Buy a ready-made solution or develop your own?
The eternal question that torments entrepreneurs: should they take a ready-made IT platform and make a product on it or develop everything themselves? In this article I will tell you in detail about each of the ways.
Over 20 years in IT, I have been in the role of a customer, an outsourcer, and even the owner of a ready-made solution. Therefore, when I once again heard the question: “In-house development or SaaS?”, I decided that it was time to dot all the i’s in the article.
Situation
An entrepreneur came to me with a request to develop a mobile application. He has already talked to several contractors and collected proposals that can be boiled down to two options:
a) Use a white label (ready-made) solution for 500 rubles. + percentage of turnover
b) Developing your own application is ten times more expensive
Which option should I choose? And what questions should you ask to choose the best one?
Question #1: What is the company's long-term strategy?
Traditionally, there are only two:
A) Dividend. Then the emphasis is on operational efficiency and rapid profit growth. In this case, it is not so important whether a ready-made solution or your own development will be used. The main thing is that the platform solves the assigned problems and helps the business earn money.
b) Growth strategy for sale. Then the main emphasis is on increasing the value of the company for further sale. It is important to understand what a potential buyer will be looking at. Most often these are: growth dynamics, user base and, most importantly, assets – tangible and intangible.
In order for intangible assets to have any value when sold, they must be owned by the company and appear on the balance sheet. Don't have your own software on your balance sheet? Sorry, but then there is nothing to buy.
Conclusion: A ready-made solution is not suitable if there are plans to sell the company.
Question No. 2: How does the finished solution correspond to the plans?
Let's put ourselves in the shoes of a white label product developer. As a rule, the main income comes from providing a ready-made solution for a subscription fee. Is it good if a client comes who will pay a subscription and additionally order paid improvements? At first glance, it couldn't be better. But there is a nuance.
A large number of modifications for one, even the largest and most beloved client, will inevitably interfere with the development of the main packaged product. This will make support difficult, unfocus the team, and may lead to mutual dissatisfaction.
On the customer’s side, the situation is also not rosy: it turns out that he will pay for the development of someone else’s product, which will not become his property.
Conclusion: if the finished solution corresponds to the ideal almost 100%, this is an excellent choice. Otherwise, there is a risk of encountering problems within a few months.
Question #3: What is the product vision based on?
If the product has not yet been used by real users, you should not immediately invest in full-fledged, expensive development. After all, the main task will be to quickly and inexpensively test hypotheses while receiving feedback from users.
Conclusion: to test hypotheses, it is better to take a ready-made but flexible solution.
Question No. 4: How do you plan to part with the ready-made solution?
It is important to make sure on the shore that you can safely move out of the chosen solution.
At a minimum, it should be possible to retrieve all your data in a convenient format. At the most, a copy of the product without the right to distribute it to anyone else.
Remember the Slack story? They left Russia and at the same time blocked access to some companies. For many, this paralyzed internal communication. A situation in which it is better not to find yourself.
Conclusion: if the developer of a ready-made solution is not ready to provide you with a full download of your data upon request, it is better to bypass it.
Question #5: Are you really ready to fit into this?
Once we ourselves initiated the development of a small (as it seemed then) application for a couple of months and 600 rubles. But harsh reality and a rampant appetite multiplied the deadlines and budgets several times.
If the developer told you that development requires 5 million, feel free to multiply the budget by two. After all, improvements will probably appear in the process, and some decisions will have to be reconsidered.
Conclusion: if the budget is very limited, you should give preference to ready-made solutions. Otherwise, you may end up in the middle of the road with an unfinished product.
What did we come to as a result of the consultation?
Since the client expected to sell the company in the future, it would be strategically correct to make his own decision. But at the same time, it was necessary to launch quickly and at minimal cost. Hence the opposite solution was asked: to take something ready-made.
As a result, we came to this plan:
Speed up your launch by using a ready-made solution as a basis. It’s a place to gain experience, test hypotheses, and make headway.
A couple of months after the launch, start working on technical specifications for your own development. Already taking into account the experience gained.
I have been developing my development agency for 10 years; I have launched hundreds of projects, including my own startup. I share my experience in team management, business development and simply personal stories of victories and defeats in on your telegram channel. Subscribe!
