The Dilemma of Build vs Buy – How it applies to Enterprise Software

If Shakespeare was an IT manager, the famous question ‘To be, or not to be’ would have been ‘To build or to Buy’. In fact, the phenomena of DIY-ing something or buying a commercial product is not only limited to enterprise software. IKEA is running a whole business out of providing utility to ‘build proponents’ and DIY enthusiasts. While building furniture can be fun, building an enterprise level software – not so much.

Build vs Buy

Like any other business decision, the decision to either build a software or to buy a commercial product is significantly influenced by total cost of the approach and return on investments. If you’re facing a similar dilemma, the table below summarizes the prospects and consequences of both the approaches.

         Metrics and KPIs                     Build Approach                        Buy Approach
Cost of deployment Hiring a team of developers, designers, programmers to build the solution License fee of the product and deployment costs
Time to market – Time to develop the product

– Time for performing QA analysis

– Time to fix any patches or bugs found

– Time to deploy the solution

– Product development, QA analysis and patch fixes are already taken care of by the solution provider. Therefore, solution can directly be deployed.

– Time to configure and install the product.

Ongoing maintenance and support costs A dedicated team of IT professionals should be on-board to help with ongoing product support and maintenance Updates, maintenance and customer support are handled by the solution provider. However, the solution provider might charge a fee for providing these services
Learning curve A steep learning curve is usually associated with the developed product Commercial products are developed to be used by a wide range of audience with varying levels of technical skills therefore, in most cases these solutions are designed to be more intuitive and user-friendly

 

When is ‘Building’ the right approach?

Building a software is going to be beneficial for your business if:

  • The software is going to give you sustainable competitive advantage
  • No other available solution can meet your business needs
  • The end-points from where your business collects data are not volatile or prone to frequent changes
  • You have substantial resources to cover the costs associated with building and maintaining the software

When is ‘Buying’ the right approach?

You should opt for buying a commercial software if:

  • Building a software is not the core of your business and is not going to yield you any competitive advantage
  • You have limited resources and you would rather invest them in improving your core business activities
  • There are solutions available that address the challenges your business is facing
  • You are looking for a quick solution that can be immediately deployed

IT manager at Brickell Bank, formerly known as Espirito Santo Bank, faced challenges in migrating broker data from MS Access database to IBM mainframe data warehouse. Learn more about the approach he opted for and other factors that influence build vs buy decision by downloading the free white paper.