Buy or build decision planning software

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Buy or build decisions are a common dilemma within organizations when they want to implement a software to optimize a certain process. Often cost considerations and the need to focus on the core business play an important role in making this decision. What about the buy or build decision of planning software? We gladly address the most important factors with the necessary clarification in order to make the right choice.

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1) Strategic considerations

Is the development or purchase of a planning software a strategic consideration that affects the core business of the organization or is it a purely operational purchase? In the second case, your main intention is to use a planning tool to make your activities run smoothly and effortlessly thanks to personnel planning. In that case, purchasing a software license is recommended. When the planning tool touches the strategy of the organization and you can use it to build a competitive advantage, it is advisable to develop it yourself. Although this will be mitigated by some other important factors.

2) Organizational specificity

How organization-specific are the desired functionalities? A self-built tool has the ability to be fully tailored to the needs and wishes of the organization. A licensed software brings a lot of options in terms of functionalities, but these will be more general and thus less organization-specific. Special needs or wishes will therefore rarely be met by the licensed software. However, it should be noted that SaaS software is often highly configurable and in many cases customizable. For this factor you need to determine how valuable organization-specific functionalities are.

3) Scalability

Another factor to take into account is scalability. In the long run, your planning software will have to grow along with your organization. If you are considering developing it yourself, it is important to ask yourself how often adjustments will be needed and what investments this will require from your organization. Software providers often have different packages and/or modules that are tailored to different sizes of organizations. When you are looking for different SaaS companies, it is advisable to look into expansion options. To what extent can the software evolve with the organization and at which cost? This way you collect the necessary information to compare what is the best choice in terms of scalability; develop or purchase a license?

factors build or buy decision software

Scalability and modularity go hand in hand. And there are more advantages to modularity...

4) Deployability

How quickly does your organization want to be able to deploy the tool? Developing software takes time. The project from research into the necessary functionalities to the delivery of the software easily takes one to three years. A purchased tool can be deployed a lot faster, after one to two weeks of onboarding for those responsible for the planning. If you want to deal with a need in the short term, a purchased software is advisable. When the need is less pressing, both buy and build are an option.

5) Innovativeness

In addition to scalability, it is desirable that the functionalities of the software evolve with needs arising from the continuously changing business environment. With the option of developing the software in-house, the important question is whether it is realistic for the organization to regularly provide the necessary innovations. If this is not the case, it is better to buy the software as it is frequently updated and renewed. In addition, there is also the life cycle of innovations that currently counts about two years. However, the time-to-market of your own planning software is one to three years. If your time-to-market is longer than the life cycle of innovations, your organisation will continually lag behind. In that case, a SaaS software is recommended.

6) Support

When implementing and using a new software, the users will have questions that need to be answered. So there will be a regular need for support. If you build a tool yourself, you will have to invest the necessary time and resources in training and question sessions. SaaS companies always have a support service that customers can contact for the necessary training and help.

7) Presence and availability of in-house developers

A well-functioning software requires developers, both back- and front-end. The time of these developers is often scarce and expensive. The make or buy decision therefore includes two important questions regarding the software developers. Are there enough developers to bring this project to a successful result in the foreseeable future? And is it opportune to let the developers invest time in developing your planning software or are they more valuable on other projects? It is important to always take into account the opportunity cost of the developers. If the time of the developers is scarce and they have more added value on other, billable projects, a planning software license is preferred.

8) Cost consideration

What does the cost analysis point out? Developing your own software involves a lot of human resource costs. Employees in development and operations will have to discuss how the planning tool ideally works for your organization. You will need to engage front- and back-end developers to develop the software. There will be a need for UX designers and copywriters to give the tool the right look and feel. In the end it will be the cost of the developers that will weigh heavily so in-house building will have a hefty price tag. Companies that sell planning software as a service, realize significant economies of scale in this area, allowing them to offer their tool at a relatively cheap price. Software companies often work on a SaaS basis. The software is offered as a subscription-based service.

The high development cost, the need for innovation and upscaling and support will ensure that a licensed software will be more advantageous in financial terms in the vast majority of cases be.

The final decision

How much weight you give to each of these factors depends on the organization. It is important to ask whether there is a link between the strategic objectives of the organization and the planning software. Furthermore, it is crucial to be realistic about the size of the investments when building a software. It doesn't add up to just that one development cost. Scaling, innovation and support will require constant resources.

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