The question whether to build or buy software is a long on-going debate between experts with various opinions on the internet. The option to build your own in-house software or buy market ready customized solution still keeps a lot of decision makers confused. With the SaaS market booming to its full glory where the market size is projected to reach USD 307.3 billion by 2026, it is making it easier for brands to subscribe to services without a need to maintain hardware or other resources.
Before we dive straight into the debate of build vs buy, let us explore how customer behaviour and purchase paths have gone through a revolution as well.
The digital revolution has armed customers with smartphones, tablets and users today are demanding and expecting service, thereby shaping the product offerings they consume. Gone are the days of brands dictating and influencing customer expectations. While option-fatigue and the tyranny of choices have affected the decision making process, price comparison engines, coupled with voices of Key Opinion Leaders (KOLs) and influencers, are helping users make informed purchases.
The Modern Purchase Path
The shift in power dynamics between customers and brands has reshaped the traditional purchase path. The modern purchase path, driven by technological advancement and multiple information sources, has taken products out of store shelves and put them inside the digital ecosystem, transcending geographical barriers to make transactions seamless and intuitive.
The above image illustrates how the consumer journey cycle has gone through a massive paradigm shift, one that has changed the customer-brand relationship from supply driven to demand driven.
Considering the above points on how brands are aiming to become more customer centric in their operations, it is increasingly important to address the build vs buy dilemma. But it isn’t that straightforward. Before deciding if it is better to build a platform from scratch or acquire an existing technology, here are a couple of factors that you need to consider:
- The cost involved in building or buying: Building something from scratch is going to be huge depending on the size of the team/company and you will need to account for the man-hours, infrastructure, and maintenance cost, all of which are difficult to estimate accurately. Meanwhile buying a solution to cater to different needs within a team, one might need to have to consider license fees which vary based on active user count and services used.
- Accompanying risks while buying or building: The main risks involved with buying are limited control and access over the software, source code, and bug, meanwhile with building a solution the major risk lies with the capability to deliver by the development team which could result in increased expenses.
- The problem is resolved through the solution: It isn’t wise to go through the trouble of building something specialized from scratch if it doesn’t directly add to your bottom line. It is usually advised to buy stuff every company needs and build what differentiates you.
- Track record of the development team: Measure your development team’s skills and maturity in terms of competence, agility, and ability to deliver. If they measure up to a good level, then building software in-house makes more sense as compared to buying a market-ready solution.
- Resources available at your disposal: Budget is a big deciding factor when it comes to buy vs build debate. Higher the spend limit exercised by brands, it gives building the software more favour. For companies that have a limited budget, buying a solution is an easy way to tackle this.
- Time-to-market requirement: One of the most important factors to consider is buying a solution is a significantly faster go-to-market strategy as it can be delivered within eight to sixteen weeks (depending on the complexity of the use cases) compared to the months or years it can take to build a platform in-house.
- The priorities of your business: If you build your own solution internally, will it be a priority with your business? Probably not, which may lead it to be an inhibitor to progress if your company can't continue investing in it. Technology is in a constant cycle of change, it's not a one-and-done project. A company that develops a solution that you can purchase is dependent on that solution evolving and continuing to provide value to its customers.
One should avoid wasting time in building and creating something that has already been built well in the market. The end goal for brands is to provide the customer with the best-in-class experience and if that is being channeled by a technology that already exists, should one be really spending a lot of time and energy building a solution?
The more important focus for companies could be to stress the human fuelled experience that they provide at every touchpoint to users and improve their customer support and services. The ever-widening gap between customer expectations and a brand’s ability to fulfill them is one of the biggest issues that contemporary managers are aiming to resolve. In order to understand how customer expectations have altered, it is important to take note of changes in user activity and attitudes along with how they affect purchase decisions.