Presented by Retool
The logic used to be: buying software is cheaper, faster, and more secure for most use cases. Construction was reserved for companies with large engineering teams, lots of money, and problems so specific that no supplier could address them. But now, the cost of coding software has reduced to zero.
Anyone can create their own software now, but business and governance models have yet to catch up. Retool’s 2026 Build Versus Buy Change ReportBased on a survey of 817 builders, it tracks exactly how this change is happening.
The cost curve changed; SaaS pricing is not
Two years ago, a custom internal tool might have taken an engineering team weeks or months and cost six figures. Today, an operations leader with the right platform can have a working prototype in a day or two. This structural change is driven by AI-assisted development and the maturation of enterprise application creation platforms.
Meanwhile, SaaS pricing has not been adjusted and continues to charge per seat for generic software that requires customization and integration costs on top. When the cost to build drops by an order of magnitude but the cost to purchase remains stable, the math changes for all companies, not just those with large engineering teams.
The data reflects this. Retool’s report found that 35% of teams have already replaced at least one SaaS tool with a custom build, and 78% plan to build more custom tools in 2026.
Workflow automations and management tools are among SaaS tools at risk
Change is not occurring uniformly. The top SaaS tools that respondents have replaced or considered replacing include workflow automations (35%) and back-office tools (33%), followed by BI (29%) and CRM (25%) tools.
A purchased workflow automation tool has to serve thousands of customers, so it optimizes for the average case, and the average case is no one’s case. current case. The internal workflows of each company are different. They reflect the organizational structure, compliance requirements, data systems, and business logic unique to that organization.
Internal management tools carry the same problem: they are inherently company-specific. These categories were always the most cumbersome for software available on the market, and now there is an affordable and accessible alternative (the MIT State of AI in business reported annual savings of between $2 million and $10 million in customer service and document processing).
The replacement pattern tends to be additive rather than wholesale (no one is simply eliminating Salesforce). They’re replacing the specific pieces that never quite fit together: an approval flow that required three workarounds, the dashboard that couldn’t connect to your actual data… but those limited replacements add up. Once a team creates a tool that works better than the one they bought, the default question shifts from “What should we buy?” to “Can we build this?”
Builders pivot to IT, signaling broader procurement challenges
The clearest evidence that procurement processes have not kept pace with capacity building is the scale of shadow IT currently occurring within companies. Retool’s report found that 60% of builders have created tools, workflows or automations outside of IT oversight over the past year, and 25% report doing so frequently.
Even experienced people with good judgment prefer speed over process. Two-thirds of the total respondents (64%) are senior managers and superiors. Existing procurement cycles were not designed for a world where creating software takes days instead of months. When people love to quote the 95% Generative AI Pilot Failure Rate They are not accounting for Strong grassroots adoption happening right under the noses of executives..
Shadow IT at this scale is a sign of demand. The people closest to the problems are telling organizations that the existing process cannot keep up: 31% of those working in IT do so simply because they can build faster than IT can provision tools. So repression is not a productive response. The challenge is that the tools that are built in the shadows are also the ones most likely to get stuck before becoming useful.
A vibration-coded prototype running on sample data is impressive. A production tool connected to your real Salesforce instance, with role-based access and a security review, is useful. The report found that 51% of builders have shipped production software that their teams currently use and, among them, about half report saving six or more hours per week.
When construction occurs in an ungoverned environment, organizations do not reliably achieve either outcome. Someone connects an AI-powered tool to production data with no audit trail, no access controls, and no owner. Multiply that by dozens of builders in an organization and you have an expanding security surface that IT doesn’t even know exists.(1)
Teams whose homegrown solutions make it to production tend to have three things that others don’t: connectivity to real data sources, a security and permissions model they trust, and a process for reviewing what gets deployed. Channeling builder energy into governed environments, where speed and security are not in conflict, is how organizations prevent shadow IT from becoming a liability.
Governance will define the next era of SaaS
The shift between building and buying is already underway. The most important question now is who controls the environment where that construction is built.
An ungoverned building invites security risks and makes the ROI case difficult to close. You can’t measure time saved by tools that IT doesn’t know exist or that only run in one person’s workflow. You can’t impose access controls on a prototype that someone connected to production data last Tuesday. And these are not hypothetical risks: in Deloitte State of AI in the Enterprise 2026 Survey of 3,200+ LeadersData privacy and security ranked as the top AI concerns at 73%, closely followed by governance capabilities at 46%. The 35% of organizations without AI productivity metrics are missing more than a dashboard. They lack the accountability infrastructure that justifies building rather than buying in the first place.
Organizations that treat governed environments as a prerequisite for building at scale will be the ones that can truly demonstrate that they are working. Those who don’t will notice when something breaks.
For a closer look at the data, including how companies are approaching AI-assisted construction, read the full article. 2026 Build Versus Buy Change Report.
(1) whose cost can be high: IBM report on the cost of data breaches in 2025 found that cases associated with AI cost organizations more than $650,000 per breach.
David Hsu is CEO of Retool.
Sponsored articles are content produced by a company that pays to publish or has a business relationship with VentureBeat, and are always clearly marked. For more information, contact sales@venturebeat.com.
