Buying vs. Building Resource Management Software

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You've got a problem: you need resource management software, but you're not sure whether to buy or build it.

There are a lot of advantages and disadvantages to both building and buying to consider. On the one hand, buying software off the shelf can be quick, easy, and cheap. On the other hand, designing custom-built software can give you complete control over the features, integration, and code quality.

It's essential to do your research before making a final decision. Taking the time to consider different options and collecting feedback from key stakeholders is essential before making a final commitment. Only by looking at all possible solutions can you make an informed decision that aligns with your unique needs and situation.

Weigh the time, cost, and resources associated with each option, as well as any functional integrations one or the other may lack. If you're serious about building your own software, be sure to speak to people who have gone through the process and built proprietary software.

Depending on the availability of time and money, as well as the desired results of the software, both buying and building have their own advantages. So which option is right for you? Let's take a look at the pros and cons of building and buying resource management software.

Benefits of building your own internal resource management software

Building internal resource management software can help your business in many ways. Tailoring software to the individual needs of your organization can give you control over the process and influence over the timeline and costs associated with its development, making it easier to adjust resources where needed.

Creating simple, in-house internal software may save you money because you won't have to build features you don't need. Over a long period of time, building software can often be less costly than purchasing an off-the-shelf product, similarly to purchasing a car (versus leasing it) pays off the longer you drive it (though you are left with an outdated vehicle—or, in our case, outdated software).

Ultimately, it's important to carefully consider an organization's needs versus time and cost constraints when deciding whether to buy or build resource management software.

Challenges of building your own resource management software

When getting started, finding the right people to build and design your software can be difficult. If your organization doesn’t currently build its own software, hiring the right people with the appropriate expertise may prove challenging, and hiring the best software designers and developers will be expensive.

Because of a lack of access to top designers, internal software teams often struggle to understand the resource management problems to design appropriate solutions. This can raise costs and cause delays. Additionally, having multiple stakeholders inputting their own specifications can result in a “Frankenstein” product. With a small development team, the transfer of information on the codebase can be a concern, particularly when it comes to software involving different programming languages. You should also have a plan in place should the people who built the software leave your organization.

Cost is probably the single most important factor to consider when building your own resource management software, as the process can be very expensive. Depending on its complexity, tailored internal software can cost hundreds of thousands to millions of dollars. Even just supercharging your current resource management spreadsheet can wind up costing you a lot of money once the time cost is factored in.

When drawing up an initial budget, be sure to calculate the cost of all labor involved, from design to development. In addition to software developers’ time, don’t forget to factor in the time that stakeholders will spend on software design during all phases of the project. This is a significant, often overlooked expense. Building comes at the expense of time and resources that could otherwise be put toward other projects.

There are also third-party software component licensing costs to consider, and integrating your current software to the custom software you are building can be a project costing tens of thousands of dollars in itself. Along with these considerations, ongoing maintenance and support is another important cost of building resource management software.

On a limited budget, you won’t be able to achieve the code quality for reliable software, but either way, whatever you build is most likely going to break and will need to be fixed. A quality assurance team is often required to ensure the reliability of your software, especially since its mission critical. There will also updates to open-source systems used in most software that require ongoing upgrade --and don't forget training, as well as the help and support that will be provided to people using the software.

It should be noted, these aren’t even an exhaustive list of expenses. It’s also important to think beyond base expenses and anticipate additional costs related to delays, unknowns, the unexpected, scope creep, and troubleshooting. If you don’t perform in this type of software development work regularly, you could be drastically underestimating the time and cost it requires.

Keep in mind, the process of building anything usually starts out simple enough and then grows drastically in complexity. As any experienced project manager will tell you, from construction to software projects, time will start to add up quickly and initial budgets can grow to multiples of the original estimates.

Given how quickly costs can add up, it’s essential for businesses to have a clear sense of their budget at the outset to ensure that their custom-built resource management software does not break the bank. Only by appropriately budgeting the entire life cycle of the project can an organization manage the cost of building its own software.

