To Build or to Buy?

Buy?

When businesses look to upgrade their software, automate a process or do something new/ different they often go to market in search for a software application that is fit for purpose. Depending on the type of application they are looking for, there is likely to be solutions that either cater completely for their needs or are close enough that they can ‘fudge’ the last 10%.

A prime example is the move to an accounting package from a spreadsheet as your business grows. Looking out to market, you will find a range of offerings from Xero to Microsoft to SAP and everyone in between. In this example, it would make no sense to hire a firm to build a solution from scratch, as there are well defined applications and processes already offered within the market which cater for 99% of the businesses out there.

How about the case where you are trying to do something new, or add features to an existing solution set?

This is where it is not so easy to find a solution that is readily available and will fit your needs. It is likely that you will find a partial match and try to fudge the remaining 50% to get what you need. Alternatively, you may pay the company to customise the product to your needs, building on top of what they have already done.

Now, this is generally where things start going pear shaped, with the 50% fudge factor soon becoming one of those dreaded company processes which need the right touch, button click, weather and mood to get to work. Not only is it time consuming, but it also is difficult to maintain and transfer knowledge to new employees (and sometimes downright embarrassing!).

In the case of getting the supplier to customise the software for you, this can pose a huge business risk - especially if you are the only customer with the customisation and if it is something that the supplier does not regularly do for its customers.

Why is this a risk?

There are three key reasons why this is a risk;

1. The supplier owns the core platform code and therefore is the only party who can modify and support the application in future. Depending on how large you are as a customer, the customisation over time will become an annoyance for the supplier to manage and will go obsolete. This leaves you with an unsupported customisation and limited options for changing platforms.

2. Vendor lock-in - linked to point one is vendor lock-in. If you customise an existing product base, you will not own the IP or the source code. This leaves you tied to a single vendor, exposing you to unnecessary around them going out of business, changing their pricing models or discontinuing the base product.

3. Customisations cost more than you think…

BUT! Doesn’t bespoke have the same risks as customisation?

No. By developing a bespoke solution in an open source technology set, you will own the IP and the source code. This gives you the ability to manage the application in house, or have your development partner look after the application.

Owning the source code and IP, means that you are not locked into a single vendor, as open source code bases are widely supported throughout NZ and globally.

Finally, with the size of the open source community globally, the likelihood of the application going obsolete or becoming unsupported is very unlikely.

Great!

New to open source? Check out our blog on open source tech here.

Build?

There many benefits to building a solution, over buying one off the shelf. Here are a few of the key ones;

• Competitive Edge - building a solution gives you a one of a kind application. Whether it is delivering extra insights, automating a process or replacing an antiquated system, it is a system that can give you that edge - getting you that trade, buying that item at the right time or halving your workload so you can focus on value-add activities.

• Matches your business needs - in the first example, I spoke about using off the shelf accounting systems, as they meet 99% of the business needs globally. But what if you are that 1%? The 1% that is working in such a niche area that there is no market solution? A bespoke solution can be tailored to meet your exact needs.

• Innovation - building a bespoke solution gives you a chance to be innovative, push the boundaries and create something new that the market has not yet built. You might use it for your business…but you may also license it for some nice passive revenue

Which is cheaper?

If you can find an off the shelf solution which requires little to no customisation - then this is by far the cheapest option.

Where you cannot find a solution that fits your needs and requires moderate to heavy customisation, then you may find bespoke solutions are on par or cheaper.

Also consider license fees - bespoke is a large one-off capital investment with a low cost maintenance contract. Off the shelf may have a cheaper upfront cost, but the licensing can add up over time.

So, should I buy or build?

Before making the decision, it pays to take the time to review what you are looking for, the business drivers behind this decision and what you see as being a successful outcome i.e. what are you trying to achieve?

Once you have a view on what you are looking for, you then go out to market (or Google) to see what exists and work out the amount of customisation that is required to meet your goals.

If there are no matches in the market and you find that you will require significant customisation to get to your goal, then it is time to consider a bespoke solution.

If you are still unsure, talk to the experts - we will tell you if the solution is worth building, or is readily available off the shelf.

FINAL THOUGHTS…

Building a solution with YouDo allows you to create a one of a kind application, fostering innovation and approaching problems from a different angle. The results…best in class applications which your competitors will envy.