SaaS vs.Software Development: Comparing the Two Routes for IT Entrepreneurs in 2023

In the ever-evolving world of IT entrepreneurship, one of the most important decisions an entrepreneur must make is deciding between SaaS (Software as a Service) and custom software development. Both options have their pros and cons, and choosing the right one can have a significant impact on the success of a business.

As we move further into 2023, it is more important than ever to understand the differences between SaaS and custom software development and which route is the most appropriate for your business.

So without any further ado, let’s compare these two routes and help you determine which one is the best fit for your IT entrepreneurial journey.

What is SaaS?

SaaS, or Software-as-a-Service, is a cloud-based software delivery model used by businesses of all sizes. Unlike traditional on-premise software delivery models, SaaS allows users to access data easily from any device with an internet connection and a web browser. Under the SaaS model, the vendor maintains the databases, servers, and code that make up the application. This relieves buyers of the burden of extensive hardware requirements and certain IT tasks.

SaaS products are accessed over the internet and do not require any installation or maintenance. Vendors maintain the code and fix all bugs, allowing firms to focus on their core operations. SaaS products are usually priced affordably and come on a subscription basis, so there are no large initial investments.

One of the key benefits of SaaS is that it allows businesses to access the innovation and efficiency of software without paying the costs of building or hosting the tool. However, customizing a SaaS product can be difficult, and it might not be possible to create exactly what a business wants. Despite these drawbacks, SaaS tools remain popular and useful for a variety of businesses.

A great example of a popular SaaS product is HubSpot. HubSpot is a marketing, sales, and customer service software platform that helps businesses manage their leads, customers, and analytics. It provides a range of tools accessible over the internet, including email marketing, social media management, landing page creation, and customer relationship management (CRM) software. 

What is Custom Software?

Custom software development is the creation of software that is designed specifically for a particular company or user. Unlike SaaS products, custom software is tailored to meet the unique needs of an organization, such as a custom booking app for hotels and restaurants or a custom shopping app for online stores. It requires significant investment, but businesses expect to see future returns.

Custom software is designed with a business’s specific needs in mind, which can result in increased productivity, scalability, long-term savings, and improved quality of service. The tool can take the form of a website, application, or intranet site, and it is owned completely by the business.

While custom software offers a perfect solution for a company’s needs, there are some things to consider. Custom software development is a process, and it can take some time to create the perfect solution. Additionally, custom software solutions require a higher upfront cost than SaaS solutions. However, the business owns the tool completely and can customize it to meet evolving needs. It is also possible to sell a custom software solution as a SaaS product.

A good example of custom software is the ordering system used by a restaurant. The software is designed specifically for the restaurant’s unique needs, including menu items, pricing, and ordering workflows. This custom software solution provides a seamless experience for both the restaurant staff and customers, leading to increased efficiency and better customer service.

Pros and Cons of SaaS and Custom Software Development

Before Opting for either SaaS for your business needs or developing custom software that can cater to every current and future requirement of your enterprise, you’ll need to consider some important factors. Depending on your requirements, you’ll have to compromise on some aspects over the benefits provided by the other.

These are the factors that you should take into account before making your decision.

Price

One of the main advantages of SaaS is that it generally comes at a lower cost, as it is developed for a mass market and shared among many users. This can be beneficial for smaller companies with limited budgets or those that only require basic functionalities. However, businesses may find that the available functionalities in SaaS solutions are limited, which can impede growth and productivity.

On the other hand, custom software development allows businesses to create a tool that is specifically tailored to their unique needs and processes. While the initial cost of custom software development may be higher than that of SaaS solutions, businesses can access a wider range of functionalities that help grow the business faster. In the long term, businesses may also save money by avoiding recurring subscription fees for SaaS software.

Customisability and Scalability

Custom software development enable businesses to have complete control over their software and tailor it to meet their specific needs. This is particularly important for businesses with unique requirements that cannot be met by off-the-shelf solutions. Many companies find that the extra expense of investing in a custom solution is worth it in the long run.

Moreover, custom software solutions offer greater scalability and are designed with an enterprise’s specific needs in mind. As a business grows, it will likely require a more complex and robust software system, which custom-developed software can cater to. 

With custom software, businesses can easily add new features and functionalities as needed, making it more adaptable to changing business needs. In contrast, SaaS solutions may not be able to accommodate the growing needs of a business. This leads to the need for a more expensive migration to custom software in the future.

Security

SaaS providers usually take care of the underlying infrastructure, so businesses do not have to worry about maintaining hardware or software. SaaS providers also offer regular updates to their software, which ensures that businesses are using the latest and most secure version.

However, businesses have little control over the security measures implemented by the SaaS provider. This can be a concern for businesses with sensitive data or compliance requirements.

Custom software development offers businesses the ability to customize their security measures to their exact needs. Businesses can implement multiple layers of security, such as firewalls and encryption, to ensure that their data is secure. Custom software also allows businesses to have more control over their data and how it is accessed, which can provide peace of mind for businesses with sensitive data.

Reliability

Reliability is also an important factor to consider when choosing between SaaS and custom software development. SaaS providers generally offer reliable uptime, which ensures that businesses have access to their data and software when they need it. However, businesses may experience downtime if the SaaS provider experiences technical issues.

Custom software development offers businesses more control over their infrastructure, which can help ensure reliable uptime. Custom software can be designed to run on multiple servers, which reduces the risk of downtime due to server issues. Businesses can also implement failover systems, which automatically switch to backup servers if the primary server goes down.

Time and Implementation

The time taken to implement Custom software is longer as it needs to be designed, developed, and tested to ensure that it meets the specific needs of the business. On the other hand, SaaS solutions are often quicker to implement as they are pre-built and require little to no customization.

However, it is important to note that even though SaaS solutions can be faster to implement, they may not always meet the exact needs of the business. Custom software development, while it may take longer to implement, allows for a more tailored solution that can address unique business requirements.

It is also worth considering that custom software development may require a more significant investment in other resources as well, especially in the early stages of development. This can include hiring a development team or outsourcing the work to a third-party vendor. SaaS solutions, on the other hand, may require a smaller initial investment but they will have an ongoing subscription fee that can add up over time.

In terms of difficulty, custom software development is generally considered more challenging than implementing a SaaS solution. This is because custom software requires a more involved development process that includes designing and building a solution from the ground up. SaaS solutions, on the other hand, are typically pre-built and only require configuration and integration into the business’s existing processes.

Using SaaS and Custom Software Simultaneously

For a successful business, you’ll have to choose between either SaaS or custom software. But that shouldn’t be the case. The possibilities for businesses in the future are limitless, and your enterprise will need any edge it can get. That’s why simultaneously using both, SaaS and custom software can be immensely beneficial to the growth of your business.

While going in this direction may cost you more resources, you’ll get the best of both worlds. The timely updates of SaaS along with the unbeatable security of custom software. This will allow the workload to be divided into two groups. The more technical staff could handle sensitive tasks on the Custom software, while other employees can take advantage of the easy usability of the SaaS for more generalized workloads.

Conclusion

In the end, choosing SaaS or custom software ultimately falls on your business and its requirements. Smaller startups with less time and resources can benefit from a SaaS but might suffer from a lack of customization, security, and accumulating subscription fees in the long run. Custom software is better suited to larger businesses, but it can be a hassle to develop and manage.

You can always get both software simultaneously for better growth and unlimited scalability. This route will ensure a smooth start to your business and long-term security.