Build Versus Buy (Software)

There are two main reasons to build your own software versus buy an existing software product:

  1. A preexisting software product does not exist; and
  2. Competitive Advantage.

The impact of competitive advantage through software and automation is underestimated by most small and mid-sized companies (and many large corporations too).

Non-Existent

Despite the vast amount of software out there in the cloud and available to be run in your own enterprise, there are still a number of business problems that cannot be solved by off-the-shelf or preexisting software.

And even if that software exists, it may have been tooled to be too specific to one environment and the cost of customization or workarounds is too high.

Integration of two different software products often requires either configuration and customization or a piece of new code to glue things together.

Still for most run of the mill business problems needing a software solution, something probably exists. The question is: Does using it create a competitive advantage?

Competitive Advantage

Aside from those unique situations where there just are no valid solutions, competitive advantage is the primary reason to use software and more specifically, to build software that gives your company an advantage over the competitor.

Some types of competitive advantage include:

  • Reduced cost of ownership – There are times when it is cheaper to build software than to buy it both in initial purchase and ongoing cost and in soft costs… the preexisting solution may be overkill for your situation. It is also easy to underestimate the complexity and cost of building software;

  • Process simplification or speed – Is the preexisting software going to simplify your processes or make them more complex? Will you be more responsive to the market and your customers or less?

  • A new way of doing something – Chances are your competitors are all using the standard software and process templates that come with them. If you have determined a new and better way of doing something that can't easily be done with preexisting software, then you may gain an advantage over the competition.

  • Adaptability – Can you change your processes and the software need run them quickly? If you are trying to run a lean or agile business, your success may depend on how quickly you can switch. It doesn't do you much good to quickly devise a change in process or service offering and then have to wait a year for your technology to support it.

  • Intellectual property – Your competitors can't just buy it, they have to build it. If you get your software off the shelf, then so can your competitors. If you invent a better process or mousetrap, the last thing you want is your competitors to quickly copy you. You can gain significant competitive advantage if you can do something new, something faster or something better than your competitors.

If you are an independent software vendor the last point is what you are all about.

It Is All in the Solution

This is what Sunwapta Solutions does for a living. We work with your team to determine what problem you are trying to solve, look at the best way to solve it and then implement a technical solution that is right for you.

Implementing includes:

  • Buy – Hey if you can buy exactly what you need/want off the shelf we will help you make this decision, find a good supplier and then implement it for you.
  • Build – We can build it from scratch if that is what you need.
  • Combination – This is the sweet spot of our consulting practice… we take third party software components that already work and integrate them into something bigger that gives you a competitive advantage without all the risk of building from scratch.

We are both a consulting company and a product company so we get it.

After all, competitive advantage has to come at the right price.

By | 2017-04-03T12:25:15+00:00 August 17th, 2009|Categories: Business Strategy, Doug's Blog, Software Development, Technology|

About the Author:

Doug Wagner is an entrepreneur, President and Co-founder of Sunwapta Solutions. Sunwapta's mission is to help businesses transform from surviving to thriving, sustainable growth. From strategy to implementation, this means marketing, sales, managing your brand and delivering consistent value. Get more clients and keep them.