Adopting Efficiencies in Industry 4.0 : Build, License or Acquire Technology Solutions
When corporations look to transform workflows or add value to their organization, they often look to technology as a way to supercharge internal efficiencies.
Enterprise IT spending is forecasted to increase in the next two to three years as management teams look to harness the efficiencies that accompany industry 4.0.
Once management makes the decision to transform, they’ll then face the decision of Build, License, or Acquire.
First, let’s evaluate the definition of all three options:
Build — Leverage internal talent to concept, develop, and integrate a new software/hardware solution. This could be done wholly or partially by internal teams as well as working collaboratively with freelance contractors or digital agencies.
License — Research, demo, and adopt a market solution that requires a leasing agreement. Examples of this would be SAP, Salesforce, Slack and Samsara.
Acquire — Initiate a thorough market landscape analysis, identify a target, and acquire a company that has the technical synergies in place you’re seeking to adopt.
Why would a company choose to build a solution internally? The largest benefit to building a solution internally is the level of customization the accompanies such a project. While a commercial package may fit many of your business’s needs, it’s doubtful that it will service all the customizations and outcomes that will make your business reach success. To sum up the response see the four points below:
- Gain total control over development and features
- The software and its reporting capabilities meet your exact needs
- Retain ownership of the software code
- Competitive advantage against competitors
What are the benefits of Licensing technology solutions(Software as a Service-SaaS)?
If your internal team of developers is not up to par with the skills required to pull off the development of an enterprise solution, you may want to consider seeking out an off the shelf subscription product to implement.
Licensing technology solutions offers many potential advantages in comparison to building a solution internally.
- Lower up-front cost — Licensing is generally subscription-based and has no up-front licence fees resulting in lower initial costs. The SaaS provider manages the IT infrastructure that is running the software, which brings down fees for hardware and software maintenance.
- Quick set up and deployment — Licensing application is already installed and configured in the cloud. This decreases the common delays often experienced during lengthy traditional software deployment.
- Easy upgrades — The SaaS providers deal with hardware and software updates, deploying upgrades centrally to the hosted applications and removing this workload and responsibility from you.
- Accessibility — All you need to access a SaaS application is a browser and an internet connection. This is generally available on a wide range of devices and from anywhere in the world, making SaaS more accessible than the traditional business software installation.
- Scalability — SaaS providers generally offer many subscription options and flexibility to change subscriptions as and when needed, eg when your business grows, or more users need to access the service.
Source: NI Business Info
What are the disadvantages of licensing technology solutions(Software as a Service-SaaS)?
Off-the-shelf licensing solutions sometimes lead to uncertain outcomes as outlined below:
- Lack of control — in-house software applications give businesses a higher degree of control than hosted solutions where control resides with a third party. Typically everyone has to use the latest version of the software application and cannot defer upgrades or changes in the features.
- Security and data concerns — access management and the privacy of sensitive information is a major consideration around cloud and hosted services.
- Limited range of applications — while SaaS is becoming more popular, there are still many applications that don’t offer a hosted platform.
- Connectivity requirement — since the SaaS model is based on web delivery, if your internet service fails, you will lose access to your software or data
- Performance — SaaS may run at somewhat slower speeds than on-premise client or server applications, so it’s worth keeping performance in mind your software isn’t hosted on a local machine.
In conclusion, there are a number of factors to be considered when making your decision.
Decisions that effect entire departments or entire business functions should not be taken lightly.
If you’re interested in scheduling time on my calendar to chat about what may be a successful solution for your business, feel free to schedule time on my calendar.