As a modern way to approach software development, SaaS helps businesses launch faster, cut down on maintenance, and keep costs predictable. Instead of building and managing everything from scratch, teams can focus on growing the business and delivering value to users.
What is SaaS?
Software as a Service (SaaS) is a model that delivers software applications via the cloud, hosted by a service provider, and accessible online to users through web browsers or dedicated mobile apps. Popular examples of SaaS include Google Workspace (formerly G Suite), Microsoft 365, Salesforce, Zoom, Slack, Dropbox, and Shopify.
As businesses accelerate digital transformation and adopt cloud-first strategies, the SaaS business model has become the preferred one for delivering scalable, on-demand software. With a large and expanding market, it's obvious why businesses are investing in SaaS application development to stay competitive in their industries.
Understanding custom software development
Custom software is applications, platforms, or systems developed specifically for your business's unique requirements. It is usually implemented by internal development teams or external software development agencies. The entire architecture, feature set, user interface, and functionality are designed around your business processes and strategic objectives.
Custom software can range from simple internal tools that automate specific tasks to complex enterprise resource planning (ERP) or customer relationship management software (CRM) systems that integrate multiple departments and operations.
The "build vs. buy" dilemma: custom vs. off-the-shelf
Once a business identifies a need, it faces a fundamental strategic choice: should it build a custom software solution from scratch or buy a pre-existing, off-the-shelf product? This decision has major implications for cost, time, and long-term strategy.
Next, we’ll explore the key advantages and disadvantages of SaaS and custom software solutions.
Benefits of custom software solutions
You can build features that perfectly match your business model and workflows. This gives you a competitive advantage, as competitors using generic software cannot replicate these unique capabilities.
While the upfront cost is higher, custom software grows with your organisation. You avoid escalating per-user license fees and can better control long-term costs, resulting in higher ROI over time.
You fully control your data, security measures, and regulatory compliance. This fosters trust with clients and ensures your business meets industry-specific legal requirements. It also allows you to leverage data for insights or potential revenue streams.
A custom solution can be designed to seamlessly integrate with your existing systems and future tools. This avoids compatibility issues, reduces manual work, and creates a unified technology ecosystem. This flexibility ensures critical functionalities are delivered first and reduces the risk of wasted resources, enabling agile responses to changing market conditions.
Key benefits of SaaS solution
SaaS solutions typically require minimal upfront investment, making them accessible to startups and small businesses.
The software is already built and tested, reducing the risk of errors or design flaws. Continuous updates ensure that you benefit from improvements without extra effort.
The provider manages security and compliance, protecting your data against threats without requiring in-house expertise.
Off-the-shelf SaaS can be used almost immediately. For example, Google Workspace or Zoom can be up and running in minutes for small teams.
The major hurdles to SaaS adoption
- Limited control: When you use a SaaS application, you rely on the provider for everything from uptime and maintenance to bug fixes and feature updates. If the provider experiences an outage, your business operations could be halted.
- Loss of version control: Unlike custom build software, where you can decide when to install updates, SaaS providers push new versions to all users at once. An unannounced change to a user interface or an API could break internal processes or third-party tools.
- Vendor lock-in: Once a company invests in a SaaS platform and stores data there, switching to other SaaS companies is quite difficult. The data formats may be proprietary, and the process of migration can be complex.
- Security and privacy concerns: By entrusting third-party services with sensitive business and customer data, you are also entrusting them with its security. So, it is important to choose a reputable Saas development service that invests heavily in security because a breach is still a possibility.
When to choose custom software
Custom software is ideal for organisations with unique processes that provide competitive advantages and operational effectiveness. It becomes especially attractive at scale, as companies supporting hundreds or thousands of users can eliminate per-user fees and gain long-term value. Industries such as healthcare or businesses relying on legacy systems may require custom solutions to ensure compliance with strict regulations.
- Cost of custom software development: Designing custom software requires a significant upfront investment. Post-launch, ongoing maintenance typically requires some additional cost to keep the lights on. The upside is long-term financial benefits: no per-user fees, decreasing cost per user as your team grows, and full ownership of a valuable technical asset.
When to opt for SaaS solutions
SaaS is best for organisations needing rapid deployment and immediate functionality. Startups and small businesses benefit from low upfront costs and scalable subscriptions. For standard software needs that align with existing solutions, SaaS avoids the time and expense of custom development. Bigger organisations can benefit from SaaS solutions as adopting with them they adopt best market practices
- Cost of SaaS adoption: SaaS is cheaper at the start, with low monthly fees and free trials for easy adoption. However, hidden costs can arise: premium tiers for advanced features or using multiple SaaS tools for different functions can increase expenses over time.
The enterprise approach
Many organisations combine both strategies. Core, differentiating processes that drive competitive advantage may require custom development, while standard business functions leverage off-the-shelf SaaS solutions.
A logistics company might develop custom routing and optimisation software with proprietary algorithms, while using SaaS tools for accounting, HR, and customer communication. This approach maximises value by investing custom resources where they matter most, while benefiting from SaaS’s speed and efficiency for standard functions.
AI's impact on SaaS
Artificial intelligence in SaaS integrates advanced capabilities like machine learning, natural language processing, and data analysis into cloud-based software, going beyond simple automation to learn from data and improve over time.
Generative AI enables SaaS to create new content—text, code, or images—automating creative tasks for hyper-personalisation and increased efficiency. AI agents can perceive their environment, plan, and execute multi-step workflows with minimal human intervention, automating complex tasks across applications.
- Figma has introduced AI tools that assist in design tasks such as text rewriting, translation, and image generation. These features aim to streamline the design process and enhance collaboration among teams.
- Notion offers AI-powered features that assist with content generation, summarisation, and translation, enhancing productivity within its collaborative workspace.
- Salesforce has integrated AI into its platform through tools like Einstein GPT and Agentforce, which provide predictive analytics, automate customer interactions, and generate personalised content, thereby improving customer relationship management.
Final thoughts
There's no single answer when deciding between SaaS apps and custom software development. Both have their benefits and challenges. For some, using an existing SaaS tool is the quickest way to get started. For others, building a custom solution offers greater flexibility and control for growth.
The best option depends on your business goals, budget, and plans. Often, it's not about choosing one or the other; combining SaaS apps with custom features can give you the advantages of both. It's about following a product-oriented delivery model to create a solution that provides lasting value.
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