Build new software or buy existing software: the 3 pitfalls

The future is uncertain. What should you base your long-term plans on? Lately, that is a question I hear very often. The greater the uncertainty, the more difficult it is to assess the consequences of choices. Yet you often know how to make wise choices: by checking assumptions and applying an appropriate decision-making process. In this blog, I will reveal how to decide whether to build new software or buy existing software.

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Dilemma: Buy vs. Build

The traditional "Buy versus Build" dilemma: Should I buy existing software or build new software? This is something you come to face quickly if you need a conversion-oriented website or an attractive online platform to achieve your goals. A proper comparison is difficult, because it’s like comparing apples and oranges. Each software application is unique. And each supplier calculates the costs in a different way. This makes it difficult to make the right decision.

When people struggle with this dilemma, I like to help by sharing my knowledge and experience. There are three pitfalls to be aware of.

1. ‘Buying is safe, building is uncertain’

You make the assumption: "Buying is safe, building is uncertain". Buying an existing product, by definition, seems safer than building something new. You know what you are getting because others have already proven its success. That feels safe. However, buying can also be risky and building can actually be a safe choice. This is partly because of these 3 things:

  • How unique is the software that you need?
  • How decisive is the software for your competitive position or your objectives;
  • How is ownership, support and maintenance organised;
  • How far along are your wishes and requirements in their development.

First, always check your assumptions.

2. Ineffective decision-making process

You are using an ineffective decision-making process, consciously or unconsciously. You ask yourself these two questions:

  • Are you able to buy what you need
  • Can my needs be met by buying several products and combining them?

If the answer to these questions is 'Yes', then you buy the software. If the answer is "No", you have it built. This sounds logical. You don't buy custom-made shoes when your size is readily available in stores. This decision-making process holds true when you buy objects, but not when it comes to software. Objects have a completely different lifespan, return on investment period, functionality and adaptability than software. For software purchases, there is another, more effective decision-making process.

3. Is buying and configuring software the right option?

There is also the option to buy and then configure software according to your own needs. When your software requirements change you can easily adjust the configuration. It sounds like an ideal interim solution, combining all the advantages of buying with all the advantages of building. The reality is somewhat different. Some nuance is in order.

Buying and configuring flexible software is a qualified third option. So, the classic dilemma of "Buy versus Build" should actually be expanded to "Buy versus Build versus Configure". Buying and configuring flexible software has its own set of advantages and disadvantages. It may be the right choice for your organisation.

Even though the future is uncertain, there are ways to make long-term choices. Check your assumptions and use appropriate methods for decision-making.

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