<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=443149619225659&ev=PageView&noscript=1"> 4 Good Reasons Why Buying Software Can Be Risky

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4 Good Reasons Why Buying Software Can Be Risky

4 Good Reasons Why Buying Software Can Be Risky

Life is full of choices. For business leaders, choices can make or break all of their hard work. One tough choice is whether to build or buy a software solution their business needs. Many will lean toward buying off-the-shelf software even when their business need is unique. We understand this can be appealing for several reasons, but this choice has consequences that may lead to a bigger headache down the road.

That's why it's important to take both buying and building a software solution into consideration. If you're not careful, the off-the-shelf solution you were hoping for may cost a lot more later. Here are some important things to consider before buying software:

  • 1. True Cost
  • Buying software goes a lot deeper than the initial sticker price. They can take many forms, but hidden fees may be waiting to jump out if you're not careful. First, licensing fee structures can be complex with fluctuating and recurring fees. Second, customizing the software to fit your unique business process and needs will require programming by the vendor at an additional one-time (and possibly ongoing cost. Third, enhancements later on for interface development, new reports, etc., will cost you additional support service fees. Lastly, there may be upgrade charges in addition to annual maintenance fees to cover the cost of major software upgrades. This is simply a truncated list to get you thinking. By contrast, building custom software and owning the source code means that you are license-free and vendor independent.
  • 2. Competitive Differentiation
  • You’ve built your business by doing things differently or more efficiently than everyone else. Off-the-shelf means that you’re using processes that are the same as what everyone else does. Unless it doesn’t matter, why would you want to dumb down your business? You’ve worked too hard setting yourself apart from the competition and you need a solution that keeps you ahead of the pack and gives you a competitive advantage. Going with off-the-shelf software may cost you your agility and responsiveness that you’ll need in the future to stay competitive.
  • 3. Utilization
  • When you’re buying software off-the-shelf, you're buying a “one size fits all" product. That's because companies aren't building software only for you; they're building it to capture as many buyers as possible. So you pay for 100% of the software and only use 20% of what it can do. Pretty silly, huh? Having certain features or functionality may sound exciting, but if you're not going to ever use them, why pay for them? This is where building custom software shines; you pay for technology you can use. What if the canned software solution doesn’t do what you thought it did? That’s wasted time, money and resources instead of getting it right the first time!
  • 4. Integration Difficulties
  • So you just bought your new software and you couldn't be more excited to integrate it within your systems. Not so fast, friend! Specialists from the software vendor need to do it themselves, which adds to cost (see above). Not only do your costs rise, your system may not be operational for a while as they make it all work. When everything does get back up and running, things may go well for the time being, until a software update throws your system into mayhem. You're down again, losing money and in general discontent. Just when you think it couldn't get worse, you receive another invoice from those specialists. You're now trapped in a vicious cycle since you're locked into a two-year contract. Building a custom software solution from the start could have prevented some or all of this.

At the end of the day, buying software may be THE answer for your goals. A good development team will be open and candid about this, even if it means losing a sale because building and buying software is an investment, not a cost. If you have a budget to maintain, need your solution to run on all cylinders and want to skip integration nightmares, building your software is the key. Just be sure to know the differences and what implications buying off-the-shelf software can have on your business.

This blog was originally posted October 13, 2016 and has been updated with new insights.

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About the author

Seth joined Small Footprint in July of 2011 and brings 16 years of sales experience. Seth grew up in Washington, D.C. and received his BA in Communications from The College of Wooster (OH) in 1994. He relocated to Winston-Salem in 1999 to get his MBA at Wake Forest University and after leaving in 2003, relocated back with his family in 2007. He is now settled here with his wife, Cara, and four children; Addison, Jacob, Caitlin & Quinn.
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