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Build vs. Buy July 10, 2008

Posted by Jeremy in Development Process.
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**8/18/2008: I have added an update to this article: Build Vs. Buy Revisited

This is an article that I wrote some time ago.  I hope that it helps.

Software is becoming a more and more important part of every business as the needs for data become larger and larger. The software that you run also can make you more efficient thus more profitable if it suits your needs. It sounds simple but how do I make that happen?

Should I build or buy my software solution? It is a question that has divided IT and management at businesses for years. The question has people standing on both sides of the fence and many who sit right in the middle. Most companies at some point have to make the decision.
This is not a simple decision to make, but it is much easier if you can understand the factors that go into the decision. Each project is unique and will require some thought to make the decision that best suits your company’s needs.

Definitions
Turn-Key Solution – Solutions that you can take out of the package, install, and begin using.
Buy – Purchase a turn-key solution from a third party vendor to meet your needs. This process usually entails finding vendors, interviewing them, watching demonstrations of their products and wading through the promises of features.
Internal Custom Build – Hire development resources that can build and implement a solution based on your customized needs. This process can involve either hiring resources directly as full-time employees or sub-contracting resources. Directly employing the resources can include searching through resumes, interviewing candidates, offering jobs, and all of the human resources issues that go along with employment. Sub-contracting can be every bit as challenging due to having to find reputable sub-contractors or contracting companies to provide resources.
Outsourced Custom Build – Employing a third party to build and implement a customized solution to suit your needs. Much of this is very similar to the buy option. You will need to find and interview vendors and then sort through information to determine if they will meet your needs.

Questions about your needs
In order to determine which solution best fits your needs you will need to answer a few questions about your company’s needs. A list of the questions to begin your decision making:

What is our timeframe?
What is our budget?
How much customization is necessary? (Now and in the future)
How much oversight do we need to have?
How would we like to deal with system upgrades?
Can we create detailed specifications of how our business runs?
Do we need control over the software?
Obviously, this is a subset of the questions that you would need to ask in order to define which solution but they are quite important ones to consider. Each one will help make the determination easier.

What should I do?
I can’t answer this question for you but I can assist you. Some of the key pros and cons for each type of solution include:

Pros for Buy:
Usually can have the software running in short timeframe
Lower initial cost
No need for development staff
Support typically provided by third-party

Cons for Buy:
Lack of customization to your needs
Updates are on third party’s schedule and priority
Typically no onsite support
Your prioritized against other client’s needs
Pros for Internal Build:
Solution is customized to your needs
On-site support
Oversight
Updates on your priority and schedule

Cons for Internal Build:
Need for development staff
HR issues
Hiring technical staff can be difficult
Longer deployment timeframe than buy

Pros for Outsourced Build:
Solution is customized to your needs
Possibly on-site support
Typically updates based on your priority and schedule
Oversight
No HR or hiring issues
Specialized Resources

Cons for Outsourced Build:
Typically highest cost
May compete with other client’s for resources
Longer deployment timeframe than buy
Dependence on third-party

Summary
The buy vs. build decision is a decision that causes headaches for many companies. This is due to the fact that there are many competing interests that affect the decision. Another thing that makes this decision difficult is that each project has different factors to consider. This means that each project will require that you analyze each project and make the decision that best suits the project’s unique needs.
It is my hope that this article can assist you in at least starting the decision-making process in the future.”

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