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Build versus buy analysis

posted Apr 13, 2013, 5:57 AM by Jageshwar Tripathi
Often buy before build is considered while defining architecture of a system but sometimes building a solution can also be important. There are advantages and disadvantages in building as well as buying a software.

Factors to consider while performing build versus buy decision

Build versus buy analysis can be done using a decision analysis method for example DAR. There are many factors which should be considered while making build vs buy analysis and choice of those factors depends upon organizations requirements and its strategy, vision and other organization specific context.
  • Total cost of ownership build/buy over the period of time (life of software/system)
  • Return on investment
  • Budget
  • Time to market
  • Keeping pace with the technology change.
  • Maintenance and support considerations (cost, resources, reliability and risks)
  • Is the a COTS available in the market? What are its pros and cons?
  • Utilization of resources
    • Number of resources available in the organization.
    • Technology background of resources in the organization? Can they migrate (re-skilled) to a new technology?
    • Platform of development and resources skilled in that

COTS vendor selection criteria

  • Does COTS fulfill all the functionality organization requires for smooth functioning of its business.
  • Can it be customized?
  • Up to what extent it can be customized?
  • How frequently vendor provides upgrades and enhancements?
  • How does vendor charge for upgrades, enhancements and support.
  • Quality of the product and record of vendor in delivering the quality products in past.
  • References of the product in the market, who else uses it? How do they use it and what is their feedback?
  • Will it require changes in business process or specific training of users?
  • Will it be convenient for users to adopt new interface, new software?

Advantages & disadvantages

Build - advantages

  • Specific to your needs
  • Initial investment is lower
  • Can be supported internally
  • Enhancements and fixes are quick
  • Investment in updates and enhancements controlled 100%
  • Specific development focused on target customers can give competitive advantage
  • Custom development may allow integration with existing software/systems easy

Build- disadvantages

  • High cost of changes
  • Overall cost is higher (design, build, test, change etc)
  • Knowledge is lost if resources leave
  • Resource management may be difficult
  • All to cost for inventing, developing and testing is used once which makes cost higher
  • IT may not be the core business of a company and in this case managing software/IT may be a nighmare

Buy COTS - advantages

  • Out of the box functionality
  • Faster time to market
  • Economy of scale
  • COTS providers have advantage of IT being their core competence and expetise in a functional domain makes it possible to have better product
  • Less dependency on managing internal resources for support
  • Changes and enhancements are economical for COTS vendors due to large customer base
  • Follow best practices and standards
  • Advantage due to competing vendors, cheaper cost and better support/enhancement

Buy COTS- disadvantages

  • Some functionality may be missing or not suitable for the business and company specific processes
  • Higher investment initially
  • Reinvestment due to versions become older and obsolete
  • Licensing model may not suite your organization
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