SaaS vs. Custom-Built Business Applications: Choosing the Right Solution for Your Enterprise

Frustrated with inflexible software that hinders growth? Struggling to find SaaS solutions that align perfectly with your unique needs? Choosing the right enterprise software is a crucial decision that can make or break your company's long-term success. This guide will help you understand the pros and cons of both SaaS and custom-built software, empowering you to select the approach that drives your enterprise forward. 

What is SaaS?

Software as a service (SaaS) is a specific type of software delivered over the internet. SaaS solutions offer an alternative to “on-premise” systems which require installation on physical servers. Instead, SaaS gives users software access via the cloud. Examples of SaaS applications include email, calendars, and many collaboration tools. 

Subscription-based models are common for SaaS products. Users pay a third party for access to an application. This essentially allows enterprises or single users to rent the software for a limited period of time. Fees typically depend on the length of a subscription or level of use. 

There are two main types of structure for SaaS products: single-tenant and multi-tenant architecture. The former, as the name suggests, gives a single user access to an isolated instance of the technology. While single-tenant architecture allows users more control, multi-tenant architecture has clear advantages, including lower costs, universal updates, and (usually) better performance.  

Pros of SaaS

SaaS products are an enormously popular way to access high-quality software. For particular needs and businesses, a SaaS application can offer an ideal solution. 

Fast Deployment

It’s not uncommon to hear a SaaS product described as an “off-the-shelf” or “plug-and-play” solution. These terms capture the speed at which users can get started using the technology. This ready-to-use quality of SaaS effectively eliminates lengthy development time for users.  

Cost-Effective

SaaS products can make accessing game-changing technology more affordable for companies—at least initially. While subscription fees do add up in the long run, SaaS applications require a lower upfront investment than custom development. This is particularly true for companies with few users on use-based subscriptions. 

Easy Maintenance

Maintenance for SaaS applications is practically effortless. The SaaS provider pushes updates and upgrades to users as needed. So, there’s no need for costly re-installations or on-site IT support. Upgrades are included in subscription fees and are essentially subsidized by other users. 

Scalability 

SaaS products make it easy for users to adjust user licenses based on needs. With SaaS applications, you don’t have to worry about your team outgrowing software designed for a smaller team. Likewise, you can scale back your subscription if you no longer need as much access as you once did. 

Cons of SaaS

While a SaaS approach to software does have benefits, there are also a few important drawbacks to understand. Be aware of these downsides of opting for a SaaS application over a custom solution. 

Limited Customization

Because SaaS products are ready to use quickly, features are standardized for users. The ease of use comes at a cost—limited customization. While many businesses face similar challenges, no two companies are identical. SaaS applications hinder the ability to tailor a piece of software to a unique business process or goal.

Vendor Lock-in

Once you establish your data and users with a particular SaaS solution, migration to a different application can be complex and costly. Extracting data from an application and transferring it to another is often difficult and time-consuming since the workflow is different within each tool. In addition, training staff to adopt the new system can require significant time and resources. The hassle of switching often keeps companies locked in with one vendor, even if prices increase. 

Security & Compliance Risk

When you opt for a SaaS product over a custom solution, you’re at the mercy of the vendor’s security measures. While this isn’t a problem for all companies, it poses an issue for some businesses in regulated industries, such as finance and healthcare. You might face compliance issues by using a SaaS product with insufficient security protocols.

Long-Term Costs

While SaaS applications offer the benefit of low upfront costs, they can be costly in the long term. Recurring subscription fees can accumulate over time especially if your business experiences growth. User-based fees can become very expensive to maintain.

What is Custom Software Development?

Custom-built software is a digital solution specifically tailored to an enterprise’s needs. Unlike a SaaS application, custom software is built around only one set of user needs. 

The multi-tenant architecture commonly found with SaaS products usually does not apply to a custom-built application. Instead, enterprise software development accommodates just one group of software owners. 

Pros of Custom Software 

Custom software has several important benefits. For many companies, the advantages of building a custom tool outweigh the convenience of SaaS applications. 