In many cases, the investment will be well worth the effort. However, what started as an investment to save money can quickly deteriorate into a significant business loss if you continue to pour money into a project without seeing returns. Beware of anyone who tells you that building is easy. The consulting software developers you are looking to hire benefit from the ongoing expenses described above. They know that, because of how far in you are, it will be too late for you to turn back. Learn more about why the sunk cost fallacy is largely to blame for this.

The reason up to 85% of software projects fail

Studies have shown that up to 85% of internal software development projects fail. As I like to say, it’s the unknown unknowns that get people in trouble. If your business doesn't build software as a service and you don’t have anyone in leadership who can answer the question: “What are the best programming languages?” this could be a sign you are headed down the wrong path.

Failure can often be the result of losing stakeholders, having too many decision makers reluctant to take critical action, and running out of money due to delays and unforeseen expenses. When projects run long and cost becomes a major factor, project stakeholders often begin to lose interest in seeing the project through to completion.

Further, software can be prohibitively expensive for small and medium-sized businesses that are unable to achieve an economy of scale for servers and other recurring expenses. For any organization, building your own resource management software will most likely be a costly proposition. All of these factors contribute to the high rate of failure of internal software projects.

The Pros of Buying Software

Buying off the shelf may be a more appealing option to you due to its associated cost savings and promise of immediate implementation. The time cost of not having the product immediately available is often overlooked when attempting to build your own software, especially given the delays that arise as scope creeps and the software continues to evolve due to unforeseen changes.

With an off-the-shelf product, you’ll be buying professionally designed software that has experienced professionals on a solution that works for everyone. Successful software companies typically receive and implement feedback from thousands of businesses like yours to design and build a drastically better product. If you understand how deep it goes, resource management is inherently very complex.

Remember, no software will ever be everything to everyone, and looking for the perfect solution will lead to you never buying software or being disappointed.  It’s important to remember that if there was an all-in-one that did everything, it wouldn’t do anything very well.

Given software companies’ large-scale servicing of hundreds, or even thousands, of businesses, integrations with your existing software may be available at a steep discount relative to building them yourself. Depending on the software, you may also be able to access the latest, often very expensive, machine learning and AI technology without a large number of users on the software.

Not to be understated, by purchasing software, you also won't have to worry about the headaches and expenses of training, help desk support, documentation, videos, and ongoing maintenance costs, which are typically included in your software subscription costs.

Making a decision

Pros of building software

  • You’ll have the flexibility to customize software to your business’s unique requirements.

Cons of building software

  • You may not have the relevant experience to know the project’s requirements or the technical expertise to build it in the right way.
  • Building custom resource management software costs hundreds of thousands, or even millions of dollars over the life cycle of the software.

The ability to customize technology based on the specific needs of your business may be worth the additional work and time involved in building instead of buying, but you’ll need to evaluate the total cost of ownership for each scenario beforehand. If you do decide to build your own software, be sure to prepare a thorough budget that accounts for design, development, integrations, servers, licensing, training, maintenance, and ongoing support.  

When considering the costs of building your own resource planning and management software, it is essential to take into account up-front investments in development, as well as ongoing maintenance costs. Budgets need to be established with contingencies for scope creep and unknowns that can lead to delays along the way, and it’s important to include support, licensing, and maintenance expenses so that budgets stay within established expectations.

Pros of building software

  • A much faster time-to-implementation.
  • Significantly less money to invest up-front.

Cons of buying software

  • You may not get all the features you feel you need.

If you decide to buy software, be sure to pick a partner that specializes in resource management and understands your problems. Check that they have good customer support and will listen to your needs. Look for flexible, customizable software. that allows you to grow with it.

And remember, when buying software, you’re looking for the best fit, not the perfect fit. You will find you can usually fill in the gaps where the software falls short with your current spreadsheet processes or another software tool that solves specifically for the problem at hand. You may not get your requests instantly, but it could take you years and cost millions of dollars to build it yourself.

If you do decide to buy instead of build your own software, Mosaic is building the resource management software of your dreams. How do we know? For over a decade, we’ve researched requirements by speaking to thousands of businesses like yours to build the fastest, most customizable resource management software on the market. With a product development philosophy of continual improvement, we have always and continue to release updates every month.

Have ideas for great resource management software? Join forces with Mosaic to develop the most powerful resource management solution ever built.

John Meyer

Founder, CEO
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