Build vs Buy: A Decision Framework for Enterprise Software in 2024

The build vs buy question appears simple on the surface: do you buy an off-the-shelf software product, or do you build something custom? In practice, the decision is nuanced, depends heavily on context, and the wrong choice is expensive in either direction. Organisations that buy when they should have built end up trapped in vendor contracts with software that never quite fits their processes. Organisations that build when they should have bought spend years maintaining custom systems instead of focusing on their core business.

The rise of SaaS has added a third option — subscribe — that has changed the calculus significantly. For many categories of enterprise software, the question is not build vs buy but rather which SaaS product, or whether to build something custom that integrates with best-of-breed SaaS components. Our framework addresses all three options.

The first question is: does this capability differentiate your business? If the answer is yes — if this software gives you a competitive advantage that your competitors do not have and cannot replicate by buying the same product — then building is almost always the right answer. Netflix does not buy an off-the-shelf content recommendation engine because their recommendation algorithm is a core competitive asset. Your ERP system, by contrast, is not a competitive differentiator: your competitors use the same SAP or Oracle products without disadvantage.

The second question is: what are the total cost of ownership comparisons? Build costs are often underestimated. The initial development budget is only the beginning — ongoing maintenance, bug fixes, security updates, and feature additions typically cost 15–25% of the original development cost per year, indefinitely. SaaS subscriptions feel expensive year over year but include all maintenance, infrastructure, and platform evolution. A genuine TCO comparison over a 5-year horizon often surprises organisations who assume building is cheaper.

The third question is: what is the maturity of available products in this category? For common business functions — accounting, CRM, HR management, project tracking — the SaaS market is mature and competitive. Products like Salesforce, HubSpot, Xero, and Workday have been refined by thousands of customers over many years. Building a custom CRM to compete with Salesforce's feature set is almost never justified. But for domain-specific workflows — a custom logistics optimisation engine, a proprietary underwriting model, a bespoke trading platform — commercial alternatives may simply not exist.

Buy or subscribe when the category is commoditised, when a best-of-breed product exists that covers your requirements at 80%+, and when the remaining 20% can be addressed through configuration, integration, or accepted process change. Most organisations are better served by adapting their processes to fit a best-in-class product than by building something that exactly matches their current process (which will change).

Modern SaaS products offer significant integration flexibility through APIs, webhooks, and pre-built integration platforms like Zapier, Make, or enterprise iPaaS tools. Before deciding to build a custom system, explore whether a SaaS product with strong integration capabilities — plus custom development of the integration and workflow layer — delivers the outcome at lower cost and risk.

Build when the software is core to your competitive differentiation, when no commercial product adequately covers your requirements, when you have significant data or process sensitivity that makes third-party SaaS unsuitable, or when your scale makes the economics of custom development clearly favourable to subscription costs.

When you decide to build, the most common mistake is scoping too broadly. Start with the minimum viable product (MVP) that delivers the core differentiating value, learn from real user feedback, and iterate. The organisation that tries to build a complete replacement for an existing SaaS product in one go typically delivers late, over budget, and with features users did not actually need. Build the core, ship it, learn, and expand.