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Comparing the total cost of ownership (TCO) of custom software with that of pay-per-user SaaS licenses is crucial for any medium or large company in Switzerland as it directly impacts financial health, innovation capacity, and competitiveness.
Beyond the sticker price, you must factor in initial investments, recurring subscriptions, hidden update costs, and flexibility to adapt to evolving business needs. This analysis determines not only the short-term financial burden but also the impact on cash flow, scalability, and innovation.
This article outlines the key selection criteria, reveals the hidden costs of many SaaS solutions, and shows how Swiss companies can reduce vendor lock-in risks, control their technology roadmap, and gain a sustainable competitive advantage tailored to their specific challenges by favoring an open-source custom solution.
Breakdown of Initial and Recurring Costs
The structuring of CAPEX and OPEX differs significantly between custom software and SaaS licenses, affecting your budget from the earliest stages.
Initial Investments (CAPEX) vs Subscriptions (OPEX)
For custom software, CAPEX includes functional analysis, design, development, and architecture. These expenses are incurred upfront and create a tangible asset that you can amortize over multiple accounting periods.
In pay-per-user SaaS, OPEX begins at deployment: each additional license generates a monthly or annual cost. If your headcount grows or you add temporary users, operational expenses can skyrocket without ever creating proprietary intangible capital.
Our article CAPEX vs OPEX illustrates the fundamental difference between these two concepts and helps you better structure your digital projects to optimize their return on investment.
Recurring Costs and Pricing Scalability
SaaS subscriptions often include updates, support, and hosting, but pricing frequently evolves. Price tiers or additional fees for advanced modules can appear without warning.
Conversely, custom software can be hosted in your own cloud or with any open hosting provider you choose. Costs for future enhancements are controlled through a flexible maintenance contract aligned with your actual needs, without sudden price spikes.
Integration and Customization
Adapting a SaaS to your value chain requires connectors, APIs, and additional development work. These external services often come as fixed-price or hourly-rate projects.
For example, a mid-sized Swiss e-commerce company integrated a stock management module into its SaaS CRM. The initial integration cost reached 60,000 CHF, followed by 8,000 CHF per month for support and further developments—totaling 156,000 CHF over two years. It’s essential to account for these fees when considering a SaaS-based business tool.
Hidden Costs and Scalability Challenges
Beyond subscriptions and licensing fees, invisible costs emerge through vendor lock-in, forced updates, and technological dependency.
Vendor Lock-In and Supplier Dependency
With SaaS, your data, processes, and workflows reside on the provider’s platform. When you decide to migrate or integrate another tool, transition costs (export, formatting, testing) can exceed 25% of the project’s initial budget.
A large Swiss logistics company spent 250,000 CHF migrating to an open-source solution after five years on a SaaS platform that had become too rigid. These unbudgeted expenses extended the migration timeline by six months. Anticipating such scenarios early on helps avoid unwanted costs, delays, and operational standstills.
Upgrades and Compatibility Impact
Automatic SaaS updates can cause regressions or incompatibilities with custom-developed modules designed to tailor the solution to your business needs. You then depend on the provider’s support team to fix or work around these anomalies.
In contrast, custom software follows a release schedule driven by your internal governance. You decide when to introduce new features, testing compatibility with your other systems in advance. This independence often brings more peace of mind, freedom, and control.
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Mid- and Long-Term Financial Analysis
Over a three- to five-year horizon, comparing total cost of ownership reveals the strategic advantage of custom software.
Time Frame: ROI and Cash Flow
In SaaS, OPEX remains constant or rising, weighing on cash flow and limiting the ability to reallocate budget toward innovation. Short-term savings can become significant fixed charges.
Custom-built software amortized over three to five years generates a peak in initial CAPEX but then stabilizes expenses. You eliminate recurring license fees and free up cash for high-value projects in the mid to long term. This strategy makes all the difference when the time frame exceeds three years.
CAPEX vs OPEX Comparison: Predictability and Control
CAPEX is predictable and plannable: you budget the project, approve milestones, then amortize according to your accounting rules. Shifting to OPEX can complicate budget visibility, especially if the pricing model evolves.
For example, a mid-sized Swiss company that consulted us after a poor decision saw a transition to per-user SaaS cost them 420,000 CHF over five years, compared to 280,000 CHF in CAPEX for a custom development—placing the custom solution’s TCO 33% lower.
Added Value: Flexibility and Continuous Innovation
Investing in custom solutions builds an evolvable foundation. You implement MVPs, test, refine; each iteration increases your product’s value. This agility results in shorter time to market and better alignment with business needs.
In contrast, you rely entirely on the SaaS provider’s product roadmap: your improvement requests may wait several roadmap cycles, delaying your market responsiveness.
Example: Large Swiss Enterprise
A Swiss industrial group with 500 users across three subsidiaries opted for a custom solution to centralize its quality processes. The initial project cost 600,000 CHF in CAPEX, followed by 40,000 CHF annually for maintenance. By comparison, the SaaS alternative billed 120 CHF per user per month—totaling nearly 2,160,000 CHF over five years.
Beyond the financial gain (TCO reduced by 70%), the group integrated its own continuous analysis algorithms, boosting quality performance by 15% and anticipating failures through custom business indicators.
Key Principles to Optimize Your Custom Project
Agile governance, open source usage, and a modular architecture are essential to controlling TCO.
Modular Architecture and Microservices
Opt for functional segmentation: each microservice addresses a specific domain (authentication, reporting, business workflow). You deploy, scale, and update each component independently, reducing risks and costs associated with downtime.
This technical breakdown simplifies maintenance, enhances resilience, and allows you to integrate new technologies progressively without overhauling the entire system.
Open Source Usage and Hybrid Ecosystem
Favor proven open source frameworks (e.g., Symfony, Spring Boot, Node.js, Nest.js, Laravel) to secure your code and leverage an active community. You reduce licensing fees and avoid vendor lock-in.
Complement with modular cloud APIs and services for hosting, analytics, or alerting. This hybrid approach combines performance with autonomy while ensuring maximum flexibility.
Governance and Business-IT Alignment
Establish a steering committee comprising the CIO, business stakeholders, and architects. Periodically reassess the roadmap to adjust priorities, validate changes, and anticipate budgetary impacts.
This collaborative approach ensures a 360° vision, avoids redundant developments, and optimizes resource allocation.
Maintenance Processes and Scalability
Implement CI/CD pipelines to automate testing, deployments, and updates. Continuous reporting on test coverage and dependencies alerts you to potential vulnerabilities and regressions before production.
This proactive system guarantees quality, secures future releases, and reduces long-term operational workload.
Maximize the Value and Flexibility of Your Software Investments
Comparing TCO between custom software and SaaS licenses shows that while SaaS offers rapid deployment, custom solutions create an evolvable, controllable, and cost-effective asset in the mid to long term. By structuring investments through amortizable CAPEX, avoiding vendor lock-in, and adopting a modular open source architecture, you boost agility and optimize cash flow.
Regardless of your situation, our experts can help you define the solution that best addresses your challenges and implement a robust TCO management strategy.
