Buy or build? Why not do both?
14 March 2016
The old dilemma again. Should banks buy software or build their own? I heard that even Deep Thought had a hard time answering this question. Being a person who is involved in both a house building project and the software industry, I can say I face this question a bit more frequently than I want to, but from opposite directions.
For my house project, I expected the answer from someone else. In my day job, delivering products for financial institutions, I’m regularly asked to answer this question and prove why BUY is the better answer.
Even though the basic dilemma is the same for the two industries, there are big differences in the reasoning. The fundamental question is whether to build something yourself (and make sure it is exactly what you dreamed about) or buy something ready-made but accept minor differences. The first option may be cheaper, but will surely take longer and you will need to be extremely skilled to avoid mistakes. The second option might be more expensive, but will be faster and you don’t need struggle as you are buying experience.
In software, it gets trickier because the story doesn’t end when you move into your dream house. You have to operate that software and you will want to add new features to it. From this point on, the cheap self-built solution starts to look less economical. You need a team of professionals to deliver and maintain the software. You need to invest in research and innovation to stay on top of your competitors. Not to mention the hard lessons you only learn after the event. Taking all these into account, the financial case is not that obvious any more.
However, if you are still looking for the Holy Grail of ‘uniqueness’ then it may be worth the sacrifice.
By following the product route, you can avoid the difficulties listed above. Select the product closest to your aspirations. However, you will have to make some compromises or start to list your customisation requests. This is the downside of the product approach. If the product is customized, how much will it cost? Will I be locked to that vendor forever? Will I be able to upgrade? Do I need re-customize the new version? Why don’t I just build it for myself??! Goto line 1 <!—dilemma restarted!>
If only there was a good answer to both questions! What if your team could do those customizations themselves? What if you got a software product with out-of-the-box features and a development platform too? You’d still get the support and the upgrades. You’d profit from hard lessons learned by others. You’d get innovations with new product versions. You could keep your custom code and the core components would remain upgradeable. With a development platform, you could avoid being locked to one vendor. So you can Buy AND Build!
What do you think? Does it sound too good to be true? I would love to hear what your most important concerns are. And please tell me how to apply this to the housing industry!