How to Decide If You Should Subscribe to a SaaS or Build a Custom Product
Everyone probably knows that person who refuses to use Google Maps because they “know a shortcut”.
Twenty minutes later, you’re somewhere neither of you planned to be, and they’re still saying, “Don’t worry, I know this road.”
Businesses can do something similar with software.
They subscribe to one SaaS platform, then another, and then another. Each solves a particular problem. Eventually, the business has a collection of systems that work individually but don’t necessarily work well together.
So when does it make sense to stop adding SaaS and consider building something of your own?
The answer starts with your core operations.
SaaS is usually the right place to start
When a business is starting out, SaaS makes sense.
A logistics company might use one platform for HR, another for employee scheduling, another for accounting and another for managing deliveries.
There is nothing wrong with this.
In fact, building all of these systems from the beginning may be unnecessary.
The business should focus on its operations and can use existing software for functions that are not unique.
The challenge comes as the business grows.
The problem isn’t necessarily the number of SaaS platforms
Imagine that the logistics company now has 150 employees, thousands of deliveries and several SaaS platforms.
HR knows who the employees are.
The scheduling system knows who is working.
The logistics platform knows which deliveries are being made.
The accounting system knows what has been paid.
The CRM knows about customers.
Each system has useful information, but management may still struggle to answer a simple question:
“How is the business actually performing?”
Someone may have to export data from several systems, combine spreadsheets and manually produce reports.
Operations may also have to move information between platforms to complete a single business process.
This is where the question changes.
It is no longer:
“Does each SaaS product work?”
It becomes:
“Do our systems work together well enough to run and manage the business?”
Start with the core operation
Every business has activities that are central to how it creates value.
For a logistics company, that might be receiving orders, planning deliveries, assigning drivers, tracking vehicles, completing deliveries, handling customers and reporting performance.
Those processes are connected.
If the business has to move information between several unrelated systems to manage them, the issue isn’t simply that it has too many SaaS subscriptions.
The issue is that its core operation is fragmented across software that was designed to solve individual problems rather than operate the business as a whole.
This is where custom software can become valuable.
A custom system can be designed around the way the organisation actually operates, bringing important processes and information together.
Management reporting is another important signal
The other question is what management needs to see.
If management can get the information it needs from existing systems, there may be little reason to build anything.
But if important decisions require someone to collect information from five different platforms every week, clean it, reconcile it and produce a report manually, that is a different situation.
The problem isn’t simply reporting.
It is that the organisation doesn’t have a single operational view of what is happening.
If that information is critical to managing the business, building a system around the organisation’s core operations should make more sense.
So when should you consider custom software?
Not when you reach a particular number of employees.
Not when you have three SaaS subscriptions.
And not simply because you can afford it.
Consider it when your core operations have become sufficiently complex, interconnected and specific to your business that managing them across separate SaaS products is creating significant friction.
Ask yourself:
- Can our core operations be managed efficiently across our existing systems?
- Can management get the information it needs without manually combining data from multiple platforms?
- Are our most important business processes supported by our software, or are we building workarounds around them?
If the answer to these questions is increasingly “no”, custom software may be worth investigating.
And even then, you don’t necessarily need to replace every SaaS platform.
Keep the systems that work well for standard functions.
Build around the parts of the business that are unique.
The goal isn’t to own more software.
The goal is to have software that gives the business the operational control and visibility it needs to grow.
Everyone probably knows that person who refuses to use Google Maps because they “know a shortcut”.
Twenty minutes later, you’re somewhere neither of you planned to be, and they’re still saying, “Don’t worry, I know this road.”
Businesses can do something similar with software.
They subscribe to one SaaS platform, then another, and then another. Each solves a particular problem. Eventually, the business has a collection of systems that work individually but don’t necessarily work well together.
So when does it make sense to stop adding SaaS and consider building something of your own?
The answer starts with your core operations.
SaaS is usually the right place to start
When a business is starting out, SaaS makes sense.
A logistics company might use one platform for HR, another for employee scheduling, another for accounting and another for managing deliveries.
There is nothing wrong with this.
In fact, building all of these systems from the beginning may be unnecessary.
The business should focus on its operations and can use existing software for functions that are not unique.
The challenge comes as the business grows.
The problem isn’t necessarily the number of SaaS platforms
Imagine that the logistics company now has 150 employees, thousands of deliveries and several SaaS platforms.
HR knows who the employees are.
The scheduling system knows who is working.
The logistics platform knows which deliveries are being made.
The accounting system knows what has been paid.
The CRM knows about customers.
Each system has useful information, but management may still struggle to answer a simple question:
“How is the business actually performing?”
Someone may have to export data from several systems, combine spreadsheets and manually produce reports.
Operations may also have to move information between platforms to complete a single business process.
This is where the question changes.
It is no longer:
“Does each SaaS product work?”
It becomes:
“Do our systems work together well enough to run and manage the business?”
Start with the core operation
Every business has activities that are central to how it creates value.
For a logistics company, that might be receiving orders, planning deliveries, assigning drivers, tracking vehicles, completing deliveries, handling customers and reporting performance.
Those processes are connected.
If the business has to move information between several unrelated systems to manage them, the issue isn’t simply that it has too many SaaS subscriptions.
The issue is that its core operation is fragmented across software that was designed to solve individual problems rather than operate the business as a whole.
This is where custom software can become valuable.
A custom system can be designed around the way the organisation actually operates, bringing important processes and information together.
Management reporting is another important signal
The other question is what management needs to see.
If management can get the information it needs from existing systems, there may be little reason to build anything.
But if important decisions require someone to collect information from five different platforms every week, clean it, reconcile it and produce a report manually, that is a different situation.
The problem isn’t simply reporting.
It is that the organisation doesn’t have a single operational view of what is happening.
If that information is critical to managing the business, building a system around the organisation’s core operations should make more sense.
So when should you consider custom software?
Not when you reach a particular number of employees.
Not when you have three SaaS subscriptions.
And not simply because you can afford it.
Consider it when your core operations have become sufficiently complex, interconnected and specific to your business that managing them across separate SaaS products is creating significant friction.
Ask yourself:
- Can our core operations be managed efficiently across our existing systems?
- Can management get the information it needs without manually combining data from multiple platforms?
- Are our most important business processes supported by our software, or are we building workarounds around them?
If the answer to these questions is increasingly “no”, custom software may be worth investigating.
And even then, you don’t necessarily need to replace every SaaS platform.
Keep the systems that work well for standard functions.
Build around the parts of the business that are unique.
The goal isn’t to own more software.
The goal is to have software that gives the business the operational control and visibility it needs to grow.