I often find myself in the position of helping company leaders navigate the challenging decision between building a custom system or buying an off-the-shelf solution. This debate is a recurring challenge, and it requires careful consideration to ensure that the chosen system not only meets current needs but also adapts and evolves alongside the business. Here are a few of my thoughts on the subject:
Prioritizing Adaptability and Scale
From the CEO’s standpoint, the decision boils down to the economies of scale and the pace of change within the market. The key question is whether you want a system that can swiftly adapt and pivot when needed. Off-the-shelf solutions, while offering convenience, can be rigid, forcing businesses to align their processes with predefined structures. For those aiming to scale rapidly, the build approach becomes the preferred option.
In today’s fast-evolving market sectors, investing in a packaged system might mean adapting your business to a set of criteria that quickly becomes outdated. The costs involved in changing or starting over are substantial, not to mention the time and business opportunities lost during the transition. However, there are scenarios where buying a package makes sense, particularly when a business adheres to well-defined industry practices with slow-paced innovation.
The build approach, on the other hand, empowers businesses with the flexibility to pivot and change direction without being confined to the boundaries of a pre-packaged solution. With custom systems, intellectual property becomes a valuable asset, enhancing a company’s valuation and contributing to its competitive advantage.
Protecting Intellectual Property
Emphasizing the importance of protecting intellectual property (IP), draws attention to mobile apps as a prime example. While buying a mobile app builder might seem like a quick solution, it relinquishes ownership of the IP. In contrast, building a custom app grants total ownership and control over the developed solution.
While I acknowledges the usefulness of some package solutions for providing a foundation and common functionality, I want to emphasize the necessity of understanding business processes before deciding on the right approach. Off-the-shelf software can define processes for businesses lacking a clear structure. However, the long-term cost of customization and the complexity of transitioning data become challenges as the company evolves.
Additionally, custom-built software is considered more secure due to its opaque and snowflake nature to hackers. In contrast, packaged solutions are often targeted by hackers who exploit known weaknesses, leading to significant breaches across the entire system.
Building vs. Buying: Pros and Cons
To sum up the perspectives, here are the pros and cons of both approaches:
Build It:
Pros:
- Provides exactly what you want
- Facilitates innovation
- Allows easy incorporation of 3rd party solutions
- Adapts and pivots with business needs
- Improves valuation and competitive advantage
- Secure
Cons:
- Higher cost
- Potentially longer implementation
- Requires understanding of business processes
- Needs staff or vendor support
- Once implemented, it can be challenging to let go
Buy It:
Pros:
- Lower upfront costs
- Defines processes for businesses
- Follows industry practices
- Faster time to market
- Market pressures drive new features
- Customer support
Cons:
- Rigid
- May result in external manual processes and silos of data
- Vulnerable to hackers
- Costly to customize
- Messy and expensive data export
- Numerous unused features due to a generic feature set
In conclusion, the decision to build or buy depends on the unique needs, goals, and adaptability requirements of each business. I enjoy guide my clients through this decision-making process, ensuring that the chosen solution aligns seamlessly with their present and future objectives.