Build CRM vs Buy - What to Choose?

So, your business needs a customer relationship management system (CRM). However, you are not sure which is better: buy a turnkey solution or develop CRM from scratch? To answer this question, you should consider the advantages and disadvantages of each option in relation to your particular business. To do this, you need to study your business and give answers to seven questions.

1. Will ready-made solutions meet your needs?

According to Accenture surveys, more than 50% of sales representatives said that their off-the-shelf CRMs were not able to adequately meet the needs of their business. In most cases, this is due to the lack of necessary functions or limited settings, as well as the fact that many CRMs "are designed to monitor performance, not improve performance." “Our business is unique, so our CRM must be the same,” they say.

In some cases, this position is true, but we urge you to take into account two things:

1. Most companies are not as unique as they think. The goals, business processes and customer relationships in most companies are almost the same, as they want to grow and earn money, and operate within the framework of similar legislation and general rules of the global market.
2. Industry leading CRMs are quite flexible in settings. Many settings are available immediately, others in the form of premium features, while others require a code change, which is also available as an additional service. It should be remembered that it is always much easier and faster to change / modify the finished CRM than to create software from scratch.

There are, of course, exceptions. And as a rule, these are either innovative industries with new business processes and varieties of customer relationships (AI (artificial intellect), genetic engineering, information technology, etc.), or a business with outdated document management and / or home-grown software.

Obsolete paperwork is commonly found in government agencies, old banks and insurance companies. They rarely try to bring it to modern standards, since there is such a mess that it’s easier to burn everything and start again, so this business is forced to create a new CRM, rather than buying a turnkey solution.

In addition, you will have to create a new system if ready-made solutions:

1. Do not support the desired language or several languages (important for multinational companies with representative offices in several countries).
2. Do not comply with the law of the relevant jurisdiction. For example, they do not comply with the General Data Protection Regulation (GDPR).
3. Do not support work with the necessary equipment and technologies.

2. Do you have the resources and staff to update the software?

When deciding whether to buy or create CRM from scratch, remember that you need software that will be updated periodically, taking into account new business practices and technologies. This is important for several reasons:

1. The longer there are no updates, the greater the likelihood that hackers will be able to pick up the "key" for protection of your software or the technologies that it uses (communication protocols, authentication). In the near future, this could become critical if IBM, Google, or other companies create a commercial quantum computer. When this happens, all modern protection protocols will instantly expire.
2. New business practices. Ten years ago, few people would have thought that smartphones would become so popular or that you would need to work with Instagram. Tomorrow, VR, AI, genetic engineering or other technologies will become commonplace, and businesses will need to adapt to new conditions.
3. Your software must comply with legislation that is periodically changed. For example, the entry into force of the General Data Protection Regulation, if you work in the EU.

Thus, if you plan to develop a CRM system from scratch, then you will need a development team that will be engaged in its updating on an ongoing basis. To do this, find the appropriate specialists, give them a workspace, buy equipment and pay a constant salary.

If you use off-the-shelf CRM, then the software provider will deal with the update, which greatly simplifies everything. The only minus is that the developer may go broke or refuse to support the product, and then you will either need to switch to a new CRM, or to upgrade it yourself.

With technical support, a similar dilemma: when buying a CRM, a developer usually does this, when developing from scratch - your company.

3. Can you train employees to work on the new system?

Regardless of whether you buy a new CRM or create it from scratch, you need to organize staff training in working with new software. If your company has similar experience, then you know that this is not always easy, because you will need to distract employees from current tasks for a long time, find or train instructors and create a system for assessing the quality of training.

If your company has people capable of organizing all this at the proper level, then you can save a lot. If not, it will be necessary to outsource staff training, which imposes certain restrictions:

1. Outsourcing training is much more difficult if you create a new CRM yourself. Ideally, those who participated in its development or worked with it for many years should be trained to work with the new software.
2. External instructors will train staff on how to work with the new CRM, and not how to improve the efficiency of your business with it.
3. Outsourcing company instructors are not personally interested in the success of your business, so they may take training superficially.

Thus, if you do not have an experienced teaching / consulting staff who will undertake the organization of training to work with the new CRM, then it is recommended to buy it. And you need to buy from a developer company, which, together with a software product, provides CRM training services.

