build vs buy software

When to Build vs. Buy Software: Here Are the Pros & Cons

When to Build vs. Buy Software: Here Are the Pros & Cons by David Bevans

To build, or not to build, that is the question. While the Bard was never faced with the dilemma of whether to build vs. buy software, the modern enterprise is surely plagued by the decision.

With technology evolving, the build vs. buy software decision is not so cut and dried anymore. The way we build custom software has changed. And with these new technologies, organizations now realize higher ROI and faster time-to-market.

Read on for a build vs. buy analysis and stories of companies that made the decision.

When to Buy COTS

When Not to Buy

When to Build Custom Software

Build vs. buy: How companies made the decision

When to buy COTS

When considering a build vs. buy software decision, companies have typically looked toward buying commercial-off-the-shelf (COTS) software over the past 20-plus years.

It makes sense, too. COTS software is already built and readily available. Historically, building custom software has been expensive and time-consuming — 53% of projects cost 189% of the original estimate and organizations cancel 31% of build projects. If you’re just looking for a basic, simple solution to a widely occurring problem, COTS products offer a better value up front.

When not to buy

Its biggest strength is also its greatest weakness: COTS software is designed for the masses. It’s intended to be a one-size-fits-all solution to common problems, like the need for an ERP system or a simple claims processing tool.

Because of this, you either have limited control over the software or need to develop extensive customizations to achieve a functional integration with your IT infrastructure. If your goal is to implement fully custom and adaptable software that’s unique to your company’s exact needs, COTS products will be too limiting.

When to build custom software

If your company has specific needs and requirements, the best option is to build. Using traditional coding methods to build a complex app might sound intimidating (and expensive), but there’s a better and easier alternative.

Low-code has changed the way we develop software applications. Traditional development is a complex, niche specialty, but low-code development is visual and collaborative in ways that accelerate the development lifecycle and produce a higher quality product.

Low-code development platforms feature interfaces and tools designed for developers of all skill levels, plus a host of collaboration capabilities to empower Agile teams. Building applications is more accessible with low-code, and teams — including the business, developers, stakeholders, and users — can take full control of the application development lifecycle.

Related Reading: COTS Software vs. Custom Low-Code Development

Build vs. buy: How companies made the decision

Head-of-the-class ROI

NC State University chose to build vs. buy. Units across the NCSU campus had developed solutions for non-credit registration management using SharePoint, Access, sticky notes, and spreadsheets. The data disparity created inefficiencies, so the university sought a new way to manage their non-credit enrollment system. Time, budget, and other resource constraints made building a custom Java application in house unfeasible, so NCSU opted to release an RFP. The quotes they received from COTS vendors were staggeringly high: $3-10M over five years.

Modern development technologies and practices have broken down many of the barriers that traditional development built up over the years, which slowed projects and killed budgets. For example, DevOps practices have dissolved the silos between R&D and Ops to allow developers to launch software faster and with better quality.

Another technology that’s redefining what it means to build is low-code, which Gwen Hazlehurst, Assistant Vice-Chancellor, Enterprise Application Services at NCSU, used to enable a team of student developers to build a solution in house, despite having very little coding experience.

“We charged our student interns with the task of researching other options,” she says. “That’s when we started to become aware of low-code platforms as an alternative to rapidly develop and deliver code.”

Using low-code, a team of student interns built an MVP of the system called REPORTER, in just over two months. Three months later, they launched the full system. The total cost in money and time of REPORTER: low six-figures and six months to release.

Graphic: Mendix's low-code platform reduced cost and time-to-market when compared to COTS vendors.

A healthy dose of savings

Saga Healthcare is the UK’s leading elder advocate. With low-code development, Saga entered a new market and extended the commitment and services they offered their customers.

Saga was looking to develop a new system to provide home health care services to seniors. In the build vs. buy software paradigm, Saga started out looking at outsourcing development for a custom application. After being quoted by a vendor for £12M with a three-year build time, Saga looked for other options. Aside from the high costs and lengthy development time, Saga also needed a way to quickly make changes to their application to address business and market demands. They weren’t going to get that with an external solution.

CEO Lance Batchelor inspired the IT team to use unconventional thinking to consider alternatives. Following this directive, Saga IT decided to develop with the Mendix low-code platform. With low-code, the IT team built a care-at-home scheduling system, SACHA, in just six months for less than £250k — a cost savings of 97.9%.

Graphic: Compared to custom development, Mendix was much cheaper and had a much quicker time-to-market. Read more on build vs. buy

So, build or buy? Before now, you had two options: Buy a COTS product for swiftness but lose agility, or build your own software to maintain control and agility but risk a costly or failed project. But the latter is not the case anymore.

Low-code development and other technologies are changing how we build applications. Learn how by clicking the banner below.

This post has been updated. It was originally published on December 17, 2019.

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