Subscription management software: Buy or Build?

The goal of any major software project should be to solve a business problem or streamline a business process in the most cost-effective way. So, when deciding on mission-critical software for your business operations, what are the relative merits of building in-house versus buying an off-the-shelf solution?

For a subscription-based business, your billing and subscription management software will ultimately determine the quality, consistency and scalability of your service.

Efficiently managing the customer lifecycle, including automatically processing recurring payments whilst ensuring that charges are timely and accurate, is the route to brand loyalty and customer retention.

Most businesses face the conundrum of whether to buy or build at some point. In fact, back in 2014, Facebook made waves by switching from Salesforce to developing its own sales software in-house.

Each route comes with its own pros and cons:

The case for Build

Building your own software solution from scratch holds one huge advantage over buying – you have total control over every feature and function. Whilst a standard off-the-shelf product may meet 80% of your needs, building your own solution means you can meet 100% of your requirements, no matter how unique you think your business is.

Then, as your company grows and your requirements change, you can also continue to develop and evolve your in-house system to keep up with the demands of the business, without being constrained by the roadmap or flexibility of a product vendor.

While many software vendors will offer a degree of customisation to their solutions, just how granular that customisation is, and how utilitarian those options are will vary considerably – and the larger the vendor, the lesser the attention your instance will warrant.

However, you must ask yourself two key questions:

• Can your business in fact deliver on the proposed project?
• Is a custom-built solution sustainable in the long term?

Building the software itself will incur a large drain on staff time and finances. As will maintaining and upgrading that software over time, with its associated workload and incremental costs. Furthermore, simply estimating the time required for the initial build can be difficult, and unexpected costs can quickly become considerable expenses – time and money that could be better spent elsewhere?

Unless your business already has a stock of software developers, you’ll need to bring in an additional contingent of techies – will you keep them on after the software is built for maintenance and on-going enhancements? And how much will keeping them on for the duration of the software’s lifetime add to your outgoings? Conversely, if you don’t keep them on, who will fix the inevitable bugs? And if some or all leave of their own accord, will you still be able to manage and maintain the software they built?

If you are a software business, then perhaps it is logical to use the skills you already have in-house to build the system you need? But if this diverts key resources away from developing and enhancing your own products and services, is it time well spent to ‘reinvent the wheel’?

With one survey reporting that only 29% of IT projects are considered successful, and another giving custom build projects a failure rate of 31% - if issues arise, do you continue with the project, or do you abandon all together?

The case for Buy

Of course, the key benefit of buying off-the-shelf software is that it is available now; no need to wait for the software to be developed. And modern SaaS applications can be easily integrated with other systems, including payment gateways, e-commerce platforms, catalogue management software and more, with implementation timelines being counted in days or weeks, not months. Furthermore, that software is updated on a product roadmap, providing access to new features and functions on a regular schedule.

While off-the-shelf software may not be able to meet all your business needs, is this a trade-off worth making in exchange for the product being available now, and someone else taking responsibility for maintenance, upgrades, security and scalability?

The rise of SaaS-based solutions has reduced up-front costs for off-the-shelf software, with many vendors providing different packages and plans based on product features and capabilities. Most SaaS vendors charge on a “pay-as-you-grow” basis, meaning you can start small and then only pay more as you use more, whether that is more users, more transactions, more API calls, more storage, or simply access to more features and functions on a different plan.

However, in signing up to use SaaS applications, you are also opening up your data to third parties. When your customer data ends up “in the cloud”, can you guarantee that it remains secure in transit and when stored? Understanding where and how your data is actually stored is critical, and that is where internationally recognised standards such as ISO 27001 and PCI-DSS are vital.

Another limitation when buying software, is that you are not in full control of the software and its features. You can’t directly control what is developed and with no access to source code, there’s little you can do about bugs either, thus you need to be sure that your application comes from a vendor with a track record of successfully delivering and maintaining software.

But even when you buy, you still need to allocate in-house resources who will administer and maintain the system for your business – configuring new features, testing patches, managing users and so on. So buying does not alleviate the need for in-house resources completely.

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In the last decade, a number of high-profile in-house software duds, including the BBC’s Digital Media Initiative and the UK Border Agency’s e-Borders project have scuppered both finances and company reputations, and the private sector is home to countless more failures.

Is it prudent in every case to opt for your own proprietary solution? Ultimately, if the software in question is not related to your core value proposition, and doesn’t add to your revenue stream, then the risk and challenge of building may be too much for little in the way of reward.

Imagine you’re choosing whether to buy or build a house – building may never cross your mind unless you have significant resources to spend, or highly specific needs, but if you choose to, you have full control over its layout and architecture, you’re liable for if and when the project runs into difficulties. When buying, what you sacrifice in, say, design, you gain in avoiding the hassle of overseeing the build and waiting for completion.

With many SaaS providers now catering for all manner of software needs, buying may well be the best way to go for most businesses.