The short answer on custom software vs SaaS
When weighing custom software vs SaaS, start from this rule: buy for the parts of your business that work like everyone else, and build for the parts that make you different. Payroll, email, accounting and general ledger are solved problems, and a subscription product is almost always the better choice there. The case for custom software appears when your process is the reason customers pick you, or when the tools you rent force your staff into workarounds every day.
NIST defines software as a service as one of the three cloud service models: the provider runs the application and the infrastructure, and you use it. That trade is the heart of the decision. You give up control in exchange for not having to run anything.
When SaaS is the right answer
We tell clients to buy rather than build when most of these are true.
- The process is standard across your industry, and the product already supports it with configuration rather than custom code.
- You need it working in weeks, not months.
- Your team is small and has no one to own a system after launch.
- The vendor is established, has a published export method, and supports the integrations you need.
- The subscription cost stays reasonable as you add users over the next few years.
When custom software pays off
Custom software earns its cost in a narrower set of situations, but in those situations the gap is large.
- Your workflow is unusual, and the SaaS options only fit if staff keep side spreadsheets.
- You are paying for several products that overlap and still need manual copying between them.
- Per-user pricing punishes growth, or you need many occasional users such as volunteers, clients or field staff.
- The data is sensitive, and you need to decide exactly where it lives and who can touch it.
- The software is part of what you sell, as with our own product, LobbyScape.
Compare total cost, not sticker price
Subscription prices look small because they are monthly. Custom builds look large because the cost comes up front. Neither number tells you much on its own. Put both on the same multi-year view.
For SaaS, count every user license over the period you expect to use it, plus add-on modules, integration tools, the price increases written into renewal terms, staff time spent on workarounds, and the cost of leaving when you eventually switch.
For custom software, count discovery, design and build, then hosting, monitoring, security updates and a realistic budget for changes each year. Software that nobody maintains decays. If you cannot fund upkeep, you should not build.
Put a value on staff time, too. If five people each spend an hour a day copying data between two products, that is a real cost, even though it never shows up on a software invoice.
Many organizations end up with a hybrid: SaaS for the commodity functions and a small custom application that connects them and handles the one process that matters most. That is often cheaper than either extreme.
Integration is where the real cost hides
Most SaaS products integrate well with the popular tools they were designed around, and poorly with everything else. Before buying, list every system the new tool must exchange data with, and confirm each connection exists, is included in your plan, and works in both directions you need.
Custom software can be built around your existing systems instead. That does not make integration free. Third-party APIs change, rate limits apply, and someone has to watch for failures. But you control the design, and you are not waiting for a vendor roadmap to add the connector you need.
A useful test: sketch the path a single customer, order or case takes from first contact to the end of the process. Count how many systems it touches and how many times a person retypes it. If the answer is several systems and several retypings, integration is the problem to solve, and it may be solvable with a small custom connector rather than a whole new application.
Questions to ask a SaaS vendor before you sign
A demo shows the product at its best. These questions show you what living with it will be like.
- Which of our requirements need configuration, which need a paid add-on, and which are not supported at all?
- What does the renewal clause allow the price to do, and how much notice do we get?
- Is there an API, is it included in our plan, and what limits apply to it?
- How do we get all of our data out, in what format, and how long does it take?
- Where is our data stored, who at the vendor can see it, and how are we told about a security incident?
- What happens to features we rely on if the vendor changes its product direction?
The honest costs of custom software
Custom software has its own risks, and a good developer should name them before you sign. The first is maintenance. Browsers, operating systems, libraries and third-party APIs keep changing, and an application nobody updates will eventually break or become unsafe. Budget for upkeep every year, not just for the build.
The second is key-person risk. If one developer understands the system and leaves, you inherit a mystery. Insist on documentation, readable code, automated tests, and a repository in your own account, so any competent team can pick the work up.
The third is scope. Custom projects grow when every wish becomes a requirement. A short discovery phase and a small first release keep the build focused on the process that actually justified it.
Ownership, data and lock-in
Lock-in is not automatically bad. It becomes a problem when leaving is impossible or very expensive. Ask these questions of any option, custom or rented.
- Can we export all of our data, including history and attachments, in an open format, without a support ticket?
- Who owns the source code, and is it held in an account in our name?
- What happens to our data if the vendor is acquired, raises prices, or shuts down?
- Are our hosting and domain accounts registered to us, or to the developer?
How we help clients decide
Foundry Peak builds custom software, but we do not recommend it by default. A short discovery phase maps your process, prices both paths over the same period, and ends with a written recommendation. Sometimes that recommendation is a subscription product and a few integrations. When we do build, the client owns the code, the data and the accounts.
Whichever way you go, write down why. A one-page decision record that lists the options considered, the costs compared and the reasons for the choice is easy to produce and very useful two years later, when someone asks why the organization runs the software it does.