Digital transformation usually sounds significant, but it’s actually a lot like looking for a house. You can purchase a house off the market, rent one or buy one from the ground up. In the world of tech solutions, off-the-shelf tools like SaaS have been used for years by businesses of all sizes, becoming an indispensable part of every department. Yet, despite the ease of use and many pros, many businesses still decide to scratch that and invest in custom software development.
In this article, we’ll dive deep into the differences between SaaS vs Custom development, highlighting the best use case and the opportunity cost of each!
What Is SaaS?
SaaS, or Software-as-a-Service, refers to cloud-based solutions that can be accessed and directly used via the Internet without installation.
For the development, maintenance, and upgrade of the application, it’s the vendor who stays behind the curtain. As a user and customer of SaaS, your only job is to use it without caring about the rest, hence the name “as-a-services.” Think of a service where you can rent software to use, instead of buying it wholly (including the license) like some off-the-shelf software like the traditional Microsoft Office.
Since SaaS application is hosted in the cloud, all you need is a web browser to access them. By prompting convenience, SaaS is relatively the cheapest choice for digital transformation, encouraging many businesses to join the ride. To gain access to a ready-made solution, you simply pay a monthly fee.
To make it easier to grab this concept, here are some notable SaaS examples:
- ClickUp: The all-in-one product management toolkit
- Slack: cloud-based workplace communication application.
- Monday: popular productivity application for software development, workflow, and task management.
- SurveyMonkey: online survey creator tool
- Asana: project management application
- Mailchimp: marketing automation software
Instead Of Buying SaaS, Why Some Businesses Choose To Build?
If SaaS is cheaper and can be used instantly, why do many still bother with custom development? Aka, building a custom software solution from scratch: designing, developing, deploying, and maintaining?
Whereas SaaS products seek to be a one-size-fits-all solution for a wide range of customers, a custom software solution allows you to receive a tool that is suited to your business, eliminating the need to adapt your procedures for a tool.
Despite being more costly and requiring time investment, many businesses still choose custom software for its flexibility. A one-of-a-kind solution that you can deploy on any desired operating system, integrate with any application without third-party permission, and earn freedom in design and features.
For some businesses such as healthcare, financial services, manufacturing, or government offices, data has become a susceptible and critical asset. Thus, to ensure a protected hub, they opt for custom software to prevent sharing a system with third parties or other companies.
A complex process, of course, comes with advanced and niche features that many SaaS don’t offer, making custom software an absolute choice for many businesses when seeking help from technology to attract tangible business results.
In this case, the goal of using software isn’t about automating tasks and improving performance but about opening more opportunities, driving positive changes, and altering business to a higher ground.
Compare The Usability Of SaaS Vs Custom Software: When To Use What
With such differences between custom software vs SaaS, it doesn’t mean one outweighs the other. To best analyze the strengths and weaknesses of each solution, as well as learn when to adopt them best, dive into our side-by-side comparison.
|What is it||Buy||Build|
|Hosting||On-cloud||Self-hosted, on-cloud or on-premises|
|Development complexity||Limited customization||High flexibility|
|Quality of the software||Depend on the vendor||Depend on the developers|
|Training and support||Under the management of the vendor. They usually provide training session (sometimes require additional fee) and instruction document (free)||You manage and decide on how to train, who to train and when to train. You should also assign your support team|
|Interface||Friendly, modern||You design|
|Scalability||Limited scalability||Grow along with the business|
|Integration||If the SaaS supports||Freedom of choice|
|Company compliance||Make for a broad user. It will not ensure that the template sites, cloud storages, processes, and security meet dozens of industry requirements and standards.||A system made on-demand hence you can alter any requirements and make it best fit your business model|
|Security||Medium to low||High|
|Maintenance & Upgrade||The vendor||You|
|Time to adopt||Instantly after purchase||Time-consuming, take months depend on the complexity|
|Pricing Model||Monthly/ Quarterly/ Yearly subscription (flat rate, usage-based or package), one-time installation fee, training fee. They also offer free trials but with limited features.||You can use in-house or outsourcing teams. With outsourcing the pricing model can be fixed price, time & materials or dedicated team. You mostly pay depending on the number of people on your project.|
|Investment||More affordable. Low at first but can add up in the long run||Big at first but can ease down in the long run|
|When to use what||
|Learn more: |
1. Decoding The Contrast Between Custom Software vs Off-the-shelf
2. How Custom Software Stack Up Against Packaged Software: Key Differences
Question To Analyze Your Need & Make Decision
When deciding between custom software development and using Software as a Service (SaaS), it is important to consider the opportunity cost. To help you make an informed decision, here are some questions to determine how prepared your business is for either solution:
- What is your financial situation? How much are you willing to invest? As much as we all want the best solution for our company, we need to depend on our budget to balance digital investment and money for other business aspects.
- What is the timeline for this tool? Do you require an immediate answer, or can you wait for a custom solution to be developed and built?
- What is your issue? Where is the bottleneck? Can a SaaS perfectly solve it? If yes, then you probably don’t need to invest many resources in custom software. But if it can only solve less than 60% of your problem or you have to piece together multiple SaaS options for “the right one,” custom is the answer.
- What are your long-term objectives? How do you envision this solution serving your organization in a year? Will this solution be adaptable and changeable as your business develops and evolves? If not, is it worth the time and money to find a solution that will only last a year?
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In conclusion, both SaaS and custom development have their pros and cons. SaaS offers affordability, accessibility, and convenience, while custom development provides flexibility, scalability, and unique features. Depending on your business needs, budget, and long-term goals, you might choose one over the other or combine them both. To make the right decision, consult with experts and conduct analysis to assess your options thoroughly.
More related posts from Software Development blog blog you shouldn’t skip:
- In-house vs Outsourcing Software Development: Best Guide For 2024
- 10 Real-life Successful Examples Of Custom Software Development
- Fixed Price Vs Time And Materials: Which Is Best For Your Budget?
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