The Debate: Should I Build or Buy?
The debate often begins with a bias leaning one way based on past experience leading to an obvious choice that we should either build it ourselves or buy an off the shelf solution.
However; management often requires a more objective assessment to understand the benefits and risks in order to make an informed choice.
To prepare for the debate, consider that the cost of either option falls into three discrete buckets – software, hardware, and people. According to a long standing report by the Standish Group, the most common issue is under estimating the cost and time of building, which is why industry research indicates that 54 percent of projects come in at 189 percent of their original budget estimate and only 16 percent of projects are completed on time and on budget.
In this first of two blogs on buying versus building, we will begin by examining the pros and cons to a custom built solution.
Pros to custom building software
- Flexibility. Custom built software provides organizations the flexibility to develop features and functionality that are purpose built to their exact requirements. However, what companies often ignore, is that only 42 percent of projects make it to completion with the proposed features and functions and that 31 percent of projects get canceled before they are completed. While flexibility is a benefit, it comes with the inherent risks of under scoping for day one implementation and not weighing in the long term cost of on-going functionality improvements to keep up with ever changing business needs along with regulatory and compliance mandates.
- Specific to your needs. One of the biggest benefits to building custom software is the ability to customize it completely to the needs of the company along with the ownership of the software code. The question to often ask is if your organization will have a competitive advantage by building custom software?
- Greater control. Owning the requirements gathering, development, test, documentation and training provides complete control over the entire project management process to deliver a fully customized solution to meet critical deadlines. With control comes responsibility to get the requirements well defined up front to prevent scope creep, cost overruns, and missed deadlines.
- Everyone has input. Whether there are quiet thinkers who don’t speak up or team members that command attention, ensuring participation, soliciting input and coming to a consensus about custom requirements ensures everyone’s voice is heard.
The seven key reasons to keep in mind for a successful build project include: User involvement, executive management support, clear statement of requirements, proper planning, realistic expectations, smaller project milestones, and clear vision and objectives.
Cons to custom building software:
- Expensive to Develop. A custom built solution requires a wide range of technical expertise that is often scarce in an organization and comes with a potential opportunity cost that they are delaying other high priority projects. While expense is the number one risk it’s often deadlines that result in more than 25 percent of projects being completed with only 25-49% of the originally specified features and functionality.
- Costly to Maintain. Maintaining and upgrading a custom built application can be an expensive proposition, not to mention the ongoing maintenance. In companies where department knowledge is siloed, alternate plans must be made when the programmers who developed the original application move on to other projects or leave the organization.
- Lack of Process Improvements. Most companies underestimate the resource requirements for developing software in-house that require a deep understanding of new technology platforms and industry best practices. One of the biggest requirements in software is that it must be fast, but optimizing performance takes significant development time. When there are performance issues, new feature enhancements often get de-scoped or delayed which results in resetting user and management expectations.
However; the debate doesn’t have to be so black and white – build or buy. What if you could have the best of all worlds? Instead of a static off-the-shelf buy option that only accomplishes a subset of your requirements and entails compromises to how it’s implemented, what if there was a more versatile option? This is the topic of part two of this blog series where we will discuss how to view buy from a different perspective.
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