Are you considering a software development investment to address some business growth goals or roadblocks standing in your way?
Software Development: Then vs. Now
A generation ago, buying software meant shopping for end user license agreements (EULAs) for popular off-the-shelf software applications. This included word processing, spreadsheet, presentation graphics, and database management software. Software got installed through various kinds of media -- including CD-ROMs and shared network drives -- to desktop computers, notebooks, and servers. Somewhere along the line, the operating systems (OS's) and network operating systems (NOS's) themselves became the focal point.
Around this time, some companies invested in software development projects to address needs that couldn't be tackled with conventional, shrink-wrapped software. But these kinds of custom software development projects typically only made financial sense for large enterprise IT departments.
About a decade ago, most companies began migrating from traditional client/server software to software that runs on other companies' servers, in the public cloud, on a subscription basis. While the idea of application service providers (ASP's) dates back to the beginning of the commercial internet, software as a service (SaaS) fundamentally changed how companies license software.
Drawbacks of SaaS (as Compared to Developing Your Own Software)
Even though SaaS often initially appears to be the overwhelming preference in a digital-first world, when you dig beneath the initial marketing pitch, SaaS has many drawbacks.
For starters, although SaaS can be very quick to deploy, SaaS pricing can also get very expensive, very quickly. You, many times, only find this out when additional users and features beyond the base offering get added.
Second, unlike traditional client/server software, SaaS can be nearly impossible to customize -- if customization is even an option. So companies are often forced to contort their processes to a product manager's consensus -- or seek alternatives elsewhere.
When a company concludes that their SaaS investment is getting way more expensive than it envisioned or not flexible enough to address their actual business needs, custom software development usually makes the most sense.
What are the two tell-tale signs that software development truly makes sense for your company's goals, plans, and challenges?
1. Growth- and Scale-Related Problems
Unless your company's founders come from an IT or operations background, company leadership teams are often unprepared for the inevitable problems resulting from growth at a faster pace than expected.
How can you tell that a company like this is headed for trouble?
You'll find that the employees spend a lot of time on manual data entry across multiple systems that don't communicate with each other. And in many cases, there isn't even data entry because daily operations center around paper-based files, clipboards, whiteboards, and Post-It notes.
No matter how careful a company is with hiring, manual, labor-intensive systems result in a lot of human errors, inconsistent information across departments and locations, slow response time, and an overall lousy customer experience.
It's also highly likely that a growing company with manual systems is losing a lot more time (through abysmal efficiency and productivity) and money (through non-existent expense tracking) than it realizes.
You can't improve what you don't measure. However, the first step to address growth-related problems is admitting that your company has a problem. More specifically diagnosing the problem is usually the starting point for a software development project.
2. Income Generation
Companies also invest in developing custom software, because they see a business opportunity.
In this context, a CEO or product manager envisions building a SaaS platform as a commercially-viable product. Why? The company's leadership is trying to solve a big problem that they've identified in the marketplace.
Perhaps the company builds an e-commerce platform that sells a niche product to an under served market. Or maybe the company creates a software application to help that same under served market solve their biggest growth bottleneck.
However, sometimes the problem is more internal than external. In other words, in a mid-sized company or enterprise, there are often internal customers struggling with a problem. Maybe the company struggles to keep track of its inventory across warehouses. Or perhaps there's an HR problem around tracking regulatory compliance that has spiraled into seven-figure fines and litigation.
Either way, if a poorly-conceived internal problem or set of problems is generating negative income (i.e., losing a lot of money), developing custom software can often be the most practical solution.
The Bottom Line on Whether Software Development Makes Sense
In a world where there is so much digital transformation and disruption going on, most companies can no longer be complacent -- resting on their laurels and past successes.
As the celebrity investors on The Shark Tank generally advise entrepreneurs: You need to work on growing your business as if someone on the other side of the planet is running 100 miles per hour, 24 hours a day, to take it all away from you. Because in a global economy, that's precisely what's going on.
For many companies to remain competitive in a digital-first world, they need to up their game on IT investments. In this article, you've learned how investing in software development fits into addressing your company's goals, plans, and challenges.
What type of software development investment is your company looking to address? Share your thoughts in the section for comments below.