Software solutions have become essential to business operations in today's technology-driven world. From managing customer relationships to automating workflows, organizations rely on software to streamline processes, improve efficiency, and stay competitive. When it comes to acquiring a software solution, organizations have two main options: building one from scratch or buying an existing solution. While there are situations where building a custom solution may be necessary, in most cases, it is cheaper to buy a software solution rather than build one yourself. In this article, we will explore the economic reasons why this is often the case.
Following Economic Principles
The economic principle of "if you can buy it cheaper than making it, buy it" is rooted in the idea that market competition and efficiency lead to better outcomes for consumers and businesses. When it comes to software solutions, this principle holds especially true. It makes economic sense if an organization can buy a software solution that meets its needs for a lower cost than building one from scratch. Building a software solution from scratch requires significant investment in terms of time, money, tools, and human capital, which can all be better allocated toward the business priorities for which they were hired or acquired.
The Hidden Cost of Building
It can be tempting to code your own tools as a software developer instead of buying them. However, this can lead to several problems. First, it takes time away from developing the product or application you are hired to build. Secondly, the tool may be less robust and efficient than a professionally developed tool. Why? Because the developers coding the commercial tool are wholly focused on producing the product, you will build yourself part-time. Remember, humans get better at what they do. Generally speaking, your part-time effort will never outperform the full-time effort of someone else.
Third, maintaining and updating the tool can become a burden, taking even more time away from developing the code you are hired and incentivized to produce. Ultimately, it is essential to weigh the costs and benefits before deciding whether to code your own tools or purchase them from a reputable source. Simply thinking, "We can build that," is shortsighted and is a view not aligned with your company's business objectives.
When organizations buy a commercial software solution, they receive maintenance and support as part of the package. This support can include regular updates and upgrades, bug fixes, security patches, and access to technical support. By outsourcing these tasks to the software vendor, organizations can save significant time and resources, allowing them to focus on their core business operations. Given a commercial product is the outcome of a competitive market, off-the-shelf software solutions are often designed to be easily scalable, meaning they can accommodate an increasing number of users and handle larger amounts of data without significant investment in infrastructure.
The Big Picture
Because a software vendor has been exposed to many use cases from many different customers that are trying to do the same thing you are doing, the vendor can foresee the improvements and expansions your current myopic scenario will eventually need. You benefit from the vendor's experiences, who will improve and maintain their product without you investing in significant development efforts to do the same. Lastly, quality and security often take a back seat because an in-house developed tool is built off the cuff as a means to an end. Poor quality and security protocols can unintentionally expose your organization to risk.
Buying Isn't Always the Best
Of course, there may be situations where building a custom software solution is necessary. Creating a custom solution may be the most cost-effective option if your organization has unique or specialized requirements not met by off-the-shelf software or if the solution needs a high degree of customization to integrate with existing systems or workflows. However, in most cases, organizations can save money and benefit from the efficiency of a competitive market by buying a commercial software solution rather than building one from scratch.
In conclusion, the principle of "if you can buy it cheaper than making it, buy it" is a sound economic principle that applies to software solutions as much as it does to any other product or service. By carefully evaluating the costs and benefits of building versus buying a software solution, organizations can make the most cost-effective decision for their specific situation. In doing so, they can save money, increase efficiency, and achieve better outcomes for their business and customers.