People set out to build custom software for a myriad of reasons.
Some leverage technology to stay competitive in their ever-changing industry. Other times software is used as an opportunity to leverage profit for innovation initiatives, opening up new lines of revenue. As a product leader, you're likely exploring the best possible avenues to make technology effective for you, your team, and your end user.
If you’ve been tasked with bringing a digital product to market you might be asking:
- How do we turn this idea into reality?
- Should I work with a development firm or hire my own team?
- How do I find the right external team?
All of these are valid questions (and there are even more to explore to produce an exceptional product). But the first step is simply making sure you've considered the many different options out there. The best path forward depends on your unique context.
In this article, we've outlined the most common ways people address the need for custom software and the pros and cons of each.
Option A - Find an existing solution
There is no shortage of SaaS solutions on the market that may already exist to solve your problem. Conduct a quick Google search and ask around your peer group to understand what’s in the market today and if purchasing a licensed product would fit your needs.
Say you’ve found a product that comes close but doesn’t check all your boxes. There are likely implementation teams that can help you make adjustments to the tool so that it fits your unique scenario. This will likely come at an additional cost but may get you what you need.
Assuming the product is exactly what you’re looking for and you’d like the exclusive rights to it, there may be an opportunity to acquire the tool or company that created the tool. This is, obviously, a more considerable investment than paying for a license. This could give you not only the tech solution but also the talent to continue supporting it out of the gate.
The pros & cons of finding an existing solution:
- ✅ Pro: You can rely on the support and ecosystem of an established team that continues to develop and improve their product. With the right license or subscription, you will get additional levels of support and customization.
- ✅ Pro: You won’t need to hire an entire team and change the way you work, justifying the investment into your own design, development, DevOps, SecOps and support.
- ❌ Con: In order for this business model to work, the creators of the software will be working to create a common denominator product that serves the broadest audience. This may mean it will do some of what you need, but might not perfectly meet your very specific needs.
- ❌ Con: You don’t own it. If this app developer goes under or decides to pivot direction, you maybe back to square one trying to solve your problem in a different way.
Option B - Hire internally or shift existing resources
You’ll need to find a way to fulfill multiple roles: design, development, product management, testing, and some level of DevOps or SecOps. You may have this talent already in house, but chances are they’re in high demand and have a backlog of other work to do.
You’ll need to make sure the individuals pass through the normal HR processes. Then, they’ll be introduced to the team, the project context, the tech stack, constraints, timelines, and general dynamics of the culture. Expect a few cycles to get fully up to value-generating speed.
Retaining great talent will take more than just paying them well. Creative, tech, and innovation talent is motivated by purpose, people, and personal growth. They want to work with and for a team that fosters a positive work culture that helps employees flourish while making a real change in the world.
4. Professional development
Closely tied to retainment is employee development. This will require both time and resources to invest in continual education and growth – not only so that the person can grow in their career, but because the tech industry changes so quickly that you’ll need your people to be able to adapt with the changes.
5. Strategy & management
Most tech teams assume they just need a couple developers to be set for success. While a great dev team is crucial, a product manager will unlock even greater potential in these teams. These PdMs help teams see the forrest for the trees. Product managers and strategists are the lifeblood to any great tech team.
The pros & cons of hiring internally or shifting existing resources:
- ✅ Pro: If you’ve chosen to build a product yourself, having a dedicated, in-house team is a great long-term solution to begin and sustain your tech company.
- ✅ Pro: You’ll have control over the type of roles, experience levels and skills that you want to hire.
- ❌ Con: Hiring for product designers, developers and product managers is an extremely competitive market. Recruiting always takes longer than expected.
- ❌ Con: Not everyone will join at the same time. This means a lot of onboarding processes for both HR and for your team as you bring on each new role.
- ❌ Con: Because the market is so competitive, retaining talent takes going above and beyond in your compensation offer, culture development, professional development and more. Remember that replacing amazing talent takes ample time.
Option C - Acquire for tech & talent
Finding an existing product to acquire can be done through a broker, or through doing some old-fashioned grassroots research. Look for companies that are up and coming to get the best value. Know that acquiring a legacy solution can introduce more work than value to bring it up to modern standards. Also consider products that are in parallel industries that might serve your need, even if it is not currently positioned directly at your company’s market.
