Are custom software applications right for your contracting business?
What kind of software services are you getting and what software is running your business?
As a contract business owner or manager, you’ll most likely be faced with the decision of whether you want to use off the shelf packages with limited functionality and flexibility, or whether to hire a developer to design a custom solution tailored to your business. Smaller contractors often benefit from cloud-based solutions due to the low cost of entry, but as they start growing, it often becomes more difficult to work within the constraints of software as a service (SAAS) products.
Types of business software found in contracting businesses
The first type of software is used to support common business functions like email, communication, and accounting. This type of software is almost always purchased or used under a subscription model.
The second type of software usually supports unique business functions. For example, a construction company using software to manage specific workflows will need to decide whether to run its core functions using an existing software product or an in-house developed solution.
In my experience, enterprises that want to cash in on their unique selling proposition are better served with customized software that can be adapted to their way of doing business. However, there are a few things to consider when making the decision on whether to use the off-the-shelf or custom software.
1. How much control do you want to retain internally when it comes to your business operations. Software purchased based on a subscription model may change and those changes happen whether you like them or not. The software provider decides what features are included and often they are updated and those decisions are often made based on their profits rather than what’s best for each and every customer. Even worse, software providers can buy out or merge with other companies or go out of business altogether if their revenue model is unsustainable.
2. Make sure to calculate the total cost of ownership (TCO) when making a decision on software. Like I mentioned previously in this post, when you’re small the cost of entry is low but the software costs start to add up once you experience growth. Also, keep in mind that the subscription plans on offer from most providers can change over time and can be very cost prohibitive for growing companies. So make sure to project costs for future growth as well when making this decision.
3. Platform flexibility is another important consideration. As you grow will you be able to easily interface with other software through API’s? Some software vendors are very prohibitive and inflexible in this area. For example, the online versions of the popular accounting software Quickbooks are not near as flexible when it comes to remote connections when compared to their standalone desktop versions. Another important thing to think about is what happens when you want to leave the platform. Some platforms are very proprietary in nature and migrating to another platform can be very costly and time-consuming.
4.Who will take care of the technical role in your company? This is where you need to be realistic as a manager or business owner and know the real costs associated with the people required to manage technology within a company. Some of the software providers really shine within this area with knowledgeable support and advice. For custom software, the costs are going to generally be higher since you will need to hire people like programmers, system administrators, and designers. If you plan on going the custom route, it is better to start thinking about the team vs. the individual that will need to manage the software product.
Overall, there is no “one size fits all” solution and, luckily, there are plenty of options on the market. Just make sure to think about the future if you’re growing businesses as things tend to happen quickly once you’re in growth mode. Your software decisions can greatly influence that amount of growth.