Organizations regularly struggle with building versus buying when it comes to software. While developing a purpose-built solution in-house may seem like the best way to address a specific business challenge, it often requires the disproportionate allocation of resources — particularly budget and personnel — to create, implement and maintain. In most situations, working with a reputable provider to deploy a proven solution will allow companies to get the technology into the hands of users more quickly and generally ensures that the solution will have more comprehensive support throughout its life cycle.
Build It Or Buy It?
Many managers make the mistake of treating a new initiative as a one-off business process project when it’s most certainly destined to be an ongoing initiative. Departments typically identify a specific problem in isolation and engage internal IT resources to address it. At first glance, this approach appears to make sense, as internal IT projects are suited to address projects with a limited, well-defined scope. However, complex business processes often span multiple departments and include collaboration with external suppliers.
An organization’s expertise is generally not developing B2B software solutions. Why spend countless hours having your best people — or hiring new people — architect a solution that already exists and is proven in the market? Generally, a vendor has already solved the same problem hundreds of times, therefore bringing clients the benefits of best practices based on others’ experiences.
Looking for more concrete evidence to purchase a commercial solution? Estimate the initial internal development costs, as well as ongoing maintenance, required here. The burden of product development, quality assurance, maintenance, platform migration and patch fixes are owned by the solution provider, while in-house development will usually require years of continued development beyond the initial project scope. In most cases, the vendor gains efficiencies because of its large customer base, so it can often charge less for implementing and maintaining an established product than it would cost to support a one-off, homegrown application.
Plus, as a customer of a commercially available solution, your key users will have input to new features released on a regular basis — developed in extensive collaboration with your provider’s user base. Commercial products are developed to accommodate a wide range of users with varying skill levels, so these solutions tend to be more intuitive and user-friendly. The vendor’s staff will help launch the solution, manage maintenance and deploy product upgrades. And don’t forget about support!
Technical Criteria To Consider
It is important to evaluate relevant factors like control of the finished product, costs related to monetary and personnel requirements, maintenance, opportunity cost and time to value. The selection and purchase of a solution isn’t just about the bottom line, though. Consider the following criteria, which can support ease of use for both internal and external users worldwide:
Configurable Templates: Applications that have hard-coded fields, layouts and workflows typically take longer to deploy, with higher-than-anticipated development costs. Additionally, given the need to involve IT as business requirements change, hard-coded applications have lower user satisfaction and higher long-term development costs.
Intuitive Design: Willingness to use the application is essential for its success. A solution that is designed for both internal and external users will feature an intuitive user interface and require little to no training.
Single Sign-On: Single sign-on minimizes implementation and ongoing administration support of a user’s access. Well-designed, role-based user access, linked to the organization’s LDAP, provides a robust solution to manage a critical area of the application.
Security: If an application is open to users outside of the company’s firewall, security that scales to support thousands of users across the globe is vital. To address both security and scalability considerations, the use of a content delivery network (CDN) and web application firewall (WAF) increases responsiveness and minimizes the risk of unauthorized access.
Two-Way Integration: Two-way integration with existing enterprise systems, such as ERP, QMS, PLM and CRM systems supports ease of use and reduces the risk of data issues.
Data Lakes And Machine Learning: Modern data lakes are designed to query vast amounts of data in milliseconds. Machine learning allows organizations to move from looking at historical data to predicting the future by looking for changes in behavior that could signal a potential disruption.
Choosing The Right Approach For Your Business
In many situations, it’s simply a better business decision to buy rather than build. An organization would benefit from a commercial solution if:
Building software is not a core part of its business.
There are solutions on the market that address relevant business challenges.
Internal resources are limited, and it needs to focus on core competencies rather than software development.
Fast deployment is a higher priority than a fully customized product.
Certainly, there are some business environments that require a 100% custom solution, built from the ground up by internal resources who have intimate familiarity with the organization’s unique business challenges.
When To Build
Some factors (other than keeping developers occupied) that may influence your decision to build rather than buy include:
Intellectual Property: When leveraging unique intellectual property or genuinely novel capabilities, in-house development may be ideal, particularly if there is a plan to monetize the product via external customers.
Point Solution: A single issue may require a specific fix — for example, developing an API to solve a compatibility problem between essential business systems.
Exact Requirements: Off-the-shelf products are generally designed to meet the needs of the widest range of users, but sometimes that results in too many or too few features. If these cannot be modified or selected to suit specific requirements, it may be less frustrating to develop to your own exact specifications.
A La Carte Adds Up: Implementing partial solutions across several products can be costly and frustrating for users. In this situation, developing a customized solution can be most effective.
Often, however, a commercial solution can more quickly and cost-effectively get the business ramped up and focusing on solving problems and driving productivity. Of course, each business situation is different, so it’s important to assess all the stipulations above to make sure you’re choosing the right path for your organization.
As CEO of LiveSource, Bo brings nearly 30 years of manufacturing and supply chain business application experience to LiveSource. Previously the CEO/Founder of FBOS, an EAM solution, Bo sold the company to QAD in 2006. He then spent seven years at QAD in various leadership roles before becoming CEO of MFG.com. There he led the spin-out of the LiveSource product into a stand-alone company and completed the company’s Series A funding.