## How Digital Transformation Impacts Your Business As an entrepreneur, you no longer face only the past classic entrepreneurial challenges but a new global process that spreads in all business and private areas: the digital transformation. You could say that the goal of digital transformation is to change. From a holistic perspective, digital transformation means: ● Doing things differently and ● Doing different things For example, this could mean transferring core activities to digitized processes or completely changing cost structures because of automatization. To learn more about digital transformation, especially in the software engineering industry, read our article “[Digital Transformation and it's impact on business](https://honeyfield.at/blog/digital-transformation)". When it comes to digital transformation, businesses often struggle with the strategic decision to buy ready-to-use software, to develop a customized solution on its own, or to rely on a trustworthy specialist. This decision is also known as the “Make-or-Buy Decision.” In this article, we've listed some critical points businesses have to consider when making this decision. Let's start with the advantages and disadvantages of all three opportunities. ![digital_transformation_Photo by Headway on Unsplash ](https://res.cloudinary.com/dytzyiahx/image/upload/v1626183881/headway_5_Qg_Iuu_Bx_Kw_M_unsplash_050579a7ff.jpg) ## Benefits of a Standard Software Solution To make the right decision, you have to find the answer to the question, “Do I need a custom solution, or would an off-the-shelf solution be sufficient?” There are, of course, many advantages and disadvantages decision-makers have to face. Still, we want to focus only on those we've detected as the most important ones in our industry. 1. Quicker than custom development 2. No extensive requirements/features that the solution has to meet 3. Support Center It's said that the standard solution is available quicker and is overall cheaper, which is true when you compare the development and implementation of individual software with that of the finished software. But what does this comparison really bring? Wouldn't it make more sense to compare only the implementation times of both products? In this case, the individual software proves to be faster and easier, as it has already been adapted to the conditions and needs of the corporate IT landscape. With the standard software, complex API interfaces must first be programmed to communicate with the legacy software. This has a strong effect on the implementation phase, making it the same as the individual solution--provided there are no unforeseen compatibility issues that you must first solve. Therefore, make sure that you fully inform yourself and prepare as best you can for any potential problems. Most standard software providers have several years of experience in their field and can react quickly to complications because they know exactly where problems might arise. Besides, you can find answers and assistance to frequently asked questions in their dedicated support center. This is a massive advantage, as the providers know what exactly needs to be done to keep the implementation phase as short as possible. Disadvantages of an Off-the-Shelf-Solution: 1. Unnecessary Features & Extensibility 2. Integration 3. Dependence on the Provider Sometimes, less is more, especially when it comes to the unnecessary features of your software solution. Suppose you are looking for a ready-to-use solution that delivers the exact conditions you want. In that case, you will most likely end up buying many features that you don’t really need, or the solution you buy doesn’t meet all of your requirements, so you have to keep adding more features and functions over time. For this, an open-source solution is best--remember that it should also have the appropriate licenses. Another downside to an off-the-shelf solution is the connection to an existing software landscape. The new solution must be compatible with the ones you already use, so carefully examine and compare all requirements and conditions beforehand. The most significant disadvantage is that you can’t easily switch providers once you decide on one. It would take far too much effort and too high an expense, as you not only have to find another reliable partner but also switch the existing solution to a new one, a time-consuming and challenging process. Companies often launch massive projects, so a switch would result in a lot of staff training, rethinking, adapting, etc. Ultimately, off-the-shelf solutions have both pros and cons, just like any other approach. For a decision-maker, a structured selection process is the best course of action. If you find that you like a standard solution--perfect! If not, continue reading to learn more about developing the solution yourself. ![digital_transformation_Photo by Zan on Unsplash ](https://res.cloudinary.com/dytzyiahx/image/upload/v1626184017/digital_transformation_c4b9a2df0d.jpg) ## In-House Development or Partnering with a Software Agency? So here we are: you’ve detected that you need a customized solution. That’s great! Now you just need to decide whether your team should be the one to develop it, or rather you partner up with an outsourcing company. Advantages of Hiring In-House Developers: 1. Control the Code 2. Knowledge Transfer 3. Flexibility Maintaining control of the code is one of the main reasons why companies prefer to hire in-house developers. There is no doubt that it is practically impossible for someone from outside your company to access the code if you invest in your in-house team. Keeping the code secret gives you a feeling of security and exclusivity, which is particularly understandable and even essential for solutions that can provide the competition an advantage. Problems are quickly resolved when you have a permanent workforce conducting the in-house development of your software. Members can share their ideas and opinions directly through in-person exchanges and inspire each other to develop innovative solutions. Having similar working hours and being in the same office allows for a much more comfortable and productive communication process. Additionally, in-house developers have a better understanding of their own corporate culture and business practices. Another definitive advantage is that your developers are focused solely on one project--your own. You can discuss the project with them at any time and bring in new ideas entirely on your terms, making it the most flexible option. Overall, utilizing in-house developers is a standard method as it has a lot of advantages; however, there are also particular challenges