To Build or to Buy? Weighing Solution Acquisition Strategies

Since the beginning of the information age, organizations have been faced with the question of whether to build a custom solution or buy a commercial off-the-shelf packaged solution.  Cloud computing ecosystems like Salesforce and Amazon have tilted the argument toward the “buy” side of the “build or buy” debate.  However, companies in a wide variety of industries, especially the beverage industry, are still tempted to rush into a custom-built software solution before considering every important factor. Here are some critical things to consider before making this important decision for your organization.

To start, think about the following broad-based factors that must inform any decision. First, everyone’s primary consideration – budget. Understand that total arriving at a clear picture of cost of ownership (or TCO) will be very different with a custom solution (very significant up-front costs tied up in development and hardware purchases) than it will be for a cloud solution (with modest costs to get up and running quickly, but residual costs by way of subscription fees).

After monetary costs, it’s wise to consider opportunity costs. That is, think about how long it may take to design, develop and deploy a custom solution versus the relatively quick implementations that define cloud solutions. If you’ve determined there is a critical need to put tighter business processes and automation around your operation, then getting more visibility, control and operational efficiency may not be something your business can delay to implement. Ask yourself, how much revenue growth can your company afford to miss waiting 12-18 months it takes to build your own solution?

Then there are some tangential benefits and liabilities to consider. Chief among these is the cost and impact of engaging internal IT resources to build a solution from the ground up.  Does your IT team have the bandwidth (no pun intended) to dedicate the requisite time and energy to this project? Will their focus here be to the detriment of their focus on other areas of your business? More importantly, is your team home to sufficient levels of industry-specific expertise? Enough to properly inform the design of a solution specifically intended to manage the demands of beverage sales and marketing? Without the clarity that comes with this kind of expertise, the design and deployment period could take even longer to accomplish and may not yield a solution perfectly matched to the tasks at hand.

Also, consider a key trend in cloud computing today: mobile solutions. Your customers increasingly want access to real-time data on any mobile device from anywhere. In light of this important trend, it is useful to look at some real-world numbers related to the development of a typical mobile application. A recent survey of IT professionals asked about the initial cost of developing a typical mobile application. Over half of respondents reported spending more than three months and over $50,000 developing a mobile app. Very nearly a quarter of respondents reported spending over $100,000. This likely adds to the cost of an in-house build whereas a cloud solution is most likely already offering mobile connectivity as part of their solution at no additional cost.

As with any important decisions, it can be a very useful exercise to draft a list of the pros and cons of both options to weigh the choice side-by-side.  The experts at GreatVines offer a white paper containing an exhaustive list of objective pros and cons. “Build or Buy – Choosing the Ideal Software Solution” can be downloaded from the right side of the page. We recommend reviewing it as you consider the build vs. buy decision.