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Build It or Buy It: should you develop a software solution in-house?

Build It or Buy It: should you develop a software solution in-house?

Software as a service and the explosion of third-party apps has made it easy to find a tool for every problem — but that convenience comes with a cost.

A business that relies on a selection of ‘off-the-shelf’ SaaS software can have a heightened risk of data loss or cyberattack, might struggle to integrate a dozen different tools, and can find the combined cost of lots of little solutions adds up to more than a consolidated approach.

Implementing an all-in-one solution is an alternative but can present the issue of configuring the software to meet all or most of the needs of the business.

And those building a solution in-house can face challenges as well.

There’s the risk that a bespoke solution won’t adapt over time, as well as the growing cost of engaging developers in a scarce labour market, and the challenge of finding staff happy to use a tool without greater industry application.

So how should you decide? We find there are four key questions businesses should address when they are weighing up buying a solution or building one in-house.

  1. How unique is your problem or need?

While businesses might like the idea of buying off-the-shelf technology that could make those processes more efficient, for some solutions, there just isn’t an app for that.

The more complex and bespoke a process, the less likely it is a third-party generic product will be able to do the job.

Even if a dozen different SaaS apps could be coerced into playing together to deliver results, the integration becomes a much larger piece of work.

Despite this, some businesses feel their processes are unique, but streamlining how they work might mean off-the-shelf options are a good fit.

Others may have unique elements to their operation along with business streams that operate the same way as many others.

For these, there could be options where technology built for their purpose could be based on a broader platform or adapted into a hybrid model.

In any case, it is not a decision to be rushed, and business leaders should find out what can be bought and applied before embarking on a bespoke build.

  1. Will your technology need a pool of skilled labour?

In a tight labour market, focus on the most critical roles.

Finding any qualified personnel who can work with advanced technical systems is a win — but if you are trying to find the rare few who might have trained on an unusual or legacy software, you are most likely out of luck.

The same goes for third-party software platforms, where the more unusual your software stack, the less likely you are to find someone who knows how Rare Application A interfaces with Unusual Application B.

Even for businesses that manage to attract the talent needed to work in a bespoke software environment, retaining that talent is harder if they don’t believe they are building transferable skills.

The lesson is that the people question can be just as important as the technology when weighing up build versus buy, and you need to look not only at immediate capabilities but how knowledge will be shared.

What does the stewardship of your project look like if the one, trained lead departs?

Can your business bring in specialist skills externally, with developers on a retainer basis, or is there a case for retaining an internal team?

They are tough questions that must considered to avoid stranded software that can’t achieve your aims.

  1. How important to your business is best practice?

For those businesses that are leaning towards buying in third-party technology, there are decisions to be made as well.

One of the most important is whether to focus on the best fit — technology that is pretty good at serving multiple needs — or strive for best-in-class.

The latter might have superb software for one specific function, but less-stellar performance in others. Integrating them with other solutions can create overlaps or redundant functions.

With hundreds of different options for every conceivable process, finding the best fit can take time — and if there’s one thing business leaders are short on, it’s time.

Pitcher Partners’ recent Business Radar report finds leaders already fear they are stuck in the weeds on operational matters, and two-thirds would rather be focusing on big picture matters.

Most don’t want to go through the pain of finding, testing and evaluating software, however critical it is to their business success.

Beyond best fit and best-in-class is a third option: building your requirements onto an existing platform.

Open-source programs — software that makes its source code available — can be adapted to suit a business’s specific needs, often at a lower cost than building a new platform from scratch.

A global survey earlier this year revealed that 80% of IT leaders expect to increase their use of enterprise open-source software for emerging technologies. Take-up accelerated during the pandemic as companies leaned into digital transformation on a budget.

The communities that develop and support open-source software continue to grow, but you will likely need support to align the software and any add-ons with your technology needs.

If your internal team doesn’t possess those skills, that means heading back to the market for development support.

  1. What value do you put on your software investment?

A final question that can sway the build-or-buy decision comes down to cost — and not just the price you will pay for the technology.

What is the cost to your business of software that underperforms? What is the value that can be captured if you have a more efficient or streamlined technology stack?

How much will you need to invest in training and development? In scaling the software as you grow? And how would a potential buyer of your business assess the value of your decision?

For any business looking to sell, the question of how their technology will be perceived is a real one.

A poor score when a bidder undertakes their technology due diligence can be enough to sink a deal, while solid, proprietary software can have value as intellectual property.

Time is another factor.

Creating software from scratch is a costly, time consuming and often uncertain path but even with third-party solutions you also need to consider the time to implement along with onboarding and training of your team.

Get advice before you move

The arguments for businesses to invest in technology are clear but knowing the steps they should take to find the best solution can be more challenging.

And the fear of making an expensive mistake can often leave business owners too afraid to act.

But finding out more about the kinds of technologies businesses like yours use can help you tackle the build-or-buy question fully informed.


This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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