Navigating Digital Product Development: Weighing the Pros and Cons of Building vs. Buying

You know that integrating a digital product for your business is inevitable, so that brings you here, right now, trying to understand better what is best for your company.

What digital product is necessary to solve your problem — whether to increase revenue, reduce costs, or otherwise improve efficiency?? Is buying an existing solution or building a custom one best?

Maybe you're looking for a project management tool that satisfies the needs of both your managers and your CFO, connecting them to the right information through conversational AI. Or maybe you need streamlined accounting software that is less labor-intensive and error-prone.

You might need a mobile app to put the buying power into your customers' hands. Or it could be some team communication tools, a procurement management suite, or a HR management platform.

SaaS products exist in most of these areas, providing a pre-built solution you can plug your business into. Since the first SaaS product was created, the question has remained; is it better to buy or build your next digital product?

We have some thoughts on this topic. But, we won’t make this a long read for you, because, even though each business endeavor is different, there is a fairly simple way to decide initially what’s best for your business.

Pulling back the scope and looking at your project from a 1000 ft view is most helpful.

The two most foundational aspects of your product force you to consider if it is core and differentiating from your competition.

Core to your business = an item that is immediately responsible for cash flows and revenue or cost of your company.

Differentiating = an item that makes your company stand out amongst the competition.

We’ve mapped out this idea straightforwardly: if it is neither core nor differentiating, we recommend canceling the project. If it is not core, but it is differentiating, you may have something worth building, but the verdict is out. Buying a SaaS product or solution makes the most sense if your product is core to your business but not differentiating. If your product idea is core AND differentiating, building the solution you need is best.

Once you’ve determined which category your product falls in (and if you should pursue a product at all), it’s time to better understand the advantages and disadvantages of buying a digital product or building one.

Advantages of Buying:

• Potentially more cost-effective
• More known outcome
• Timeline to deploy is often shorter
• Built-in support structure (customer service, tickets, etc.)
• Ability to obtain external expertise
• Continued feature development over time

Disadvantages of Buying:

• Licensing agreements – long term financial commitments with SaaS companies
• Lack of data ownership
• Lower customization options across the board
• Sacrificed flexibility in size, scope, design, and functionality

Advantages of Building:

• You have control over the things that you create — needs specific to your business
• Ability to differentiate your services to the market
• You’re in control of the data
• More meaningful insights
• An asset that is growing in worth over time
• Fixed cost curve: Costs are high up front, either value continues increasing OR costs reduce over time

Disadvantages of Building:

• Potentially higher cost
• Timeline varies based on project and availability of resources
• Ongoing upkeep (you have to support + maintain the product)
• Required expertise
• Less known outcome

Conclusion:

Whether you’re trying to convince your C-suite about a new software you believe is necessary for your company, or you’re in a bind, needing a solution to support your business growth, buying a SaaS product is best if you need a well-rounded solution that doesn’t have to be differentiating enough from your competitors. Building a custom solution is best if your product is core to your bottom line and you want or need to make a statement in the marketplace.

MJL is a great digital product partner to consult and guide you in your software journey. We’d love to hear from you.

Set up a consultation call with the experts at Monkeyjump Labs.