Full Customization

One of the most compelling reasons to choose custom software is the ability to tailor the tool to your needs. A custom-built solution offers exact alignment with business processes and workflows. There’s no need to make an off-the-shelf feature work when something else would be better.

Unique Competitive Edge

Custom software offers the ability to create something totally unique. With a SaaS product, users have access to the same toolset. Custom-built solutions give you the potential to develop innovative software features, which can give you a market advantage.

Ownership & Control

When you build a tool from the ground up, you retain full control over the software, its data, and integrations. You don’t have to worry about a third-party SaaS provider using your information, and you can ensure your software is interoperable with the other programs you need. 

Potential Long-Term Cost Savings

Building custom software is an investment, but often you’ll save money in the long run. Custom-built software eliminates recurring subscription fees. Any costs associated with maintaining a custom solution are potentially significantly lower than ongoing subscription costs. 

Learn more: How to Calculate the ROI for Custom Software

Cons of Custom Software

Before you choose the custom software route, be aware of a few drawbacks to this approach. Still, depending on your business and goals, the pros might outweigh the cons. 

Higher Upfront Cost

Custom software requires an upfront cost typically higher than you would pay for access to a SaaS solution. That’s because custom solutions require an initial investment in development. You’ll likely need to hire a dedicated development team that can build your custom software idea. 

Longer Time to Market

If you want to build a custom software solution, you’ll need to plan for in-process time. Development and deployment for custom software take longer than for a SaaS implementation. That means you can’t address your business goal through the software as quickly as you might otherwise. 

Learn more: How Long Does It Take to Build a Custom Application

Maintenance Responsibility

When you choose a SaaS solution, the vendor is responsible for maintaining and updating the software. When you build a custom solution, however, the onus of maintenance will fall on you. You’ll either need an in-house or outsourced development team to handle software updates and troubleshooting. 

Key Factors to Consider When Choosing

SaaS applications and custom-built software have their place. Consider these key factors to determine which approach is right for your business. 

What Are Your Business Needs?

Before you opt for a custom software solution, consider: How unique are your business processes? If your processes and goals are relatively similar to other businesses, chances are SaaS features will suffice. On the contrary, a custom-built application might be well worth the effort if you’re trying to find a software solution for a one-of-a-kind business need. 

Learn more: Is Custom Software Development Right for Your Business?

Do You Have the Budget for What You Need?

The upfront investment cost of custom software can pay off in the end, but not every business can afford it. Weigh the cost of upfront investment versus ongoing subscriptions. Which option makes the most financial sense for your company in the short term? In the long term?

Learn more: Build vs. Buy: Which is Right for Your Business?

How Critical is Control Over Your Software and Data?

In some industries and for some companies, control and security are absolutely paramount. In high-risk industries, like aviation and healthcare, giving up some oversight to a vendor is simply too risky. For others, less control is not a huge issue. 

What is Your Long-Term Business Vision?

When making your decision about custom or SaaS enterprise software, think beyond today. You can’t read the future, but any insights or plans you have for the future could sway your decision. Are you planning for significant growth? Perhaps, a custom-built solution will better prepare your team for growth. Alternatively, do you anticipate changing software needs? In that case, a SaaS application might offer more flexibility to change course later. 

Learn more: Key Questions to Ask When Planning to Buy Custom Software

The Strategic Decision: SaaS vs. Custom Software. Designli Can Help.

When it comes to choosing SaaS vs. enterprise software, there’s no one-size-fits-all answer. Both software development approaches have their merits. For some businesses, SaaS tools fit the bill, while for others, enterprise software development pays off. 

To determine which path to take, it’s important to conduct a thorough analysis of business requirements, budget, and future goals. The answers to key questions about where your enterprise is today and where you hope to take it will guide you toward the right choice for you.

In many cases, the choice is more nuanced than simply SaaS vs. enterprise software. Sometimes, a hybrid approach—where you build upon or customize certain aspects of a SaaS tool—offers an ideal solution. 

Interested in exploring all your enterprise software options? Designli can help. Our experts understand the full spectrum of available options and can support you in landing on the right choice for your business. Schedule a free consultation to get started. 

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