August 2021

Build or buy: how to decide

Try our tool and answer a few questions to help you decide which way to go

The age-old technology question that every company faces: do you build, or do you buy? How do you even decide!? From small features to large capabilities, in my time working with Tesco, NatWest, Met Office, Naked Wines and others, I’ve seen seasoned technology leaders struggle with the decision countless times. Loomery is often asked to help. There are loads of factors to consider but I’ve boiled it down to six I believe are key. Let’s consider the case to buy, the case to build, then I’ll pose some helpful questions to help you decide which way to go.

The case to buy

Sometimes buying software is clear-cut. Afterall, we always buy software to serve common business functions such as collaboration (Slack/Google Drive/Mural), project management (Trello/Jira/ or managing a sales pipeline (Salesforce/Pipedrive).

When it comes to developing products, I’d be surprised to find anyone who’s made their own mailing list app (instead of using Mailchimp/Hubspot) or built their own payment gateway. There are specific functions where it almost always makes sense to buy. Why reinvent the wheel? You’d be paying to build something which another company has already solved.

Buying software is typically more predictable (you know what you’re going to get because you can see and trial it upfront), it’s easier to quantify the cost, and is often a quicker route to getting something live. With the ubiquitous software-as-a-service (SaaS) model, you don’t need to think about product updates, security or keeping things cutting edge: that’s all taken care of. The big challenge is it’s unlikely to be perfectly suited to your requirements and needs - and that means making compromises to the functionality or experience.

The case to build

On the other side, Twilio CEO Jeff Lawson claims the decision is not build or buy – it’s “build or die”: in order to differentiate yourself in the mind of your customers, Lawson says, you have to build: “by definition, you cannot buy differentiation: the only way to have differentiation is to build it. Companies that can adapt most quickly to the changing needs of consumers will be the ones that survive”.

Beyond standing out, companies tend to “build” software systems that are part of their core competencies. For example, banking systems are critical to every financial organisation and are mostly developed in-house.

Building software gives ultimate flexibility to create something perfectly suited to your needs… but it’s likely to be costly and take a fair chunk of time to get right.

How to decide

There are dozens of factors you could consider when making a build vs buy decision but I’ve filtered them down to six which have the biggest impact:
- Differentiation
- Urgency
- Cost
- Capability of buyable solutions
- Capability of in-house team (and the opportunity cost)
- Adaptability

Use our buy vs build decision tool to dive into the detail on these six areas:

Moving from buy to build

Thinking through these six factors will guide you to a sensible, considered build vs buy decision. Of course, the answer can change over time. You could start with something off-the-shelf and make it more custom or differentiated as your business and customer needs evolve. Licensing or procuring a product can be a helpful way to extinguish a burning fire, later replaced by a more stable long-term solution. The increased portability of SaaS products and components means you can get somewhere fast and then, should you need to, replace those components when you want to go bespoke.

Making a decision

At Loomery, we love thorny build vs buy decisions. Ultimately, making the decision is about understanding risks. You can quantify and mitigate those risks through an evaluation process that (1) looks at the technical and non-technical aspects of any off-the-shelf solution and (2) gives you better clarity on the cost/time to build in-house. If you’re at that stage, we’d love to help.

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