When negotiating the acquisition, understand what you’re getting. Work to understand the current state of the technology, its existing features and function, the infrastructure it is built on, and any existing user-base. Consider if it’s an acquihire (hiring for both technology and the talent that currently support sit) or a technology-only acquisition. This will affect your integration timing.
3. Seal the deal
There are several purchase models based on a combination of cash, equity, and/or bonus opportunities. Bonus or payout can be determined based on milestone, time retained, potential growth, and more. Consider the additional payroll the acquisition will add to your overhead.
4. Integrate & retain
Integration involves both technology and people. Make sure that your existing IT or DevOps organization knows about the incoming technology being added to your solution. Consider how the tech may integrate with your existing solution or run independently. If the team is coming with the product, understand that it is a massive culture shock to go from a passionate startup to a new parent company with new policies, culture, people, legacy, expectations, etc.
5. Be a tech company
If this is your first technology acquisition, be aware that technology teams do not work in a traditional workflow. Technology is iterative and creative. Remove bureaucracy in favor of empowering the team to work with end users of the technology to learn quickly and continue increasing the value of your investment.
Pros & cons for acquiring for tech & talent:
- ✅ Pro: Finding the right investment in tech and talent, you can reduce the time to value generation.
- ✅ Pro: At the right price, you may be able to acquire the lion share of your needs for less than you would spend custom building it yourself.
- ✅ Pro: Market validation of another company is an incredible clue into the potential of your investment. If the company you’re acquiring has happy users, then you’ve got a great product and likely a great team in-house now.
- ❌ Con: The integration of people and culture rarely goes perfect. It's one of the reasons M&A's in tech often fail.
- ❌ Con: Your existing team may or may not see and/or agree with the value of the acquisition and may struggle to accept the incoming technology.
- ❌ Con: Acquisition tends to see a pretty big turnover in talent unless extremely intentionally approached.
Option D - Hire a partner, vendor, or digital product agency (like us 👋)
There are a growing number of digital product agencies ready to help build your product. Using Google, Clutch, and other avenues, you can identify agencies that fit your needs, company requirements, geographic preferences, tech stack, and more. These agencies might also identify as UX design, custom software, or app development companies depending on their team makeup and strengths, but, traditionally, they all build products.
Review their case studies, testimonials, and reviews to determine whether they qualify for what you need them to. If these are not easily accessible on their website or other channels, ask for them. Any reputable agency with a good track record will be proud to show off their previous engagements.
Once you select an agency, it’s best to loop in your Legal and/or accounting teams as soon as possible for contract negotiations and review.
4. Onboard & align
Once the SOW is signed, you’ll need to get the agency team up to speed with where your product is and what your goals for the product are. If you’ve hired an expert staff, they likely have their own process of getting everyone on boarded effectively. These first few weeks are some of the most exciting.
Typically, there will be a period where the working relationship and/or product will need to be refined. You should have an open line of communication with your agency to suggest adjustments to meeting schedules, processes, and other elements of your working agreement. Iteration is natural and necessary.
It’s important to work alongside – typically – the product managers and product owners on the team to help ensure the engagement is being managed appropriately. You should have a clear picture into the product roadmap and product milestones in order to communicate back to stakeholders that may be outside the core team.
An expert agency will help move you and your team through several phases of a project, ultimately growing to fit the needs of the product. They should be talking about these opportunities with you and often so that each team can prepare accordingly and help support the future of the product.
Pros & cons of hiring a partner, vendor, or digital product agency:
- ✅ Pro: Existing teams are already familiar with working together and bring a strong culture to the table.
- ✅ Pro: Process and workflows have been vetted and established through the agency allowing you to bring your expertise.
- ✅ Pro: Agencies often integrate well with existing teams if positioned correctly and set up to communicate transparently.
- ✅ Pro: A fresh perspective outside the organization can bring a lot of creativity to the solution that may not be seen when the challenge or problem is so close to home. Most of the roles are represented: Design, Development, Testing, and Product Management under one roof. This drastically reduces the time to onboard and get up to speed.
- ❌ Con: Communication and trust will take more time and work to get perfect.
- ❌ Con: They will bring their own process, and these will need to be eventually aligned with yours.
- ❌ Con: A full stack team all at once can be a higher price solution to your problem.
- ❌ Con: They likely have a specialization in a particular tech stack or integration that may not be your exact solution set today.