Build vs. Buy Decision for Custom CRM

Introduction 

Is your business outgrowing your customer management systems? Facing hidden costs, slow email replies, and data silos is enough to cause a headache. In that case, it is time to adopt Customer Relationship Management (CRM) software. CRM adoption has been shown to increase sales revenue by 30% and up to 31% in conversions. This is where the build vs. buy decision for custom CRM comes into play.

On one hand, a custom CRM gives you full control and lets you customize according to your business needs. Whereas buying an off-the-shelf CRM is easy to deploy without the hassle of hiring developers. Each method comes with its own set of benefits and drawbacks, and choosing the wrong approach can lead to more challenges down the line. 

In this article, we will examine both build vs. buy options for CRM and their trade-offs, including time, cost, and scalability, as well as a guided framework to get started. Remember that what works for one company may not align with another. 

Key Takeaways 

• For SMBs or startups, a proven CRM solution is preferred compared to a custom build to support standard processes in a short period of time. 
• For large organizations with substantial budgets and unique workflows, hiring a development team to build custom CRM software is ideal. 
• For an optimal middle ground, the Hybrid approach is where an industry CRM platform is customized with added features. 

Build vs Buy: Clear Comparison 

At the heart of the decision, the choice lies in what is best for your business goals. The right choice can help your company grow, while making the wrong choice can cost you dearly. Here is a quick comparison to put both options in perspective.

When to Build Custom CRM? 

Building a custom CRM is indeed a big commitment, and is only suited for the right use case. So if your business model is unique and no existing solution fits your needs, then building is the right choice to drive long-term growth.

• Your business is complex and has a unique workflow 
• Off-the-shelf CRM solutions are not the right fit 
• Building a custom CRM is needed for long-term growth 
• Industry specific compliance rules 

Benefits of Building CRM

• • Competitive Advantage: Building your own CRM means you have a one of a kind unique software that makes you stand out from your competitors. This can be the difference between generic off the shelf solutions and your unique product. 

• Perfect Fit: A custom CRM is akin to tailor making a shirt that is made to fit your body size. This is often the case in specialized industries like banking where custom CRMs are built to fit your process. 

• Ownership: You have full control over the whole software, including the code, roadmap, features, etc. There is no risk of a vendor company suddenly increasing the subscription cost or changing features out of the blue, since you own the data.

Risks of Building CRM 

• High Initial Costs: Building comes with massive costs, which is not affordable for most companies unless you have a substantial budget. This is not a matter of thousands of dollars, prices can reach the millions even – since you’re paying for an entire team of developers for months before having anything substantial to use. 
• Ongoing Maintenance: The hidden costs behind maintaining a software like scaling, updates, and bug fixes is a big undertaking. You need a in-house team to keep working on maintenance continually to keep your custom CRM running in good shape. 
• Wasted Effort: After months of building, you might only discover that a similar solution already exists in the market – this situation occurs frequently. Which means that all your effort for the past few months and the budget have been wasted. 

When to Buy an Off-the-Shelf CRM?

Now buying is the faster route and most companies would opt for this option. If your business has standard CRM needs, looking for low costs then an off-the-shelf CRM will help you speed up time-to-market. 

• Your business has general CRM needs 
• Looking for low upfront costs 
• Time to market is important 

Benefits of Buying CRM 

• Speed to Value: Buying an off-the-shelf solution means you don’t have to wait a long time to start using the product. If you subscribe on the previous day, you can start using the CRM as early as the next day as most pre-built CRMs are cloud-based.  
• Costs are Predictable: Another benefit is the cost of implementation, which is ideal for businesses with typical requirements. You pay a certain amount per month/year, so your bill won’t have any sudden increases out of the blue. 
• Less Maintenance Hassle: Maintenance is often the culprit of hidden costs, and buying means that the vendor will handle everything. From fixing bugs, to updates, and new features, these are all a part of the package deal. 

Risks of Buying CRM

• Less flexibility: There is less flexibility in ready-made CRM solutions compared to custom CRM. Some third-party tools cannot be customized, and not all the features will be useful for your business, which can feel like a waste. 
• Challenging to Integrate: An off-the-shelf CRM is a one-size-fits-all solution, and although it’s built to suit most use cases, it may not suit yours. If your business has a unique process, then it can be challenging to connect with your tech stack or need third-party plugins. 
• Vendor Lock-in: Another major issue is vendor lock-in. It can be quite costly to extract all your data if you do decide to switch to another CRM tool from a different vendor. Not to mention the termination fees and retraining staff. 

The Middle Ground: Hybrid CRM Model 

Other than the typical Build vs Buy approach, there is an emerging solution, namely the hybrid approach. This combines both buying a solution and building on top of that. 

For instance, say you buy a standard CRM platform that solves maybe 70-80% of your needs, like reports, sales, etc. You then either use APIs or hire an experienced developer team to build the last 20-30% that is unique to your business, like a custom payment tool. 

This hybrid model allows you to maximise the benefits of both approaches – the low cost of buying while getting the customization of building your own unique feature. Hybrid solutions are ideal for enhancing an existing system rather than a full replacement. 

