When it comes to buying vs building software, my default position is clear:
Buy the foundation.
Build only what truly differentiates you.
As a Fractional CFO, I strongly prefer purchasing core systems — ERP, AP/AR automation, payroll, FP&A/EPM, and basic analytics — and only developing custom workflows when the business model is unique enough that off-the-shelf tools create distortion or block scale.
Simply put: buy your base applications and selectively build the workflows that create real competitive advantage.
The Case for Buying Software
For most companies, buying software wins on speed, cost efficiency, and operational clarity.
1. Speed to Market
Modern SaaS platforms deploy in weeks — sometimes days.
Internal builds often take quarters or years.
When you’re fixing reporting, tightening cash management, or improving forecasting, time-to-value matters.
2. Lower Operational Burden
Building internally requires:
- A full IT support structure
- Ongoing upgrades and testing
- Cross-department sign-offs
- Security oversight
SaaS vendors distribute these costs across thousands of customers. You benefit from maintenance, compliance updates, and feature improvements without funding a product team.
3. Battle-Tested Finance Practices
Off-the-shelf tools embed standardized processes for:
- Revenue recognition
- Month-end close
- Compliance controls
- Audit trails
That reduces design risk and audit friction.
4. Continuous Innovation
AI forecasting, anomaly detection, and workflow automation are constantly evolving.
When buying software, innovation comes bundled.
5. Focus on Strategic Finance
Every hour spent managing internal software is an hour not spent on:
- Pricing strategy
- Cash conversion improvement
- Margin expansion
- M&A analysis
That opportunity cost is real.
The Downsides of Buying Software
Buying isn’t perfect.
Limited Flexibility
You operate within the vendor’s data model and roadmap. Complex pricing or unconventional revenue models can hit ceilings.
Subscription Creep
As you grow, so do licenses, integrations, and add-ons — driving total cost of ownership higher.
Integration Friction
Multiple SaaS tools stitched together can create spreadsheet workarounds and fragile workflows.
When Building Software Makes Sense
When I encounter limitations — usually around complex pricing logic, proprietary revenue models, or unique operational data — I evaluate building targeted components on top of a purchased core.
The Case for Building Software
1. Designed for Your Reality
Custom software reflects your actual approval flows, business logic, and performance standards — instead of forcing your team to adapt to rigid workflows.
2. Strategic Differentiation
If your proprietary engine (pricing, fraud detection, capacity optimization, scoring models) drives competitive advantage, owning that logic can matter.
3. Control and Ownership
You control:
- Product roadmap
- Data model
- Release cadence
No dependency on vendor prioritization.
The Risks of Building Software
It’s More Complex Than It Looks
Internal tools require:
- Product management
- Engineering
- QA
- Security
- Documentation
- Ongoing support
Scope creep is common. Delays are normal.
Hidden Lifecycle Costs
Version 1 is only the beginning.
You still owe:
- Bug fixes
- Refactoring
- Compliance updates
- Training
- Scaling investments
Without sustained funding, internal tools decay.
Key Person Risk
If one engineer holds critical knowledge, turnover becomes a serious operational risk.
How I Decide: A Practical Build vs Buy Framework
When evaluating buying vs building software, I run each decision through three filters.
1. Is This Strategic or Commodity?
Commodity functions (buy):
- Payroll
- Basic general ledger
- Standard CRM
- Ticketing systems
The market has already optimized these.
Strategic functions (consider building):
- Proprietary pricing engines
- Custom revenue models
- Exclusive operational planning logic
- Unique data science models
2. What Is the Time-to-Value Requirement?
If impact is required this fiscal year, I lean toward buying.
If we’re executing a multi-year transformation with funded engineering capacity, building becomes viable.
3. Do We Have Real Engineering Capacity?
If you don’t have a stable, funded internal team committed to maintaining the system long term, you should not build it.
The Blended Approach: My Preferred Strategy
In most cases, the best answer to buying vs building software is not binary.
It’s hybrid.
Buy a solid core system.
Extend it intelligently.
Use low-code tools, APIs, dashboards, micro-workflows, and targeted decision engines layered on top of a dependable SaaS foundation.
This approach:
- Reduces risk
- Accelerates time-to-value
- Controls lifecycle costs
- Preserves differentiation
You avoid rebuilding what the market already perfected — while still owning what truly sets you apart.
Final Thought
Software should support your business model — not become the business model.
As a Fractional CFO, my bias is clear:
Buy the base. Build the edge. Scale with discipline.
