Build vs. buy vs. hybrid
As your business scales you’ll need to answer one fundamental question. When looking for new technology and systems to manage and grow your business do you build it yourself, buy it from a vendor or combine both.
It’s a question you’ll need to ask yourself many times and in some instances the answers will often be different. For some decisions you might opt for a build it mentality whereas for others you’ll see the buy option as the best solution.
There’s never a perfect answer to the question and the answer will always depend on your businesses’ unique context.
Below are a few considerations that might help you for when the question arises next time.
- How quickly do you need to grow?
You might be lucky in that you’re supporting a high growth business. Do you have the time to build a system from scratch using overstretched engineers and designers?
2. What skills are you missing?
Often clients go down the buy route as they believe they are missing skills that a vendor can provide. Technology vendors do have very specialised employees who could really accelerate the work you want to do. Going down the build route could lead to significant recruitment costs.
3. Think about the total cost of ownership (TCO)
A good exercise is to tally up the costs for the three models you might consider. For each write down the set-up, maintenance and training costs required. You might find that building it yourself could become very costly especially if you need to maintain a system that struggles later on, when you’re five times the size.
4. How unique is your business?
This will really help you decide whether you should build a system yourself or work with a vendor. If your business is very unique it might be worth going down the build route due to its strategic importance. One great thing about going DIY is that whatever you create becomes proprietary and you free yourself from competing with a competitor that is using the same tooling.
5. Do you really believe in the ‘buy it off the shelf’ anymore?
Some say that software like Salesforce is ‘off the shelf’. I think that’s unfair. Software and systems have changed and customisation is very easy to do.
6. Can you spare your engineers?
Building a software system or tool takes time. Building means going from MVP right through to release upon release. If you have engineers spare great, if not they should focus on other business priorities. You could lose up to 20 engineers in helping to build a CRM system.
7. How good is your project management?
Vendors scope, plan and implement day in day out. They’re skilled at managing projects and preventing mission creep. Vendors work to a Statement of Work and are unlikely, unless directed to, go off brief. If you have those same skills in place then the build option again comes back into consideration.
8. How good is your contingency planning?
Things change. People change. How robust is your contingency planning? If halfway through a build project you opt to change to a buy project what can you rescue from the work done so far. If on the other hand, you’re working with a vendor that goes bust, how do you manage the business with technology that might simply stop working?
Like any business decision there are pros and cons. The right answer lies in your head and heart. These are just a few of the questions I’ve heard bounce around boardrooms over the years.