Build vs Buy Decision Framework: Guided Steps 

Making the decision is not just about the advantages and disadvantages of build vs buy. You have to align with your business needs and long term growth. And this practical framework is going to help you do that by weight. 

Step 1: Define Business Needs

Determine the core objectives of your business, for instance, do you want to speed up workflows? Improve customer experience? Along with that, list the core features that the software needs to have, and the more specific you are, the easier it will be know whether a ready-made solution or a custom build is the right fit for you. 

Step 2: Evaluate Functionality Against Criteria

Identify the functions/features that are essential for your business (MoSCoW method is useful), and ensure whether these can be met in an existing software or needs to be customized. Consider how either building or buying will meet your expectations. 

Step 3: Evaluate the Capabilities of Building & Buying

3.1 Analyze Costs (TCO)

What is the end goal of the financial commitment of each option? Calculating the Total Cost of Ownership will help you decide which solution is best for you. Consider the following:

• Initial Investment of buying a licence/subscription compared to creating a custom software
• The ongoing expenses like maintenance, updates and if you’re building additional cost of hiring a development team
• Also count in hidden costs such as training staff, integrating with existing solutions, etc.

3.2 Time-to-Value and Risk 

If your company deals with time-sensitive initiatives then buying will make more sense. However if you have time to spare, then building a custom software is the way to go. Main points:

• The timeline of development and implementation
• Risk of project delays, quality issues, and cost overruns
• Learning curve for team members
• Complexity of the project 
• Vendor reliability 

3.3 Assess Flexibility and Scalability  

Evaluate the potential of each approach to accommodate your business needs in the long-term. Buying offers very good time-to-value but could slow you down since it has limited flexibility to meet complex needs. Building on the other hand provides more control over customization and can be designed to scale as your business grows. 

3.4 Long-term Maintenance & Support  

Think of the long-term implications, say a year down the line; things like maintenance, the cost of switching, support, etc are a few factors to take into account. For custom built software think about the resources that’s needed for ongoing support. And for bought solutions make sure that the vendor you choose offers extensive maintenance. 

Step 4: Audit Internal Capabilities and Resources

Consider your organization’s capabilities, and honesty assess whether you have the technical ownership to go for a custom build as opposed to a ready made solution. Even a good solution can collapse if it does not mesh with your company’s culture, infrastructure, and skills. Points to note:

• Do you have available developers or do you need to hire a team? 
• Who will be in charge of quality, timelines, updates, and post-maintence? 
• Does your company’s culture better suit buy or build paths?

Step 5: Make the Decision 

After analysing various factors, it is time to make an informed decision. Use a weighted scoring matrix to judge each factor based on what’s most important for your organization. 

Rate the “Build” and “Buy” options on a scale of 1-5 (1=Poor, 5=Excellent) for the following criteria. Weigh the criteria based on what’s most important to your business. For some companies, priority might weigh heavily on speed to market or ease of maintenance, and others might prioritize different aspects.

Note: The option with the higher total weighted score aligns better with your prioritized needs. This particular example shows a slight edge for “Build” due to the higher value placed on the ‘Strategic Fit’ and ‘Data Control’ factors.

Once you have made your decision, the final step is to acknowledge the risks involved and plan to combat them. 

• For Buying: Negotiate with the vendor about the pricing before signing a long-term contract. Choose strong platforms like Salesforce or Odoo that have strong APIs – allows for future customization.
• For Building: Start with a Minimum Viable Product (MVP) that focuses on the core workflows. Budget for post-maintenance like updates, training and more from the start. 

Build vs Buy Decision based on Organization Type 

The build vs Buy decision for custom CRM also depends on the size of your organization. This is because SMBs and startups will have different priorities and that will influence their choices. 

Startups and SMBs 

For small to medium businesses with limited budget and smaller teams it’s more important to enter the market rather than having a unique solution. For this reason, CRM platforms like Salesforce, AWS and other integrations like Shopify are the top choice of many new startups. 

Enterprises 

For large enterprises the decision is more complex, as these organizations often operate in large environments where the software needs to interact with internal systems and unique workflows. Off-the-shelf solutions may not support or provide the flexibility that is needed.

A custom CRM is often built from the ground up by in-house teams or outsourced developers and can cost up to hundreds of thousands. Compared to off-the-sheld solutions, custom CRM can integrate flawlessly with marketing tools, ERPs, automate tasks, meet specific compliance, and more. 

Conclusion: Making the Right CRM Choice

At Nascenia, we know that the build vs. buy decision for custom CRM is not to be taken lightly. Building a custom CRM gives you ultimate data control and flexibility if your business has a unique workflow with specialized needs. If speed and reliability are your objectives, then buying a premade CRM solution is the most cost-effective option for businesses with standard requirements. 

In certain situations, the most optimal solution may be the hybrid CRM approach, where a proven CRM platform is extended with custom features. Whatever your build vs buy decision is, it is important to weigh all the factors, such as time to market, scalability, ongoing support, etc before making an informed decision that delivers maximum ROI.  

As an experienced software development company, we help businesses to choose the best approach – build, buy or adopt a hybrid CRM solution that delivers maximum value and fulfills long-term goals.

Discuss your CRM strategy with us and receive assistance to make the right decision.