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Build vs Buy

As a consultant I have faced this particular question quite often at different clients. I don’t think there is a singular answer to this question so as a consultant we tend to give answer that usually starts with “Well it depends..”.

Following is the thought process that I usually follow. I have seen some of my coworkers do the same.

Question:

When does an organization invest in building custom software vs buying an off the shelf application?

Rule of Thumb:

  • If it’s core to your business, build it.
  • If there’s COTS and you are willing to change your process to match the tool, buy it.
  • If there’s COTS and you have to do significant customization that doesn’t match their model, build it.
  • If there’s COTS and you have to do insignificant customization within their model, buy it.
  • If while you’re trying previous step and you realize that your customization is more significant and less of a match, see 3rd step and don’t fall into the sunk cost fallacy.
  • If other services that are core to your business have to integrate with it, and evolving this integration is going to impact your ability to serve business needs, build it.

COTS - Commercial Off The Shelf

– Lav