6 Reasons to Buy Rather Than Build Software

My first job was as a developer, I was involved in the development of a mainframe purchasing system, which I later helped to replace with a package. That was my first exposure to a buy rather than build decision and since then I’ve seen both scenarios, although in the vast majority of cases buy beats build hands down.

Of course, if there isn’t a package in the market that does what you need, then building your own system makes sense. Also, if your company has some secret sauce that is truly unique and special, then there is an argument to build. Whilst I was at a previous company, we developed our own WMS because we didn’t see anything commercially available that could easily be enhanced to contain our proprietary intellectual property, but that company is one of the largest distributors in the world, with some intelligent systems and some unique ways of doing things. For everything except the WMS, we used packages - I think that says something. Even with the capability and expertise to develop our own complex systems, we chose to buy software in most cases.

Speed

Buying is typically much faster than building. Faster time to benefit is a massive reason to implement pre-built solutions. It’s also a very good reason to deploy in a pragmatic manner. I especially like the concept of minimum viable product. This is the idea that we should rapidly deploy the minimum solution that delivers value, but then follow a continuous improvement process to deliver further capabilities. Whilst this approach will not suit every situation, it is a very low risk approach that can deliver business values very quickly. This approach works well for companies who have embraced agile concepts.

Cost & Opportunity Cost

If you look at total cost of ownership, packages solutions and SAAS solutions can deliver significant savings, however, I think that the benefit of buy over build is often underestimated in cost calculations because we fail to account for the following 2 factors:

1.      Speed. Improved time to benefit means more benefit.

2.      Opportunity Cost. In house development resource, or key design resource is often constrained, so if we spend time building things we could have bought, we waste our capacity to develop or build those special things that should be built.

You Get More

If you are buying software of SAAS in an area that is mature, such as ERP or CRM, you will get hundreds of developer-years of investment in the product. You may not want it all, but you will usually get more than if you build yourself. Can you imagine how much it would cost you to develop something like Concur yourself? You can use it for a few dollars a year with virtually no setup cost.

This one can be a double-edged sword, because if your deployment approach is not disciplined, then packages can offer a myriad of possibilities for scope creep.

Better Quality

Software has bugs! As the software gets used, bugs get found and corrected. If you develop software, you will be the first company to use it whereas if you buy software, there will be tens, hundreds or even thousands of companies who have found the bugs for you. Developing your own software makes you the ultimate early adopter!

How often is version 1.0 a great software release? Buying software from a company that has taken it through several releases means that you are buying all of the painfully acquired experience on what works and what doesn’t. Its currently possible to find people who have implemented SAP or Oracle 5 or 10 times! That’s a whole lot of lessons learned.

Thought Leadership

When you buy software, you are buying the company as much as the product. Good software companies have thought leaders, people who have done what you are trying to do and they have directed the development roadmaps of their products taking that expertise into account. Although this is intangible, it’s an enormous factor.

When I was at SAP in the 90’s there was a massive team of SAP experts working with the EU before the rules were even defined for monetary union. When the Euro was introduced, SAP had solutions and strategies ready.

Future proofing

How should you exploit AI? How will IOT affect your system? How about Cloud? What about Blockchain?

Good software companies are thinking about these questions every day and they are building these technologies into their products. When you partner with a good software company, they realize that their future depends on negotiating these challenges.

In Conclusion

If there is a commercially available SAAS or package that does most of what you are looking for, then the argument for buy over build is very compelling. If there are no mature solutions in your space, or if you have ‘secret sauce’ then there may be a justification for building your own solution.