In Code rant: Why is 'Buy' not always better than 'Build', Mike Hadlow opens his blog post by stating that "Building software is hard." He goes on to describe how this fact eventually leads most organizations to ponder the universal question: Should we buy or build our next software system?
As Hadlow explains, commercial off-the-shelf (COTS) software is often a great choice for common business needs, such as word processing. I would go a bit further and say that COTS software is a viable choice for any business need that isn't, and shouldn't be, a competitive advantage for your organization.
What does that mean? Well, if your accounting system is unique to your organization, watch out. Worst case, your system may not follow GAAP accounting principles. More likely, it is simply not very effective software and doesn't follow industry best practices. This will be true for many business functions, such as call-center management, document management, and email marketing. Chances are slim that there are any ways your company can gain a competitive advantage by building its own software for any of these common business needs.
But, what if the software system in question provides functionality that you consider a competitive advantage? For instance, if you run a large head-hunting firm should you use a COTS system for finding, tracking, and managing your candidates and clients? If you are large and successful, the way your staff finds, tracks, and manages candidates and clients should be a competitive advantage. Why would you give up that advantage by moving to a COTS system that your competitors can also purchase?
If a COTS solution is better than your current solution for a business function that should be one of your competitive advantages, you need to rethink, and possibly re-engineer, how your company performs that function. For instance, a large e-commerce organization should have plenty of competitive advantages built into its warehousing, customer-service, on-line shopping, and vendor management systems. If not, they may be in trouble.
Buying versus building makes sense in many cases. But, without even considering the hidden costs of customizing and integrating COTS systems (which Hadlow covers nicely), it is often the case that building a custom software solution is the only choice that makes strategic business sense.






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