If you choose independent development, it is recommended to immediately involve part of those employees who will be direct users of the new CRM (bosses, department heads, ordinary employees, technical support) in this process and prepare them for consulting and / or training other staff.

4. Do you have free server capacity?

All modern SaaS CRMs operate as cloud services that do not require their own server capacities. To work with them, you only need a PC, laptop, tablet or smartphone and an Internet connection. Computing processing and the database were transferred to the cloud servers of the supplier company or the servers of companies such as Google or Amazon.

If you choose an individual CRM, you will most likely have to either create a local network, which means buying servers, finding a separate room, hiring personnel to service the equipment, or renting Google or Amazon servers. Both options involve additional costs (at the start and every month), which, depending on the size of your company, can more than exceed the monthly subscription to SaaS CRM.

Given the above, it can be assumed that in the case of developing a new CRM, larger organizations are more likely to be able to save on this, since they most likely already have free server capacities (either own or leased). Whereas for a small business, independent development carries additional costs, so from this point of view it is better to give preference to SaaS solutions.

5. What will happen during downtime and failures?

Using their own servers to support the operation of network programs, enterprises need to consider the likelihood of downtime in the event of software failures, hacker attacks, or equipment maintenance. Giants of SaaS solutions, such as Microsoft and Apple, ensure the uninterrupted operation of their software due to the large number of redundant servers. The question is whether you can achieve uptime of 99.9%.

For 99.9% of companies, the answer is No. This does not mean that starting your own servers will be impractical, but it means that when developing your own CRM, you need to pretty much integrate reliable offline features into it, which will allow sales and support departments to work normally during server downtime, even if this happens in the midst of Black friday.

If, while creating an individual system, such offline capabilities cannot be realized or it will be too expensive, then you will have no choice but to use SaaS solutions. But this is right only in cases where a simple CRM leads to large losses or lost profits (typical for online businesses). If a simple CRM does not greatly affect revenue, then the downtime of the system can be neglected (offline sales for cash).

6. How fast do you need a new CRM?

Creating custom systems requires a lot of time - from 6 to 12 months, depending on the complexity of the software and the size of the company. In addition, some time is still needed for product testing and staff training. Thus, if you are limited in time, then development from scratch is not your choice.

Longer periods are usually critical in the following cases:

1. If your current SaaS CRM vendor stops supporting it or if critical errors or security holes are identified in its products.
2. If sales need to start as soon as possible. For example, at the start of a new business focused on online sales, or in the case of the launch of a new product or service that, due to time lag, will lose relevance and / or competitive advantage.
3. If new laws are passed in your jurisdiction that require amendments to the CRM, and your supplier will not do this, since your market is not very important for him.

7. Purchase and development cost of CRM?

Custom CRM development costs typically range from a few thousand to $ 50,000 or more. And this is only the initial figure. If you decide to go this route, you also need to remember the monthly costs:

1. If you use your own servers, you need to spend money on electricity, hosting and staff salaries. In addition, from time to time it will be necessary to upgrade equipment and change broken parts. All this requires from 500 to several thousand dollars a month.
2. The system must keep pace with the times, gaining new features and adapting to new market standards. Without this, even the simplest compatibility issue associated with updating your browser or operating system can stop your business.
3. Even the simplest CRM needs information and technical support services for users and staff.

Buying a simple SaaS CRM, in turn, costs from 50 to 100 dollars per month, complex - from 1 000 to 10 000 dollars per month. These are also just starting numbers, to which you usually need to add the price of staff training and a subscription to some premium features (the best statistics and analytics, marketing tools, more users, technical support, etc).

Thus, when creating a custom CRM, you need to spend a lot of money at the start and allocate some more each month. When buying a CRM, you only need a few hundred dollars to subscribe, which is cheaper at the start, but not so profitable in the long run.

Make a brief summary

If you make a summary from all of the above, then we can conclude that:

1. It’s worth buying CRM if the budget is limited, there is no server equipment of your own, or it is important for you to implement a new system as soon as possible.
2. Creating a custom CRM is worth it if you need unique functions, development time is not critical, and there is a lot of “home-grown” software that is not compatible with ready-made solutions.

You can also say that off-the-shelf CRM usually uses a small and start-up business, while large companies prefer custom systems or turnkey solutions optimized for their needs.