Should I Buy or Build the New Software I Need for my Business?June 21st, 2012 by Michael Giuffrida
The classic buy vs. build question permeates many aspects of our business and personal lives. Whether we are talking about a personal residence, a commercial building, a new line of business, or a piece of software there is an analysis that we must do to weigh the trade offs and calculate the value of each option.
When it comes to software projects, we deal with this question everyday. And there is no simple answer as each situation is different. In this post we hope to help you answer some of the questions that you should be asking yourself in the buy vs. build decision. The types of things you should consider are flexibility, growth potential, customization needs, short term costs, and long term costs.
Depending upon where you are with your business cycle, the exact needs of your business may not be 100% fleshed out yet. As such, you might need great flexibility in the functionality of your software as your organization grows. Additionally, gauging scalability and your offerings differentiation from the rest of the market are critical. If your business will depend upon this new software and it is key in supporting your differentiation from your competitors, you better be able to stay ahead of the curve with adding new features and functionality which will support your business vision.
Alternatively, if the software supports an aspect of your business that is fairly static, an off the shelf product may work just fine. It is important to not reinvent the wheel for things that others have done already if it is not your primary business to do so. As an example, if your business is selling widgets and you are looking for a contact management software, an off the shelf product may work just fine. On the other hand, if your product is on online portal and there are many sources that your visitors can frequent to get the information you provide, you might consider a custom product that can help differentiate you in the market.
Now the big question; cost. Oftentimes off the shelf products that you can purchase the license for or buy as a service (SaaS) will be a lower investment upfront than building your own software and that can be critical to manage the cash-flow of an organization. Be sure however to consider the long term costs of not actually owning the software or not being able to do exactly what you want with it. This is usually the largest tradeoff that folks have to consider.
Unfortunately there is no single answer to the buy vs. build question but there is a “right” answer for each particular situation. Performing an analysis as described above should help you find that right fit for your organizational goals.