Software ROI in a Build vs Buy Decision

Most teams do not struggle with the math. They struggle with deciding what to count, what to ignore, and how to defend the numbers in a room with finance, operations, and IT.

This guide shows how to estimate software ROI for a software decision using a simple worksheet you can reuse, plus a fill-in-the-blanks example you can adapt.

You will walk away with a clean way to compare options, a short list of traps that quietly blow up ROI, and a next-step plan you can run quickly.

‍

‍

What Software ROI Really Means in Build vs Buy

The catch is that “value delivered” is rarely a single line item. In a build vs buy software decision, value usually shows up as:

• Fewer labor hours in a process that used to be manual
• More throughput with the same headcount
• Faster cycle time, which can free capacity or pull revenue forward
• Lower error rates, fewer rework loops, fewer compliance issues
• Better data, which can reduce decision lag and wasted spend

“Total spend” is also bigger than most first-pass estimates. Your model has to include implementation costs, the ongoing run-rate, and the rough edges that show up after go-live.

A good software ROI model is not a perfect forecast. It is a fair comparison across options that makes the trade-offs visible.

The Reusable Worksheet for Software ROI

Use this worksheet to compare common paths:

• Buy (off-the-shelf)
• Build (custom)
• Hybrid (buy a core platform, build the parts that create differentiation)

This structure keeps the discussion grounded, especially when the build vs buy software decision gets emotional.

Define The Decision and the Horizon

Start with three lines:

• What problem are we solving, and what does “better” look like?
• Who uses the solution, and what workflows change?
• What horizon matters most for your business planning?

A shorter horizon often favors buying because up-front effort can be lower. A longer horizon can favor building if the solution becomes a durable asset.

Also decide whether you are leading with ROI or payback period. Some teams need a fast payback period to get approval, then they refine the longer-term ROI.

Map Total Cost of Ownership by Category

In a build vs buy software model, total cost of ownership is where the truth lives. Break it into categories so you can compare apples to apples.

For buy:

• Subscription fees (base, tiers, add-ons, storage)
• One-time setup and implementation costs
• Integration work, connectors, middleware, data migration
• Internal time for training and process changes
• Ongoing maintenance and support (admin time, vendor support plan, reporting upkeep)

For build:

• Product discovery, UX, architecture
• Engineering, QA, DevOps setup
• Cloud, hosting, monitoring, logging
• Security reviews and compliance work
• Ongoing maintenance and support (bug fixes, upgrades, backlog work)

For hybrid:

• Subscription fees for the platform
• Implementation costs for rollout and integration
• Build costs for custom modules and workflows
• Ongoing maintenance and support split between vendor and your custom layer

Quick check. If your first draft does not include integration and change management time, it is not a total cost of ownership model yet.

Quantify Benefits You Can Defend

A defensible software ROI estimate uses benefits you can point to in operations.

Start with these buckets:

• Time savings (hours reduced in a workflow)
• Quality gains (fewer errors, fewer escalations)
• Speed gains (shorter cycle time, fewer handoffs)
• Revenue enablement (more capacity to sell or serve)

Then convert to dollars with simple assumptions:

• Loaded labor rate (not just salary)
• Volume per week or month
• Baseline error rate and rework cost
• Throughput or conversion improvements

If you cannot defend a benefit with a measured baseline, keep it as a separate “upside” line, not part of your main ROI.

This keeps the ROI calculator honest and helps the output survive scrutiny.

Add Risk and Constraints as Dollars

A build vs buy software choice includes risks that show up later as cost.

Add these as explicit lines:

• Data migration complexity
• Integration uncertainty
• Security reviews and governance overhead
• Vendor terms and vendor lock-in
• Internal capacity limits and opportunity cost

You do not need perfect numbers. Use ranges and document assumptions. The goal is to make “unknowns” visible so the decision is not based on optimism.

Compare Payback Period, Long-Term ROI, and a Reality Check

Now compute:

• Payback period = total up-front spend ÷ monthly net benefit
• Long-term ROI using the same structure
• A downside case, such as “benefits arrive slower and costs run higher”

If the result only works in the best-case scenario, it is not ready to drive a decision.

Build vs Buy Software: Where ROI Usually Breaks

Most teams assume the choice is “cheap and fast” versus “expensive and flexible.” In practice, the ROI hinges on fit, change effort, and the long tail of costs.

