Build vs. Buy – Is it better to develop your tech solution in-house or outsource?
The race to stay on the competitive edge of digital media is fiercer than ever. Businesses across the globe are rushing to find more ways to understand and influence customer behavior so they can drive the value of their digital offer.
According to Gartner, Enterprise Software spending will top $572 billion worldwide by 2022—a positive growth of 10.6% over 2021. As more and more companies move into the digital fast lane, the survival of your business depends on adopting the right approach to developing your digital media software platform.
When looking at a problem that can be solved by technology, the first question businesses need to answer is will they build a technology solution to address the problem internally, or should they invest in a solution.
For a long time, tools designed and built in-house were only available to more mature companies with the available internal resources. However, the accessibility of today’s cloud platforms and with greater access to more advanced IT/engineering teams has meant that building tools in-house has become far more attainable.
At the same time, off-the-shelf tools are more available than ever—offering end-to-end customization capabilities covering the collection, processing and activation of data while providing configurable computing power. However they come with an array of functional and financial trade-offs. Factors like communication, timescale, expertise and budget should all be in the mix when deciding if building or buying technology is the right choice for you.
Here are the 5 things to consider when you are deciding whether to build or buy:
The main influence in a company’s decision to outsource their software development is the pricing. When faced with a limited and specific development need, it’s common to assume that it’s both possible and simple to build the feature in-house and at a lower cost.
However, it’s important to break down all the related expenses, technical debt and risks when you decide that building an in-house solution is cheaper. In addition to the price tag, you need to look at the full scope of benefits and drawbacks of outsourcing your solution.
Build – When building in-house, you need to cover the entire cost burden of the project, regardless of how long it takes and whether or not it’s successful. This includes paying for the initial buildout, ongoing support, bug fixes, upgrades, platform migrations and keeping up with software industry trends. The Total Cost of Ownership (TCO) can skyrocket if you don’t take all factors into consideration.
As the market and needs evolve over time, you’ll also need to continually add on features and functionality. While you may be building a solution to a problem you’re facing today, your initiatives and challenges will shift and expand, meaning you’ll need to build additional solutions.
It’s never a one-shot, short-term cost.
Buy – By choosing the right vendor partner when you outsource, you enter into a technical relationship that is designed around your specific needs and that evolves over time. The pricing is often finite and known. The vendor has amortized the cost to build the solution across their whole client base, so one company is not footing the full bill for the build and maintenance of the product. There would likely be no “surprise” costs when you choose to buy a technology product.
2. Level of Control
Many online media companies know exactly what features and level of functionality they need and that they can build them without having to invest in a business platform. Digital teams often worry that if they need additional features later on, they won’t have an influence over product updates and the associated roadmap to address their specific needs.
When looking at insourcing your development project, you need to take the following into account:
- What precise goals are you looking to achieve by developing your project internally?
- Is your business strictly revenue focused or do you have any other considerations such as advertising or long-term aspirations beyond the paywall?
- Have you tried building out a similar solution in the past and what were the results?
Build – When you develop in-house, you have complete control over how your solutions are built and how they function. However, this control comes with significant responsibility and challenges you and your teams may not have faced before.
Without the expertise of seasoned developers that have faced the issues that come with building software, it’s very difficult to ensure development stays on track and on time. Having control over the product and roadmap does not mean there are no limitations.
You will also only have access to your data alone to leverage in decision making, with no industry benchmarks or context around performance.
Buy – With purchasing a solution, you benefit from experienced developers who are tried and tested at setting up a specific slice of digital business software. You also give your teams access to expert support based on valuable benchmark data.
The time it takes to manage bug fixes is another major issue for companies thinking about outsourcing their software provider. Keeping control with a dedicated in-house team seems like the most reliable option to speed up software updates and reduce dependency on an outside provider.
This approach can easily be a false economy though if you haven’t considered the following:
- Do you have a dev team in place to manage ongoing maintenance?
- Has your team worked on projects of that size/capacity before?
- What features and capabilities do you intend to build out for your website beyond a paywall?
- Do you have a roadmap?
Build – With an in-house solution, you’ll be on the hook for all maintenance related to your newly-built software. That means managing the launch, bug resolution, user training, password setup, security and compliance with industry standards/local regulations and building new functionality. And all that maintenance potentially requires increased bandwidth, cost, and staff.
In other words, building the solution is just the beginning. Maintaining it is the bigger challenge and it’s no longer viable in today’s marketplace to develop software projects in-house, even for very mature companies with limitless resources.
Buy – When you join forces with an outsourced provider, you open up access to the expertise and experience of large numbers of developers. You also tap into service teams that are product and industry experts armed with best practices based on a wealth of direct experience.
4. Minimize your Time to Value
Time to Value (TTV), or the amount of time it takes a business to realize value from a solution is a critical factor when deciding whether or not to outsource.
As they set out their plan of attack, teams are obviously keen to get up and running as quickly as possible and see rapid results. Working with external providers carries the risk that the onboarding and implementation process will take too long and they don’t have time to wait.
- When do you expect to launch the solution?
- How long can you afford to wait?
- What are your competitors doing today to solve the challenge?
Build – By planning and executing your development internally, just building a version 1.0 of a well-functioning, user-friendly platform can take at least 6 months to a year. This lengthy wait can stall other projects across the board and put you at a distinct competitive disadvantage.
Building a solution in-house takes time and results are not guaranteed with a tool that has never been used before.
Buy – Choosing a well-established and internationally recognized provider can significantly accelerate your TTV. You join an agile and optimized organization that has the expertise and experience already in place.
5. Performance tracking
Once a business model is up and running, it’s essential to be able to easily and accurately track your performance. Before choosing to insource, it’s necessary to look into how your team intends to monitor data, performance and gain insight with the in-house solution. Will your analytics tool be built in-house as well and what will that connectivity look like?
Build – As well as developing the functionality of your solution, reporting and analytics are vital to understand how your subscription model (and software) is performing. You need to ensure that your solution can fully integrate and connect to an analytics tool. This can be an additional heavy lift to consider in terms of development, project management, time and cost.
Buy – By outsourcing to a complete digital business platform, you are able to instantly leverage comprehensive reports that display all your activity, traffic flow, the outcome of split testing, conversions and retention rates.
This article was first published on the Piano blog and is republished with kind permission. Piano helps the world’s biggest media companies build dedicated audiences and increase revenues.