Buy or build: how to choose between off-the-shelf and custom-built
Updated: Jan 14, 2019
Today’s array of technology options for not-for-profit organisations is vast, and one of the key decisions to make when looking for a new digital solution is whether to go for off-the-shelf products or custom-build your own system or app. Here are some key considerations to take into account.
Off-the-shelf (OTS) describes applications or software you can buy that are already developed and ready (or semi-ready) for implementation. Not all OTS products are built equal and range from the highly customisable to those that allow only basic configuration. Many off-the-shelf products are cloud-based and offered under a SaaS (Software as a Service) model (e.g. Salesforce, MailChimp, Basecamp, XERO, MS 365 or Survey Monkey).
By opposition, custom-built products are solutions you develop from scratch and for which you typically do not have ongoing usage fees like licenses or monthly subscriptions. These days, many custom-built applications are developed using the PaaS (Platform as a Service) model (like Google App Engine or Force.com), which basically takes care of the underlying development environment but lets you build a system unique to you.
Pros and cons
There are a few key criteria to consider when deciding between off-the-shelf and custom-built:
1) Solution fit:
This is the deal breaker and what will most influence the decision to go one way vs the other.
Off-the-shelf products generally offer a wide range of ready-made features, often built on best practice processes. OTS is great if you look for something that’s “good enough” and you are ready to adapt to the way the software works. The downside is that these products (even the customisable ones) may not cater well for really specific needs. You can always request product changes, but your flexibility is limited by the vendor’s own development pipeline and other customers’ demands.
In comparison, custom-built pretty much allows you to do what you want (when you want) and can get you to reach perfect(ish) fit. It is a worthwhile option if no OTS product can meet your critical requirements.
Off-the-shelf products typically involve lower up-front costs (particularly if the vendor has a special NFP pricing), as custom-build requires potentially significant investment since you need to build from scratch. However, if you go for an OTS system and find you have to customise it a lot, this may turn out to be in fact more expensive. Hence it’s really key to work out early on what your critical requirements for solution fit are, and where you may be willing to compromise.
When it comes to ongoing costs (i.e. support, maintenance and ongoing improvement), having a custom-built solution can be a real challenge as you have to dedicate costs and efforts in keeping up with things like security, compliance, and other technologies your system needs to work with. This can become problematic if you don’t have continued access to resources knowledgeable in your system.
From that perspective, OTS is in many ways a safer choice since the onus of keeping the technology up-to-date is on the vendor, and skilled resources are more easily accessible. You still need to plan though for costs associated with version upgrades (particularly if you have customised the system) and ongoing license fees.
3) Timeframe to implement:
OTS will generally be relatively quick compared to custom-built, particularly if you can work with out-of-the-box features. Of course, you need to take into account the time required for the other stuff (things like data migration, business process changes, testing, end-user training, etc.), but this applies to any type of technology implementation.
Ownership of OTS products resides with the vendor and can limit how you use the product. With custom-built, you own the technology, which gives you a lot more freedom. Make sure you legally set IP ownership terms early on, particularly if you hire external technical resources to do the development. Also bear in mind that with ownership comes liability, so if things go wrong, you’re responsible.
With custom-built, you also get an opportunity to commercialise the product. Whilst it’s not usual for NFPs to get into technology development, there can be opportunities to create an alternative income stream, particularly for those that work within a part of the sector with needs poorly catered for. However, you need to be prepared to invest into the product and its ongoing development and support.
How do you decide?
When looking at buy vs build, consider all the key criteria, how they apply to your organisation and what you’re trying to achieve through technology. These days, there are so many tools on the market that most of the time someone will have already developed something. When it comes to core information management needs, such as functions and processes common to most organisations, OTS is usually a better avenue to take. Solutions like customer relationship or donor management systems, accounting packages, online collaboration, Digital Marketing tools or document management systems will address most of your needs (and more). There’s no need to reinvent the wheel when someone else has spent millions creating it.
That being said, there is a place for custom-build if your needs are so specific that there’s nothing out there that does what you need. And if you want to do something completely new that relies on really innovative technology to create high impact for your supporters, members, constituents or clients, there’s nothing wrong with developing your own technology (check out these great ideas from past winners of the Google Impact Challenge).
Go custom-build if you need something truly unique. And the best way to work this out is to consider what’s unique about your organisation, your purpose, and, most importantly, the people you’re trying to help.