TL:DR
Mid-market companies face a unique challenge: enterprise ERP and CRM systems are too heavy, while lightweight SaaS tools are too shallow. This “fit gap” forces leaders to make tough build vs. buy decisions.
- Buying delivers speed and vendor support but can be rigid and costly to customize.
- Building enables differentiation but requires significant investment, talent, and risk management (including key person risk).
- Hybrid strategies are emerging as the winning model: buy a strong core platform, build where your business differentiates, and use APIs or low-code tools to bridge gaps.
The companies that thrive will master this balance — choosing strategically when to build, when to buy, and how to combine both to reduce risk and accelerate growth.
Mid-market companies are facing one of the most consequential software decisions in decades: should they build custom solutions or buy commercial off-the-shelf products? Unlike large enterprises with deep resources or small businesses that can thrive on out-of-the-box SaaS, mid-market firms are caught in the middle. Too complex for simple, one-size-fits-all solutions, yet too lean to sustain massive in-house development, they must navigate a rapidly shifting landscape — one defined by cloud, AI, and new economics of software ownership.
The Mid-Market Squeeze: ERP and CRM Challenges
Mid-market businesses typically fall into the 
$50M–$1B revenue range with growing operational complexity. At this scale:
- Buying software often means bending processes to fit rigid SaaS workflows, or paying heavily for customizations that can make upgrades painful.
- Building software can unlock alignment with unique workflows, but traditional software development comes with high upfront costs, talent shortages, and long-term maintenance challenges.
This creates a paradox: enterprise ERP and CRM systems are often too heavy, while lightweight SaaS is too shallow. Mid-market firms are big enough to require sophisticated capabilities — supply chain management, international operations, customer engagement — yet not big enough to afford the IT overhead that enterprise platforms demand. Conversely, affordable SaaS options can be too simple, lacking the advanced execution and planning features needed to scale. The result is a “fit gap” that leaves many mid-market companies squeezed between two imperfect options.
The New Economics of Build vs Buy Software
The calculus is shifting, driven by several factors:
- Total Cost of Ownership (TCO): License fees vs. ongoing developer salaries — each with hidden risks, including underestimated integration costs, long-term maintenance, and key person risk (the danger of relying on a single developer or small team). Leaders also need to account for the true total cost of ownership when comparing build and buy scenarios.
- Integration: Buying doesn’t eliminate complexity; integrating multiple SaaS systems is costly and fragile. Building rarely means independence; external APIs and services are still required.
- AI and Low-Code Tools: Emerging technologies reduce build times and enable leaner development teams to deliver more.
- Cloud Deployment: Subscription models shift spend from capital expenditures to operational expenditures, changing how CFOs and CIOs evaluate ROI.
Strategic Drivers of ERP & CRM Disruption
Several competing forces shape decisions:
- Speed vs. Differentiation: Buying accelerates deployment, while building enables unique capabilities that create competitive edge.
- Risk vs. Control: Buying provides vendor-backed security and compliance; building offers ownership of data and IP.
- Vendor Lock-in vs. Agility: SaaS vendors evolve on their own timelines, sometimes leaving customers stuck with outdated or mismatched features.
- Talent Scarcity: Skilled developers are expensive and scarce, making in-house builds a risky bet for many mid-market firms.
Build vs. Buy: A CEO’s Perspective
When working with mid-market firms, I’ve found that pragmatism is key. If it’s clear a client hasn’t explored commercial off-the-shelf solutions — and we know there are options that could meet their needs — my advice is simple: buy, don’t build.
This isn’t about reselling products like Microsoft or Salesforce. It’s about discipline. Custom development should come after leaders have thoroughly evaluated what already exists in the market. In many cases, buying and customizing a proven platform makes more sense than starting from scratch. For mid-market leaders, the takeaway is straightforward — don’t default to building when viable alternatives are already available.
Buy where it accelerates, build where it differentiates.
Hybrid ERP & CRM Solutions: The Middle Path
For many mid-market companies, the answer lies in blending the two:
- Configure + Extend: Buy a robust core (ERP, CRM) and extend with custom modules for differentiating workflows.
- Composable Architecture: Build integrations around APIs to ensure agility and reduce vendor lock-in.
- Internal Platforms: Adopt internal developer platforms that allow faster customization without starting from scratch.
At Red Hawk Technologies, we’ve guided mid-market firms through this hybrid path — ensuring they can buy where it accelerates, and build where it differentiates. By balancing these approaches, companies reduce risk while still innovating.
A Decision Framework for Mid-Market Leaders
Before committing, leadership teams should ask:
- Is this capability core or context? Does it drive competitive advantage, or is it table stakes? Explore our DIY Tech Innovation Workshop
- Do we understand the expected ROI? If not, use our free ROI calculator to project potential returns.
- What is the long-term cost of ownership? Go beyond upfront fees — consider integration, maintenance, and staffing. Read our blog on Total Cost of Ownership (TCO).
- Do we have the talent to build and sustain? Remember to factor in key person risk.
- How quickly must we deliver? Time-to-market often defines success.
- Have we evaluated existing off-the-shelf solutions first? (Matt’s rule of thumb: always assess before building.)
Using these questions, leaders can map initiatives into a decision matrix:
- Buy: Standard capabilities (HR, payroll, commodity CRM features).
- Build: Differentiators (unique customer experiences, industry-specific workflows).
- Hybrid: Core platforms extended with custom functionality.
Conclusion: Navigating the Mid-Market Software Squeeze
The software landscape for mid-market companies is in disruption. One option is too simple, the other too complex — and the real opportunity lies in finding the solution that bridges both. Old binaries — buy or build — are breaking down, and the winners will be those that master hybrid approaches. By strategically balancing speed, cost, risk, and differentiation, mid-market firms can navigate the squeeze and turn software disruption into a growth catalyst.
Ready to rethink your software roadmap? Explore more insights on overcoming key person risk and calculating true TCO, or connect with Red Hawk Technologies to design a strategy that fits your business.
FAQ: Build vs Buy for Mid-Market Companies
Custom software development involves creating solutions tailored specifically to a company’s unique workflows, goals, and industry needs. It offers high flexibility and differentiation but requires significant investment, skilled talent, and ongoing maintenance. Off-the-shelf software, on the other hand, is pre-built and ready to deploy quickly, often at lower upfront cost. While it delivers faster value and vendor-backed support, it may require businesses to adapt processes or pay for customizations to meet all requirements.
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