An age-old question within large organizations is ‘shall we build this particular software solution ourselves or buy from a third-party vendor?’
Whichever option is selected one thing must be kept in mind: the long-term consequences.
1. It’s often much more expensive than planned
Building software is expensive. It is also unlikely that the budget reserved for building a solution is enough to compete with an equivalent commercial solution that is sold to many other clients, this is due to simple economies of scale.
Even more than this, there is a cost that organizations routinely underestimate or don’t budget for: running the software. Once developed, software needs to be supported, maintained, and updated using new technologies all the time. This makes under-budgeting so common. Expect the figure to be at least twice the one in your head.
To make matters worse, cutting any corners will bite you as you will accrue technical debt, which will not be sustainable and eventually will need to be paid back, which will draw time, money and other resources from your organization.
2. Return on investment & opportunity cost
Building your own software will take a lot longer to return any value. Whilst your developers are high-fiving on their innovative solution to an organizational problem solved,
you will barely have written your login page by the time your competitors (who purchased a vendor solution) have real users on their system producing value.
3. Why reinvent the wheel?
Even though an in-house built software will be tailored to your use cases, nearly all technology providers on the market now have demonstrated the ability to offer customization to a high level.
And if you think your use cases are unique, then think again. There’s a very high chance that technology providers have already solved the same challenges with other users, so they know how to meet your specific requirements - there is no need to reinvent the wheel.
4. The nightmare of system integration
If a vendor can provide rich, RESTful APIs then it is difficult to look past the option of buying an already successful product from the market. System integration can easily become a black hole of your budget for building a software tool in-house.
Couple this with lack of experience in the subject area and it is easy to see where costs seem to be underestimated for projects over and over again. Most software providers on the market now offer integration into a variety of software landscapes. They can seamlessly link their solutions up with all of the other software in your technology stack.
5. Maintenance and future proofing
Benjamin Franklin once said, “in this world nothing can be said to be certain, except death and taxes”. If Benjamin had lived to see the 21st century he may have also added technological progress. It won’t stop. Once an in-house system is built and functional, it is already out of date, especially when it comes to the latest advances in cloud computing, data privacy and security.
Technology providers are at the bleeding edge of their field, have multiple teams working on updating and future-proofing their software at any one time, and they will typically be better equipped to handle maintenance of an enterprise-scale software. Plus, relieving pressure from your internal IT teams will allow you to concentrate on your business goals, e.g. precision medicine, crop protection, compound safety assessment, and any other area your organization is known for.
Conclusion
When all is said and done, the decision of building or buying software may come down to personal preference. After all, an in-house built system can be tailored to your exacting needs and expectations without having to rely on influencing the third-party product roadmap, as well as keeping the up-front costs low. However, should you want scalability, performance and cutting edge functionality, as well as no maintenance pressures; buying a software from a reputable vendor is the most sensible option.
As a general ‘rule of thumb’ if the requirement fit of commercial software is 50% or more, buy has been proven to be much more sensible to invest into. When taking a step back, building a software yourself may seem very appealing up-front, but racks up costs over the long term and leads to opportunity cost. Again, you have to ask yourself, what is the best decision for a long-term growth?
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