Here are common patterns in build vs buy software:

Buying tends to win ROI when:

• The process is standard across your industry
• You can accept the vendor’s workflow with light configuration
• Subscription fees stay stable as you scale
• Integration needs are simple and the data model fits

Building tends to win ROI when:

• The workflow is a differentiator or a core capability
• You need deep integration across systems
• Per-seat pricing grows faster than the value delivered
• You need control over data, roadmaps, and security posture

Hybrid tends to win ROI when:

• A platform covers most of the baseline needs
• The remaining gaps are where the business value lives
• You can keep the custom layer small and maintainable

Meanwhile, the hidden ROI killer is vendor lock-in. It does not just make switching hard. It can also limit how you adapt your process, which can cap the upside of your software ROI model.

‍

‍

The Traps That Quietly Destroy Software ROI

Even solid teams miss these because they do not look like “costs” at first.

Counting Only Price, Not Total Cost of Ownership

A build vs buy software decision based on price alone is a fast path to regret. Price is what you pay. Total cost of ownership is what you live with.

If you buy, the long tail often includes subscription fees, add-ons, and admin time. If you build, the long tail is maintenance and support plus backlog ownership.

Underestimating Implementation Costs

Many implementation costs are internal:

• Training time
• Process redesign
• Data cleanup
• UAT cycles
• Stakeholder alignment

If you do not model those, your payback period will look better than reality.

Treating Time Savings as Automatic Profit

Time savings only creates ROI if you can redeploy that time. If you save time but nobody changes what they do, your software ROI is theoretical.

A better approach is to connect time savings to a measurable output, like more quotes sent, more tickets closed, faster onboarding, or fewer handoffs.

Ignoring Vendor Lock-In Until Renewal Time

Vendor lock-in is not only contractual. It is also technical and operational:

• Your data in proprietary formats
• Workflows embedded in a tool
• Custom reports and integrations that are hard to unwind

In a build vs buy software model, you should add a line for exit cost and a line for “innovation constraint,” even if you keep them as ranges.

Skipping the Maintenance and Support Plan

If you build, you own a product. Products need care. If you buy, you still have admin work, integrations, and ongoing training.

A realistic ROI includes maintenance and support as a first-class line item, not an afterthought.

Software ROI Signals That Point Toward Build, Buy, or Hybrid

If you want a quick filter before you model anything, use these signals.

Buy Signals

• The vendor supports your workflow with minor adjustments
• Data model and reporting match your needs
• Integrations are standard, not custom
• Subscription fees remain predictable at your growth rate

Build Signals

• Your workflow is unique and drives advantage
• Integration depth is the main requirement
• You need control over roadmaps and releases
• Vendor lock-in creates major downside risk

Hybrid Signals

• A platform accelerates the baseline
• Custom modules are limited and high-value
• You can keep total cost of ownership under control with a small custom layer

No shortcut beats a real software ROI model, but these signals can keep you from wasting cycles on options that will not fit.

How Yocum Technology Group Helps Teams Estimate and Improve ROI

Yocum Technology Group builds and modernizes software with services that include custom software development, cloud work, DevOps, data platforms, and application modernization.

In a build vs buy software decision, that can translate into practical support like:

• Scoping a proof-of-value so your software ROI assumptions are based on real workflow data
• Identifying integration work that drives implementation costs
• Planning a roadmap that balances speed now with total cost of ownership later
• Modernizing legacy systems through application modernization so you can reduce the cost of keeping old workflows alive
• Building targeted custom components when a hybrid approach makes sense, rather than rebuilding everything

A good partner does not just build. They help you model, measure, and adjust so your ROI does not disappear after launch.

Next Steps: A Fast Plan to Make the Decision Clearer

If you want momentum without turning this into a long exercise, run this sequence:

• Pick one workflow and measure baseline time, volume, and error rates.
• Draft your total cost of ownership categories for build, buy, and hybrid.
• Fill in implementation costs with internal time estimates.
• Run a downside case and compute payback period.
• Decide what you need to validate next, then schedule the smallest test that reduces uncertainty.

If your model is simple and visible, people will use it. If it is complicated, it becomes a spreadsheet artifact that does not change decisions.

That is the real goal of software ROI in a build vs buy software decision: clarity you can act on.

‍