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4 Signs Your Business Needs Custom Software

By Jamie Smyth • Published July 25, 2023

You may be asking, “Can I really afford to build the custom software my business needs?”

A better question may be—can you really afford not to?

Let’s get this out of the way: custom software is expensive. Sometimes, extremely expensive. Anyone who tells you differently is not in the business of making good software.

Some business owners may hear a total dollar amount and immediately determine that their organization cannot afford custom software.

But before ruling out such an investment, it is important for organizations to understand what it might be costing them if they fail to invest in custom software. In other words, what are the hidden costs of keeping your current software systems if your company is outgrowing them?

You may be asking, “Can I really afford to build the custom software my business needs?” A better question may be, “Can you really afford not to?”

When you don’t need custom software

Let’s start by considering when a company does not need to consider a custom solution. Think of purchasing software as traveling from Point A to Point B toward a destination.

If you live somewhere with an excellent public transportation system, purchasing a car may not be a worthwhile investment. If the metro or the bus efficiently and affordably transports you to the desired destination, take it.

Similarly, if your out-of-the-box SaaS easily moves you from Point A to Point B in the direction of your organization’s goals, consider yourself fortunate. You do not need a custom solution.

Often, this is the case for smaller organizations that have a high employee retention rate and low training costs. While no system will seamlessly meet every need, if your systems are working, your staff is sticking around, and there is not a general feeling of frustration from your staff or your customers, you don’t need custom software.

In addition, if your current technology aligns with your long-term business goals, you are content with the current state of your business, and your goal is simply to maintain that over time, then investing in custom software would not make sense for you.

When you should consider custom software

But what happens when a company grows in size and begins to push the limits of its current software systems?

A man is resting his head against a dramatic mound of paperwork, frustrated and defeated.

Increasing Frustration: When Your Existing Software Fails You

One telltale sign that you are outgrowing your SaaS is a sense of sustained and increasing frustration.

If your technology no longer aligns with your business processes, here’s what happens. Your staff is frustrated because it takes an inordinate amount of time to accomplish simple tasks. They might be forced to use multiple systems, multiple devices, and re-enter the same data across platforms.

This, in turn, opens the door for mistakes and inefficiency. An increased amount of time and money for training is required, and a higher turnover rate results.

The frustration then makes its way up to management. The outgrown SaaS creates or contributes to a negative loop of recruiting, training, and losing new staff. In addition, the clunky systems lead to an increase in payroll costs and mistakes that may necessitate costly remediations. The growth of your organization is now stymied.

Worse yet, your customers may also experience frustration if they have to use your system. In response to customer complaints about the UX, your staff member says, “I’m sorry, I can’t help you. There’s nothing I can do about that.” Now, instead of your current systems simply preventing growth, they are harming your company’s brand, your customer relationships, and jeopardizing the revenue earned through repeat customers.

If you are a business owner who is torn between upgrading to enterprise software or augmenting staff and dealing with frustration, consider the potential ROI on the right custom software solution. Compare that to what you are losing over time if you keep the same outgrown systems. If a $250,000 custom software solution can save your company $1 million within the first few years, it has more than paid for itself.

Dealing with Cruft & Rising Subscription Costs

It may also be time to consider custom software if your organization is using a SaaS laden with cruft—badly designed, unnecessarily complicated, or unwanted software.

I saw an example of this recently when I consulted with a pest control company. They are beholden to a software system that has so much cruft that the software company literally offers “university” classes to clients so they can learn how to use (decipher) it. If the classes aren’t enough, customers can pay $150 to $250 per hour for specialized training. That’s a lot of money to understand a crufty system with an interface that looks like it hasn’t been updated since 1999.

In situations like these, many organizations pay for features they simply don’t need or, worse yet, have no idea how to use.

Another factor to consider is rising subscription costs. Many SaaS systems raise their prices every year, and what started as an affordable compromise could become a liability. As your business grows, the value you get from the SaaS keeps decreasing while your subscription costs keep increasing.

The old man hides in his fort made of paperwork and accepts more paperwork from someone through a window like a troll accepting a bridge toll.

Data Provenance: Trust and Control Over Your Data

Data provenance is another consideration when it comes to custom software.

If you ask your team for a report and receive conflicting information from different team members or different systems, that means you have a data provenance issue. If you are using a cobbled-together system, your data resides in different places. This makes it difficult to accurately identify, and therefore correct, the source of the data discrepancy. But if you have one system that is built correctly, it’s much easier for you to trust your data.

Custom software allows you to gain full control of your data by providing the necessary trust and reliability in your data provenance as well as elevated security.

Boosting Business Valuation with Custom Software

If you are a company that hopes to be acquired one day, a discussion about custom software is one you need to have. Having your own IP will increase the value of your business.

In most cases, companies that do not have their own tech will receive a lower valuation because an expensive, enterprise out-of-the-box solution is considered a liability.

On the other hand, companies that own their software system—particularly if it’s a well-built system—will receive a much higher valuation. A custom solution that helps optimize your business is now an asset, especially if it sets you apart from the competition. If your custom software has automated and simplified your business operations, prospects will take note.

The exception to this would be if an acquirer’s goal is to roll up the newly acquired business into a larger one with preexisting processes and technology. In this case, they may not view your proprietary software as something that increases valuation, particularly if integration is challenging.

But generally, custom software is part of the secret sauce that makes you a viable acquisition.

The Potential of Custom Software for Business Growth

So if your out-of-the-box SaaS aligns with your processes, you don’t need custom software. If your goal is just maintenance, you don’t need custom software.

But if your goal is innovation, growth, or acquisition, then investing in your company with custom software might be your best solution. Custom software allows you to start with processes and create a solution that maps to them.

The Smyth Group is ready to help you evaluate your software needs and see if a custom software solution is truly right for you. In the past 17 years, we’ve helped countless clients build custom software that’s resulted in more efficient processes and greater valuation. Get in touch and let’s see how we can do the same for you.


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