that you must consider. Let's have a look at them: Disadvantages of Hiring In-House Developers 1. Internal Team 2. Fixed Costs 3. Acquisition Effort One of the most significant disadvantages companies face with in-house developers is the overhead expenses. You not only need to build and train an internal team but also regularly pay their salary. There is a shortage of highly-skilled workers in the software industry, so finding, training, and retaining them can be a considerable challenge. If you have decided to work in-house--cool! Your next steps are to find out precisely the correct technologies and procedures, form a cooperative team, and define other framework conditions. However, if you are still considering outsourcing, here are some pros and cons about working with an agency: Advantages of Software Development Agencies: 1. Fixed Costs vs. Variable Costs 2. Specialists 3. Quick Start (teams already established, etc.) One of the most advantageous factors of working with a software development agency is that you only pay for what you get. In other words, high fixed costs become variable costs. Additionally, you get to work with top experts in the field without needing to train them. Discuss the conditions of your future solution with the agency to inform you on how best to realize it. Another benefit to outsourcing is that you hire specialists who will realize and support your project independently. They ensure that you get the best possible results without having to do any of the work. You no longer need to concern yourself with the project’s management or finding solutions for any unexpected problems. With a competent team, you can quickly realize even the most demanding tasks. An already established team also impacts the project’s start because the company doesn’t have to worry about recruiting the right employees. They will advise you on all aspects of the project or even decide themselves, so you don’t have to. You only need to clarify the framework conditions so the development agency can start working. Disadvantages of Software Development Agencies: 1. Lack of Communication 2. Yes to Everything Communication is crucial. How else can you let your partner know what you need exactly if not by communicating? The agency needs to update you on the project’s current situation continually, so you’re always informed and can intervene or adjust the course if necessary. A reliable partner will provide you with a clear project plan with which you can track its progress and will always be reachable for any questions you might have. Another disadvantage to working with development agencies is that they might say yes to everything you ask for without first checking the circumstances. If the partner nods their head and says yes to everything, your alarm bells should ring. In this case you should make sure to ask them to explain precisely how they plan to reach these goals. This also applies to the planned costs--if it seems too cheap to be true, it probably is. Working with a partner agency is a long-term affair that is based on openness and cooperation. In most cases, if you do your research and select the right partner, you will succeed. Hopefully, these explanations helped you decide which software solution method you should choose. You’ll need specialists regardless of whether you’ve decided to go with a customized or an off-the-shelf solution. Your options consist of those who implement the standard solution, who create a solution in-house, or who you outsourced to develop and implement the solution of your dreams. It is vital to have partners and specialists by your side whom you can trust and rely on. ![shaking_hands_partner_Photo by Cytonn Photography on Unsplash ](https://res.cloudinary.com/dytzyiahx/image/upload/v1626184222/partner_c3fcf409b5.jpg) ## Your Partner Is the Key to Your Success Whether you choose an off-the-shelf solution or a product developed by an agency, cooperation and communication with a reliable partner are critical. Selecting the right software partner provides many advantages that your business can profit from. ● **Partners are Specialists:** Partners should be specialists in their field, be highly competent, and clearly understand what the goal is and what the customer needs. Only passionate people have the underrated and rewarding virtue of effort. To check whether a partner has the right skills, ask about their previous projects and the circumstances. Be aware that many agencies do not always publish past projects on their website because of, e.g., NDAs, so asking in-person is necessary. ● **Trust Your Associate:** The partnership will never succeed if you don’t have confidence in them. A partner should be reliable and honest. This means knowing the schedule and communicating the entire process, where struggles might occur, what is achievable, etc. Their ability to communicate is key, especially if there are no specialists in your own company, so make sure you fully trust them. Ensure that your partner provides a clear and detailed project plan and assigns a responsible liaison. ● **Long Partnerships:** It is essential to build a good relationship with your partner during the entire process because software projects never end. In the best-case scenario, the product will continue to be improved upon and expanded even after the relaunch. It's enjoyable working with a partner with whom you get along so well. ● **Realistic Plannings:** A solid software solution takes time and is an intensive investment that needs to be well thought out. This is why a serious and competent partner plans realistically and never makes unattainable promises. Genuine partners remain logical, especially when it comes to estimating the time required and the costs. The proximity to the customer should not be lost with outsourcing but strengthened. The subsequent maintenance and further development of the software requires a close and cooperative partnership with the specialist and clearly structured processes. Internal human resources must also be readily available to manage the collaboration professionally. In this regard, the client has to have total trust in their partner. ### Conclusion Whether you choose to buy an off-the-shelf solution, develop one in-house, or partner up with specialists -- all three methods have their specific advantages and disadvantages. While the standard software is supposedly the cheapest option, individual solutions are unparalleled with maximum adaptability and flexibility. In any case, your choice of partner determines the success and failure of your project. Therefore, a make-or-buy decision should be well thought out and comprehensively planned.