Today’s executives face extreme pressure to keep their companies on par with the pace of digital innovation. Our guide provides key insights for selecting the right technology solutions.
Companies of all sizes license SaaS solutions to save time and complete essential tasks. From Slack to Salesforce, the number of “Software as a Service” (SaaS) tools grows daily, offering increasingly specific features for the businesses they serve.
But, at times, even market-leading products fail to meet the requirements of an organization. An off-the-shelf solution might fulfill 80% of a company’s needs, yet lack the most critical 20%.
The decision falls on the shoulders of leadership. Is it better to invest resources in a custom tool or hope that a SaaS provider adds the required features in the near future? Enter our new white paper, “How to Choose Between SaaS and a Custom Product: A Guide to Defining Your Company’s Digital Future.”
At TheoremOne, we get this question all the time. Clients come to us at a crossroads, looking for an outside perspective before committing to one or the other. Although we develop custom solutions for a living, we find ourselves recommending SaaS tools just as often. We only want to build products that fill a meaningful, unique need for a company — if it’s not essential to the future of the business, then it’s not a project we’re interested in.
On the surface, the custom versus off-the-shelf decision is often misconstrued as a matter of budget, i.e., can you afford custom or not? The true distinction, however, requires a big picture view of a company’s future.
The difference between licensing and building
Generally, SaaS products cost less than custom tools when you look at a single year’s budget, plus they provide ongoing support and improvements. These factors comprise the typical allure of licensing versus building.
Executives must also consider the risks of relying on a 3rd party tool, though. A company is at the mercy of outside entities when it comes to the product roadmap. Influence over design and direction is strictly limited.
When a solution is built internally or with the help of an outside firm, the intellectual property (IP) belongs to the business and the evolution of the product is entirely dictated by the company’s needs.
Anytime that the IP plays an important role in the future of the industry, a custom solution should be on the table.
The associated costs are also the company’s responsibility, but the expense of an ongoing SaaS contract is eliminated. As long as you have an engineering team that’s prepared to handle a custom tool, it is not usually a problem to bring the longterm maintenance in-house.
Most companies use a combination of both SaaS and custom. Some scenarios work best with a licensed product, and others find a strategic advantage in custom IP. Our guide clears up some common misconceptions that lead companies down the wrong route.
An open-source revolution
Another common fallacy centers around quality.
The collective knowledge of many decades of software development is available for free through code repositories. Developers often share learnings from passion projects and even the actual components used to build products. The collective quality of digital tools has vastly improved as a result, with no signs of slowing down.
Executives sometimes perceive SaaS tools as the more robust choice due to the large, dedicated teams maintaining them. While it is true that a licensed tool may contain more features, that does not necessarily make it a better fit.
Custom solutions are created with the same building blocks as SaaS tools. Quality is not solely determined by the size of the team behind the product, and a streamlined offering typically works faster than a behemoth program.
Companies can safely bet that open source code will play a role in the solution they choose, regardless of whether its SaaS or custom.
With SaaS, a business simply pays an annual fee, and a 3rd party manages all the development and maintenance. A custom tool is free after the initial cost of creating and any ongoing resource allocation. Both can produce products of equal quality and continue to improve alongside collective knowledge.
The answer to your technology woes
The sales teams at SaaS companies are trained to sway executives one way or another, so it’s usually a mistake to rely on their accounting alone. In our experience, choosing the right path for your digital roadmap comes down to four key questions, which we spell out in the guide. The correct option for your company will come into focus after considering your answers.
“Salespeople have branded the issue as custom versus licensed, where the licensed option seems low risk and cheaper. But it’s really about who owns the IP and whether you want the product to belong to you or someone else,” says Alex Finnemore, Head of Revenue at TheoremOne.
We know that this is a critical decision to make and it’s one that we never take lightly when consulting with our clients. That’s why we created this guide, which is filled with expert insights from Finnemore — whose background in technology, science, and design provides a holistic perspective on the subject — in addition to independent research conducted by our team.
If you still feel uncertain after reviewing it, we’re here to help. You can contact us with any questions, and we’ll do our best to help you attain clarity on your digital roadmap.