Build Versus Buy: Thinking Beyond Total Cost Of Ownership


Companies are challenged daily to identify a software solution that fits their business needs. Oftentimes, that discussion quickly turns to whether buying software or building the solution is the best approach.

In this Forbes article,Tim Mitrovich, Founder and CEO of Artisan, discusses the common misconception that buying software is always cheaper than building it. He also shares some important considerations for determining which approach is right for your business.

From setup times and licensing fees to incremental costs, maintenance, complexities, and everything in between – the true TCO (total cost of ownership) for a software solution, whether custom-built or out of the box, depends on many factors.

Off-the-shelf solutions may require less initial setup but can involve hefty licensing fees. After a few years and multiple layers of varnished customizations and work-around integrations, these solutions become so complicated and nuanced that it requires an internal team to maintain it.

On the other hand, businesses that pursue the "build" route face a generally higher upfront price tag and longer ramp-up times.They also may need to take on the long-term commitment of employing a dedicated team to support the new product.

As conversations continue around which path is right for the business, Mitrovich recommends all business leaders consider their responses to these three questions when making the build-versus-buy decision.

  1. Is this solution a differentiator?

The ability to differentiate from competitors is critical in today's fast-moving market. If creating a customized solution allows you to stand out from the crowd or provide an exceptional customer experience, it's likely a worthwhile investment.

  1. Has a specific tool become the limiting factor for your business?

Technology should be an extension of your business, never the harness holding you back. If your current technology encumbers your growth, it's probably time to build something new.

  1. Does the solution integrate seamlessly across the organization?

Building a custom solution could be the better choice if an out-of-the-box technology tool is hindering synergy across the business or requiring cumbersome manual effort to integrate.

The decision to buy or build is complicated and looks different for every organization. When it comes down to it, remember this: whatever path you choose, the business value should drive your route forward.

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