TO BUILD OR BUY BUSINESS SOFTWARE?

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1 Equip-Soft Whitepaper Series: TO BUILD OR BUY BUSINESS SOFTWARE? A Guide to Choosing the Right ERP Solution for Equipment Distributors Experiencing Growth The bottom line is when companies work with Equip-Soft and Microsoft Dynamics they get all the benefits of working with an industry-specific software provider, with the backing of the largest provider of business software in the world. Grant Skinner, Vice-President, Equip-Soft

2 Your equipment distribution organization has decided it needs an enterprise resource planning (ERP) software to maximize efficiencies of business processes now what? You face the choice of whether to build or buy the software; weigh the factors and consequences carefully. After all, the repercussions of a software choice can be long lasting and affect all your business systems and processes. Building software may appear at first to be the easier route; for one thing, it s a solution that s tailor-made for your organization. Since it is developed and maintained by in-house staff, you have total control over the software. Be careful what you wish for: total control also means a great deal of front-end time by employees, not to mention ongoing maintenance of the ERP system, unsupported by an external company. When it comes to costs, you may think that upfront expenses are less when you build, rather than buy; however, that is not always the case. To help you in making a decision about whether building or buying software is best for your company, let s take a look at some of the differences between buy and build. UPFRONT COSTS Build: Assessment of the cost of any software project can be difficult because of upfront investment in hardware required as well as software development tools, training and staff time especially software developed in-house designed to meet company specifications. An ERP solution can be particularly tough to estimate the total investment; you have to include the cost of the resources involved in software development, including: Requirements gathering Analyzing Designing Implementation Testing Training users Ongoing maintenance and enhancements of the software to suit your growing business A common perception when developing in-house software is that users will not expect as much from it as a purchased software package, that they will be more forgiving of its shortcomings. But in reality, users demand as much, if not more, from software developed in-house. Not only that, users often think that because the developers are in-house and accessible, they can request customizations and changes whenever they want! Not an efficient way to manage expectations, obviously.

3 Buy: Purchasing ERP software involves well-defined and known licensing fees or subscription costs (for cloud ERP) and on occasion, a setup or installation fee. You know what you re paying for upfront and longer term. UPFRONT DEVELOPMENT TIME Build: Many companies recognize the downside of development time. Writing the application code and testing the code comprises only part of the time; numerous meetings are required to discuss planning and design, proof-of-concept development, hardware/software coordination and testing. Each of these stages can take weeks or even months before you re ready for launch. Buy: When you buy an ERP solution, the product is ready to launch, and it only requires an investment in time for user training. SOFTWARE MAINTENANCE Build: Software vendors regularly release updates to improve functionality and update features, not just to fix bugs. When software is developed in-house, money is required for development, testing and design as the software becomes obsolete, systems evolve, or your hardware demands increase. And if you don t invest in updating the software, you could have more problems down the road. Would you drive your car for years without changing the oil or doing other maintenance? Buy: When you buy ERP software, updates and maintenance are the responsibility of the vendor, not your in-house staff. SOFTWARE MATURITY Build: Software takes time to mature, especially software developed in-house. It can takes years of development and maintenance not to mention a ton of money before all the bugs are fixed. Even though a custom-built application may seem to offer control and flexibility, build-your-own-software will lock your company into a less than optimal solution. 2

4 Buy: When you buy an ERP solution, especially one from a well-regarded, established vendor with experience in the equipment distribution industry, the software arrives with already matured performance quality. REAL WORLD PROBLEMS Build: It s a fact of business: Companies reorganize/downsize/merge. What if your budget gets slashed and you don t have the money for necessary software updates? What if the developer(s) who built your in-house ERP system are heading out the door? Buy: When you buy an ERP system, your vendor is focused on the product; after all, it is their source of revenue. The ERP vendor will continue to devote significant resources no matter what happens to the structure of your company. If you buy software on a technically relevant, renowned and updated platform such as Microsoft, you will have the assurance of staying on a solid product roadmap that extends out several years and has deep pockets for ongoing R&D investment in the ERP technology. According to studies from companies such as IBM, as well as analyst firms such as Gartner Group and IDC, organizations fall very short on ROI when they build their software versus buying the ERP system. Other advantages to packaged software applications over the custom-built approach include: Purchased software applications leverage reusable components. Purchased software offers better integration with third-party technologies. Purchased software allows for automated and standardized design processes. Reliability has been tested and proven. Your limited IT resources can focus on your company s core competencies rather than reinventing the wheel when it comes to ERP software. Purchased software is scalable and can handle increasing user demand and growing volumes of data at your company in the future as well as immediately. The decision of whether to buy or build ERP software will require an honest assessment of the needs of your organization, and what it will take to meet those needs. Sometimes the nature of the software project dictates the necessary direction. For example, does your organization require a solution involving a highly specialized business function for which no commercial software exists? Then you should build that solution in-house. If that is not the case, consider the purchase from an ERP vendor; the savings in time and money in the near and longer term future may well make it the right option for your company. 3

5 ADDITIONAL RESOURCES Equip-Soft Blog Latest updates about Equip-Soft, Microsoft Dynamics ERP, best practices and news in the equipment distribution industry Equip-Soft Twitter Live feed of industry events, news, Equip-Soft updates 4

6 Equip-Soft delivers software and services for the equipment distribution industry to help improve efficiencies in rentals, service, sales, parts, and fleet management aspects of your business to improve relationships with your customers and vendors. Our industry experts have built a product roadmap that takes you where you want to grow, matching the best technology with the best business processes. Industrial equipment distributors working with Equip-Soft reduce implementation timeframes and implementation risks often associated with ERP. Equip-Soft software and services are powered by the fastest growing ERP platform in the world, Microsoft Dynamics, and features industry-specific functionality. For more information please visit Information on Microsoft Dynamics can be found at 5

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