Build vs. Buy vs. Hybrid: Decision Criteria

If you’ve read this far in this series, you know the significant advantages and disadvantages of the three approaches to implementing a digital solution, that is,

  • Building custom software
  • Buying commercial off-the-shelf (COTS) software
  • The hybrid approach of buying COTS software and customizing it

Is there a simple decision tree that points you to the right decision? Not really. Every business situation is different and has a unique set of variables and tradeoffs. Budgets, timelines, urgency, the competitive landscape, and more contribute to how you approach a digital transformation project.

Here, we present a few high-level criteria to help guide your decision process. These should be taken as a starting point, not hard-and-fast rules.

 

Buy Commercial Off-The-Shelf Software If…

…some or all of the following are true:

  • You have a common problem that others in your industry face. Chances are good that a COTS solution can be implemented without customization.
  • The software can be used throughout the organization. Depending on the size and complexity of your organization, this might be a problematic criterion to meet; few applications other than enterprise resource planning (ERP) systems are used in all areas of mid-market and larger businesses.
  • The software can integrate with other applications in your business. This could be an essential requirement because integrating different small systems is often easier than replacing them with an extensive system. If the candidate COTS application has an available integration API, all the better.
  • Your IT department is not equipped to build the application or maintain and support it long-term. In most mid-market companies, the IT department has its hands full just “keeping the lights on,” let alone building and supporting a custom application throughout its lifecycle.

 

Build a Custom Solution If…

…some or all of these are important to your organization:

  • You need increased scalability to meet your growth projections. But don’t forget that with cloud computing, many COTS solutions have good scalability characteristics as well.
  • You have nonstandard but indispensable business processes or unique problems that no COTS solutions support out of the box. But consider the cost of building a custom solution versus changing to an industry-standard process.
  • You have a strong IT department with the expertise and resources to maintain and support the application. A custom application requires continual care and feeding to keep it working and valuable, and you need resources for these tasks.
  • You want complete control of the branding, user interface, and functionality. If full ownership and control of the source code and product roadmap are essential to you, a custom solution is the only practical choice.
  • You can make a more significant up-front investment in exchange for a lower long-term total cost of ownership. When comparing the costs of different options, always consider the long-term view.

 

Customize a COTS Application If…

…neither a strict buy or build option meets your needs and constraints:

  • The available COTS applications meet your less-critical processes but need a custom solution for critical capability gaps. The distinction is important—most of your investment should address your most critical problems.
  • You have existing applications that need to be seamlessly integrated. A common pain point for many businesses is “siloed” applications that don’t talk to each other.
  • You need customization but do not have the proper internal skill set. If you don’t have a full-service internal development team, contracting out a COTS customization can be a cost-effective way to meet your needs.

 

Next: Final thoughts and tips

 

How Solution Machine Can Help

For over 10 years, Solution Machine teams have been developing and delivering software solutions for businesses that operate across various industries, including manufacturing, retail, distribution, non-profits, media and entertainment, plumbing, heating and air conditioning contractors, and many others.

Contant us to see how Solution Machine allows your business to optimize business operations, increase employee and customer engagement, improve reporting and analytics for better decision-making, and give you a competitive advantage.

Author: James Mosqueda