When Should a Company Develop Its Own Software?

When a company recognizes a need for software to solve a particular task, it faces one of the options: buy ready-made software or turn to custom development services. However, the choice between these two options largely depends on the goals the software serves, as well as a number of other factors associated with this important business decision.
Fortunately, companies starting to explore these options are neither the first nor the last. There are many situations where it is more advisable for companies to invest in creating their own software rather than purchasing a standard version.

What Really Requires a Custom Approach?

If a company understands that all available software on the market lacks the features and services it wants in its application, then the most logical step is to create a custom application in-house or with the help of an outsourcing software development team. Most commercial applications operate on a one-size-fits-all basis, which can limit the organization's ability to use the application effectively.
With custom software, developers have the opportunity to integrate all the functions and settings necessary for a specific company. For example, if a company handles specialized tasks (such as manufacturing processes) that differ from other industries, finding suitable software to optimize such specialized tasks will always be challenging. In such situations, it's best to use specialized applications or software.

When Is the Total Cost of Ownership Lower?

In most cases, commercial tools require organizations to either pay upfront or subscribe on a monthly/yearly basis. If they calculate and determine that building their own product will be cheaper in the long run than subscribing or making upfront payments, then they should invest time in creating their own version.
For example, the cost of some professional applications exceeds 5 million rubles per license per year. If a company intends to use such applications for many years, and building its own costs 10 million rubles, then it is more reasonable to build the application in-house rather than buying a ready-made one. Such cases are not very common but do exist in certain industries.

Is Integration with Existing Company Systems Required?

Another reason why businesses often consider building custom software is when the available market options do not integrate with the systems already in use at the enterprise. For example, if a company is looking for accounting software that integrates with other custom applications (such as warehouse and HR platforms) it already uses, building its own software is always the obvious choice.
Integration is one of the most important factors companies must consider when choosing software. Software that does not integrate properly with other tools being used always negatively impacts employees' convenience and the overall workflow. If a company already uses custom applications, it may face the need to constantly modify its software if integration is an important attribute for it.

What Are the Company's and Software's Security Needs?

If a company has security concerns when using available commercial software, it is always better to develop custom software according to required specifications. For those running an organization with high security risks, in-house software development provides the necessary control over important factors such as access management.
For government organizations, NGOs, or organizations in niches targeted by hackers and other malicious actors, using commercial tools is inadvisable. This primarily applies to web applications that involve storing data on the developer's servers. Using commercial tools can expose organizations to danger because attackers often target widely used platforms, as they can gather more information about their potential vulnerabilities.
Before choosing between commercial and custom software, a company should assess its organization's security risks. This may mean the company will incur relatively high costs to build its own means, but the peace of mind, money, and time it would lose dealing with the side effects of data breaches, which have become commonplace, are a much higher price.

Is Branding a Problem?

Software created and tailored to an enterprise's needs allows for easy integration of branding into the user interface. Most commercial software products do not allow users to change colors, icons, and other graphical elements of the UI. This means all users essentially have the same interface as everyone else using the same software.
If branding is important to a company (and it should be), then it may need to build its own software to have the flexibility to integrate all aspects of its brand. This becomes even more important if the software is customer-facing, because differentiating one's brand from others is a critical aspect for companies aiming to stand out in the market.

Is the Software Developer a Competitor?

If the organization in question itself is involved in software development, it will most likely prefer to build its own software, especially in cases where the software requires profit or was created by a company with which it competes. For example, if a company operates in the same industry as a company that produces accounting software, using a competitor's application for accounting tasks would put it at risk of losing competitive advantage.
For this reason, most large technology companies end up building the tools they use for daily tasks because they cannot trust tools created by competitors. If Facebook (or Meta) needs a remote work tool, it likely will not use Google Meet because Google is one of its main competitors. In this case, they either turn to other companies they don't compete with, or build their own tool to serve their purposes.

Choose Wisely

Building your own software has several advantages over using commercial tools. However, each company must weigh the pros and cons of each option for its specific case. For some, ready-made solutions will meet or even exceed all current needs, while others require fully customizable options.