The Tool Desk
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When does building software make more sense than buying?
A build decision is strongest when the software enables a business process, product capability, or customer experience that materially differentiates the organization. It also becomes more compelling when available products cannot satisfy an important functional, integration, data, or operating requirement without awkward workarounds.
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Building gives an organization more control over design and change, but transfers responsibility for development and ongoing operations to its own team. Microsoft’s Azure Well-Architected Framework cautions that “A custom solution requires effort up front and over time” (Microsoft Learn). A business case should identify the people and budget that will sustain the product—not just those that can deliver its first release.
Account for ownership after launch
Custom software needs an owner for maintenance, dependency and operating-system updates, testing, security, backups, user support, and changes in business requirements. If the organization cannot provide that capacity, the control gained through customization can turn into a support liability.
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When is buying SaaS the better choice?
Buying is usually more attractive when the need is common, a mature product covers the requirements that matter, and speed to usable service is important. SaaS can shift hosting, infrastructure maintenance, and support to the provider. In exchange, the customer pays subscription or license charges and accepts less control over the product’s design and roadmap.
Evaluate actual fit rather than relying on a vendor’s feature checklist. Confirm that the product works with required systems, provides suitable data access and export, meets security and service expectations, and offers support terms that match the organization’s needs.
Test the pricing model against real use
Find out whether charges are based on seats, users, cores, storage, API calls, or another meter. Where consumption or additional usage charges apply, ask for estimates based on production-like usage. A price that fits a small initial rollout may not represent the cost at broader adoption.
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Is tailoring an existing platform a useful third option?
Instead of starting from scratch or accepting a SaaS product unchanged, an organization can extend an existing managed or well-architected platform. That may reduce the foundation it must create itself while preserving some room to meet specific requirements. AWS describes this as a “tailor” approach, but it is a potential pattern, not a guarantee of lower cost or effort (AWS).
Test whether the platform actually meets requirements and whether its dependencies create switching costs the organization can accept. A tailored solution still needs an owner, a support plan, and a lifecycle budget.
How should you compare build, buy, and tailor?
Compare viable options against the same business needs, operating assumptions, and planning horizon. There is no universally correct forecast period or cost threshold; use a horizon suited to the organization’s planning cycle and state the assumptions behind it.
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| Decision area | Questions to answer |
|---|---|
| Strategic value | Does the capability distinguish the business, or is it routine functionality available from several providers? |
| Functional fit | Which requirements are essential? Where would SaaS require workarounds or customization? |
| Total cost | What are the full development and operating costs versus subscription, license, integration, support, and usage charges? |
| Time to value | When will each option provide a usable result, and what does waiting cost the organization? |
| Skills and ownership | Who will build, secure, operate, update, and support a custom solution? |
| Risk and assurance | Can the option meet this organization’s security, reliability, privacy, and regulatory obligations? |
| Contract and pricing | Which meters apply? What do renewal, true-up, usage, and exit terms allow or require? |
| Portability | Can data be exported in useful formats, and what are the likely time and cost to leave? |
Microsoft recommends including development resources, infrastructure, maintenance, support, subscription and licensing, time to market, technical expertise, updates, and provider reliability in the evaluation (Microsoft Learn). The comparison should include more than the price of building a first release or the headline SaaS subscription.
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Use a consistent time horizon and include costs that occur before, during, and after deployment. For a custom solution, account for discovery, development, infrastructure, integration, migration, security, support, maintenance, upgrades, and training. For SaaS, include subscriptions or licenses, implementation and integration, support, usage charges, renewal terms, and the work needed to leave. Include the cost of waiting for each option to become useful where it affects the business case.
Cost and usage can be hard to see when SaaS purchases are decentralized. The FinOps Foundation recommends creating an inventory of products and usage so organizations can understand spending and value (FinOps Foundation).
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Govern licenses and variable charges
License fees may depend on seats, users, cores, storage, API use, or other meters. Contracts can span multiple years, and a true-up may increase entitlements without offering an equivalent way to reduce them later. Use beyond contracted entitlements can also create compliance exposure. The FinOps Foundation recommends understanding license terms, variable billing, commitments, true-ups, and coordination with procurement and software asset-management functions (FinOps Foundation).
In 2024, the FinOps Foundation reported that polls at its September North America & EMEA and Asia Pacific virtual summits found about 70% of participating FinOps practitioners already managed SaaS spending and about 65% managed licensing. Those figures describe poll participants, not all enterprises (FinOps Foundation).
How should you plan for lock-in and exit?
Portability does not have to be absolute. A provider-specific service may be worthwhile when the business value exceeds the cost of switching; the key is to identify and accept that cost rather than overlook it. AWS recommends including switching costs in the evaluation and planning for a possible future change (AWS).
For SaaS, UK government guidance recommends choosing products that use open standards and formats so customers retain control of their data. It also advises estimating the time and cost to exit and revisiting those assumptions periodically (GOV.UK).
Build an exit estimate that reflects the specific service. Depending on the arrangement, include data extraction, migration, replacement integrations, retraining, contract termination, and parallel operation while a replacement is brought online. Tighter integration may still be worthwhile if it delivers material value and the organization understands the consequences.
What does the evidence not establish?
There is no supported universal percentage of cases in which building wins, general build-cost threshold, or universal price advantage for SaaS. A 2026 preprint by Janardan Misra, Vikrant Kaulgud, Adam Burden, and Sanjay Podder frames enterprise build-versus-buy choices across strategic, technical, cost, budget, and risk dimensions; it is a framework for considering the decision, not proof of a universal rule (arXiv). Actual prices and program terms need to be checked against current, organization-specific quotes.
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