SaaS Solution**: - Upfront cost: £0-5K - Timeline: 1-2 weeks - Ongoing: £500-5K/month - Flexibility: Limited - Speed to value: Fast

Decision Framework

Build Custom When...

✅ You need significant competitive advantage ✅ Off-the-shelf tools don't meet requirements ✅ Long-term ROI justifies investment ✅ You have unique business processes ✅ Security/compliance needs are specific

Use SaaS When...

✅ Standard industry solution exists ✅ You need fast time-to-market ✅ You want predictable monthly costs ✅ Vendor reliability is proven ✅ Your needs may change

Cost Analysis Example

**Payroll System**: - **Custom Build**: £100K upfront + £10K/month = £220K/2 years - **SaaS**: £0 upfront + £1K/month = £24K/2 years - **Decision**: SaaS (cost 91% lower)

**Industry-Specific CRM**: - **Custom Build**: £200K upfront + £15K/month = £380K/2 years - **SaaS**: £0 upfront + £10K/month = £240K/2 years - **Decision**: Custom (better ROI after year 3)

Hybrid Approach

Use SaaS for common functions + custom for competitive advantage: - SaaS: CRM, payroll, invoicing, HR - Custom: Core business logic, AI features

**Result**: 40-60% cost savings vs custom-only

Real Decision Tree

1. Does SaaS solution exist? - YES → Is it feature-complete? - YES → Use SaaS - NO → Go to #2 - NO → Go to #2 2. Is custom development ROI positive in 2-3 years? - YES → Build custom - NO → Find better SaaS or workflow improvements

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