BLOG MAKE OR BUY
MAKE OR BUY: DEVELOP SOFTWARE YOURSELF OR BUY IT?
How to make the right decision for your path to the right software solution.
15 July 2022 · Christoph Bertram
The situation: You need new software that fits your needs in logistics, field service, service or sales. The strategic question: Should you develop your own individual solution with your IT or would you rather buy standard software on the market? Make or buy?
MAKE OR BUY: IN-HOUSE DEVELOPMENT
Software is developed to solve problems, and to do so in a highly targeted way. If the user company develops the software itself, then the solution is fully focused on their requirements. That is fundamentally a great advantage. You set the direction yourself and ultimately receive customised software that is precisely tailored to the tasks you need to manage. Be it in route planning, transport management, scheduling, or sales.
SHORT PATHS AND HIGH TRANSPARENCY
Another advantage: the short service routes to the IT department. If software development takes place internally, developers are greatly more accessible than with an external provider. And you usually know exactly who is working on what and receive a transparent development process. In addition, you have full control over the data when you use the software later.
BUT THEY ARE THE 'GUINEA PIG'.
One major disadvantage is that the programme has to be developed first. That costs time. And since it is a completely new solution, it has not yet proven itself under the real conditions of daily business. You yourself are the 'guinea pig' and risk increases.
DO NOT UNDERESTIMATE ADDITIONAL EFFORT
This means that you will probably have to deal with a number of teething problems at the beginning of the software's use. Problems often arise that you could not have foreseen. Then your IT team has to get back to work. Such bug-fixing and software adaptation can be costly, and you don't have the capacity to test and test again.
DEVELOPMENT IS AN ONGOING PROCESS
There is no external customer service that you can quickly ask for help. The responsibility lies with your own team. This certainly has advantages at certain points, but it can create its own disadvantages for the rest of the business. In software, development alone is not enough. External factors, such as technical architecture take over, and you'll soon find a costly adjustment is necessary within a couple of years. Ask yourself: can your IT do this and is it prepared for it?
Furthermore, there is the question of how much sense it makes to develop software if a very similar solution is already offered on the market. The decision to 'make or buy' should therefore always be made after researching and analysing the existing market.
MAKE OR BUY: A SOLUTION FROM THE MARKET
What are the advantages and disadvantages in terms of 'make or buy' when you take your software requirements to the market?
One advantage is definitely that the chosen solution is already in use in many companies. It is accordingly field-tested and mature. There are demos, trial versions, and testimonials whose feedback you can draw on to evaluate the software.
WITH 'BUY' YOU HAVE THE CHOICE OF APPROPRIATE OPTIONS
In contrast to in-house development, with a buy decision you have choice, and you can compare different systems and their modules. This means you have alternatives instead of 'this software or none' as with in-house development. And since the programme does not have to be developed first, a standardised software platform is often implemented faster than custom software.
IT MAY NOT FIT 100 PER CENT
What could happen: that you do not find a solution on the market that fits your requirements 100 per cent. You may have to agree on individual adjustments to the software (custom features) with the provider of your choice. You must seek ensure you're not paying for functions that you do not need.
RAPID UPGRADES AND ONGOING DEVELOPMENT
However, the latter point can also be an advantage. If you need additional functions later, they are already available. Plus, you benefit from ongoing developments of the software by the provider. Especially if you use a cloud solution, these are worked-on in the background and are well tested. Updates and further developments for other customers are then usually also played out for your software version (and can be rolled back in a short window should problems arise).
PRACTICAL: YOUR EFFORT IS MINIMISED SO YOU CAN FOCUS ON WHAT'S IMPORTANT
A significant advantage of a 'make or buy' decision in favour of partnering with a provider: the development effort is outside your company, including the ongoing effort for bug fixes, adjustments and support. Your own IT has capacities free for other critical tasks. There is an external customer service that supports you in case of malfunctions and training. On the other hand, with the buy strategy you must ensure a good SLA quality from the beginning.
MAKE OR BUY: SUMMARY
As an interim conclusion, software solutions developed in-house have the great advantage that you have everything in your own hands. This means that a solution can be created exactly according to your ideas, directly integrated into your existing software landscape.
A big disadvantage, however, is that development is an elaborate process with ups and downs. And the software does not exist at the beginning. The development takes up time and resources of the own company and you're relying on up-to-date development knowledge.
ARE THE REQUIREMENTS REALLY SO INDIVIDUAL?
Unfortunately, it is also not guaranteed that custom software will meet all requirements. It is not 'wishful thinking', but always a weighing up of what can be implemented with the available resources.
Also ask yourself how unique the needs of your organisation really are. Whether in logistics, field service, service or sales, other companies probably face very similar challenges to yours. This means that most software providers have already been employed by other customers with the same requirements that you have; suitable software brings suitable solutions.
PROVIDERS LIVE AND BREATHE INNOVATION
A specialist software developed does nothing but develop and optimise their software and provide consulting to help you get the best from it. You also benefit from their need to innovate in order to remain competitive. Also not to be underestimated in the buy strategy: experienced developers share insights into many companies across many industries. For example, they can give you benchmarks.
MAKE OR BUY: WHAT IS THE RIGHT DECISION?
There is no general answer to the question 'make or buy?' However, the general trend is clearly in the direction of buy. Companies intensively compare the solutions available on the market and opt for a provider whose software and project management promise an early return on investment (ROI), transparency, and a competitive edge.
A good example is the CRM (Customer Relationship Management) sector. Here, many companies have switched from in-house developments to standardised solutions such as Microsoft Dynamics 365, Salesforce, Hubspot, or Pipedrive. In-house developments simply could not keep up with the advancements in CRM and sales requirements.
MAKE OR BUY: COMPARISON OF SELECTED CRITERIA
|Own development (Make)
|External procurement (Buy)
|Functionalities precisely tailored to your own requirements
|Standardised functionalities directly available, possibly customising necessary
|High internal effort and resource commitment
|Little internal effort
|Full transparency and independence
|Dependence on the provider
|Extensive testing and bug fixing necessary
|Can further developments be afforded at a later date?
|Continuous further development, ongoing updates
|Consider ongoing support
|Agree customer support (SLA)
|Direct integration into your own software landscape
|Often standard interfaces to other systems available
|Lean solution possible
|Unnecessary functions, if applicable
|No licence or subscription costs
|Different price and licence models
|Costs for development and support only partly calculable
|Clearly calculable acquisition and operating costs
|Development in the "own bubble" (operational blindness)
|Experience from other customer projects flows in
|Real USP developable
|Rapid ROI possible
NOT LEAST A QUESTION OF RESOURCES
When you take the 'make or buy' decision, you should begin with your own IT team. Especially to clarify whether the team's capacity is at all sufficient to develop software yourself. In view of the shortage of skilled workers in the IT sector, you must allow your business to manage your development resources efficiently.
When you find a system that meets the majority of the requirements, the question is: why create something new when there is already an Best-of-Breed solution that can fix your problems?
Learn more now - The Solvares Group solutions:
Field Service Management and tour optimisation from FLS - FAST LEAN SMART
Mobile solutions for field service and maintenance from mobileX
Personal field service planner from portatour®
Software for transport logistics from Städtler
Automated truck dispatching and telematics from Opheo