Custom software or off-the-shelf SaaS: how to decide

The difference in one sentence

With SaaS, you adapt the way you work to the software. With custom software, the software adapts to the way you work. Everything else follows from that difference: lead time, cost, control and room to evolve.

When SaaS is the right choice

For most everyday needs, an existing product does the job, and often better than anything built in-house:

• The need is standard. Accounting, payroll, invoicing, email, classic customer relationship management: vendors have had entire teams on these for years.
• The rules change often. For payroll or tax, the vendor keeps up with regulatory changes for you.
• You need to start this week. SaaS is configured in days; custom software is built over weeks, sometimes months.
• Usage is limited. For a few users and a simple process, a subscription will stay cheaper than development for a long time.

If this list describes you, don't have software built. We would rather tell you so in the first conversation.

When custom software pays off

• Your process sets you apart. The way you plan, handle requests or serve customers is a competitive advantage. Squeezing it into a generic tool weakens it.
• Workarounds keep piling up. Spreadsheets kept next to the software, double entry, manual exports every week, data copied from one tool to another: these are hidden costs, paid in hours.
• The per-user cost keeps climbing. Subscriptions priced per user or by volume weigh more and more as the team grows.
• Your systems need to talk to each other. If the tool lacks the integrations you need, or only offers them in a higher tier, the problem remains.
• The software is your product. If you want to sell a platform to your own customers, you need a SaaS of your own.

Comparing costs over five years

Comparing a monthly subscription with a development cost only makes sense over the same period. Here is a made-up example, just to show the arithmetic:

In this example, custom software is cheaper over five years. With 10 users instead of 40, it's the other way around: the subscription costs only $38,000 over the same period. The outcome depends entirely on your situation, and the arithmetic doesn't tell the whole story:

• SaaS includes hosting, support and the vendor's new features. Those features don't always match your priorities.
• Subscription prices go up, and the vendor alone decides the roadmap.
• Custom software takes an upfront investment and a vendor you trust for what comes after. In return, you set the priorities and you own the code.
• Hours lost to workarounds appear on no invoice, but they get paid all the same.

The middle path: keep your tools and build around them

The right answer is rarely "all SaaS" or "all custom". Most often it is a mix: off-the-shelf products for standard functions, and targeted development where they fall short. That usually takes one of these forms:

• an integration that connects your tools and ends double entry;
• a custom module for the process that sets you apart, plugged into your existing software;
• a dashboard that brings together data from several systems.

That is the approach behind two platforms we designed. CornerPilot builds on merchants' Clover registers to give them dashboards and alerts, with no change of register. PaxRelay connects to carriers' operational systems through APIs, webhooks or files, without replacing them.

Questions to ask before choosing a SaaS product

• Can you export all your data, in a standard format, at any time?
• Does the product offer a documented API to connect it to your other tools?
• Where is the data hosted, and does that meet your obligations? Québec's Law 25, for instance, requires a privacy impact assessment before personal information is sent outside the province.
• How does the price change if your team doubles?
• What happens if the vendor is acquired or shuts down?
• Are the features you're missing on the roadmap, with a date?

Deciding in practice

1. List your processes and, for each one, the tools involved and the frustrations that come back every week.
2. Sort each process: standard or distinctive.
3. For standard processes, try two or three products on a real case, not on the vendor's demo.
4. For the rest, estimate the cost of an integration or a custom module, then compare over five years. Our budget estimator gives you a first order of magnitude.

For a second opinion, tell us about your situation. We'll tell you plainly if an existing product is enough.