Business

Make vs. buy: When should you build your own solution?

This is a guest post by Nikhil Behl, founder and CEO of Zoostores.com and Supplizer.

One of the many challenges a business must face is the decision to buy a pre-packaged solution or to build a customized version that meets the business’s exact specifications.

The latter often requires extraordinary time, money, and human capital resources. In the entrepreneur-friendly environment of today, it can seem like the best option. However, as many former “build your own solution” enthusiasts can attest, it’s often easier said than done.

During my stretch as VP of sales and operations for HPShopping.com, I learned the entire process of building our own solution was not only disruptive to our internal business process, it was also incredibly expensive. Having had that experience, if I were evaluating buying a solution versus building one today as a CEO or CIO, it would be a no-brainer — I would prefer to buy it.

But, before you go rushing down the proverbial shopping aisle, here are a few things to consider and some questions you should ask:

1. Is the solution I want to build a core competency of my business?

I have found that the answer is typically no. Current resources should not be stretched to do something outside of the business core competency or focus. Before deciding if you are equipped to tackle your own solution, first look at what you are trying to build and the resources you have available.

For example, if I am an e-tailer, do I build my own credit-card-processing engine or do I integrate an existing solution from CyberSource or Braintree?

2. Do I have the subject matter and technical expertise to build the solution?

One of the most critical considerations you can make is to determine whether you have enough subject knowledge internally to solve your problem.

Ask yourself: Are you really the expert at this? Can your team identify what solution needs to be built? And it’s not just subject matter experts you need to worry about — it’s also your technical resources. Do you have in-house expertise to utilize the latest technologies and capabilities to effectively build out and maintain the solution? If not, you may need to leverage external expertise to make this happen.

For example, in supply chain automation you need very specific subject matter knowledge. It’s a specific need set and the solution requires standard integration capabilities allowing customers rapid deployment at low to no initial cost.

Do you really need to build this capability in-house and will you have long-term value for it or does it make sense for you to adopt an existing solution built by experts who will continue to invest in it and make it better? Not to mention monitor the solution and make it scale without you worrying about it so you can focus on your core business.

3. Do I have the team to support the solution, as well as provide custom updates in the future?

Not only must you understand what the solution is going to look like today — you also need to know what your future requirements might be. You don’t want to address only your customers’ current needs. You need to find solutions as they evolve. Think about whether you have people available who can both support the solution and provide custom updates down the road as they emerge.

4. What is the total cost of ownership?

As a business, you need to carefully evaluate the total cost of ownership of your solution. Building your own solution means making ongoing internal tradeoffs. It all boils down to whether you are committed to making the sustained investment required in the DIY method or making the upfront investment required to buy the decision.

Part of this equation also relates to scalability. Can you continue to invest in scaling your platform as your business grows, or do you want to leverage a platform provider’s ongoing investment? When you work with a solution provider that has multiple customers, that provider learns from each of them based on each customer’s unique needs and requirements. So, if you end up buying instead of building your solution, you’ll have an insurance policy that your needs will be constantly invested in and updated.

5. Is the time to market faster if I use an existing cloud-based solution?

Though you may have determined from the questions above that you’d prefer to build your own solution, don’t forget time to market, which includes the time to design and architect the solution, build, and test. These steps all take time and if not done correctly result in a poor output.

Ask yourself: Do you have time to build a custom solution, or do you need rapid deployment? If it’s the latter, investigate whether there’s a comparable cloud-based solution that already exists in the marketplace. When there’s a need for speed, it may make more sense to pay for an existing system such as Salesforce for sales force automation or Zendesk for customer service.

6. Can you offer security and the ability to control data?

Security is a key component to the dialogue today for any customer solution. People need to ensure that their sensitive data can be stored securely. A decade ago, I would have advised being wary of cloud solutions, emphasizing the importance of maintaining control. But we’ve come a long way in the last decade, and as SaaS solutions have evolved, security has increased; sometimes they’re more secure than what an internal team can create.

For example, look at credit-card processors. Today, many processors prefer e-tailers integrating with their services, allowing the credit-card data to go directly to the processor, bypassing the e-tailer and their database. That’s because not all e-tailers have the core competency of managing payments and protecting their customers’ data. Likewise, by going with a service provider, your data may actually be safer because you’ll be buying their security capabilities and expertise.

From an adoption standpoint, people are putting fairly sensitive data into cloud solutions. For example, Salesforce is a leader in its space; small businesses are uploading customer data and market information into the cloud. NetSuite runs financial accounting for many companies, including publically traded companies. Finally, Workday houses private HR-related data for thousands of companies in the cloud. This trend reveals a shift in mindset that proves there is a greater comfort in the security of SaaS solutions.

The takeaway

While some of these things may sound simple, they require planning and resources. The devil is in the details. You have to make sure that you’re committed, that you have the capability set, and that you have the right team in order to execute on your plan. Your technical resources need to be strong enough to architect and code the solution, and you need to have the ability to scale it based on your business needs in a timely manner.

If you keep all of this in mind at the front end, then it shouldn’t take a herculean effort to accomplish your goals or require an expensive rebuild to get it right.

With 15 years of e-commerce and technology experience, Nikhil Behl is a successful entrepreneur and the founder and CEO of Supplizer and Zoostores.com. Prior to Zoostores.com, Nikhil spent 12 years at Hewlett-Packard (HP) where he held a number of executive-level positions, including vice president of sales and operations for HPShopping.com. Nikhil is best known for being a part of the founding team that built HPShopping.com and turned it into one of the Top 5 of the IR 500 retailers in just seven years.

Businessman with two roads via ollyy/Shutterstock


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