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Author's profile photo Roisin Monaghan

3 Reasons When It Makes Sense to Buy versus Build

Companies are struggling with the definition of Big Data and how to measure and utilize insights, they also have to deal with new delivery mechanisms for their applications and software, namely via the cloud or some kind of mobile device. These technologies can really expand their customer base, enable their employees and make their software easier to use and distribute. In a 2013 McKinsey report, “More than 60% of CEOs expect 15-50% of their earnings growth in the next 5 years to come from technology-enabled business innovations.”

Adapting to meet these challenges and get the required expertise in house to accomplish an end-to-end Big Data, Mobility and Cloud strategy is a daunting task. Add sometimes it makes sense to consider buying and integrating another company’s platforms and technologies into your own solutions rather than trying to build from scratch or rearchitect what you already have.
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  1. When you want to extend your application and services into new areas
    Gathering requirements for new technologies can take time and requires a comprehensive understanding of these new technologies that your in house development team may not be familiar with. Integrating with a proven solution eases their learning curve with new solutions.
  2. If there is a serious sense of urgency around getting new products to market faster
    Using other companies technologies integrated with yours can help you differentiate yourself from the competition and get to market faster and monetize products and services with proven technologies.
  3. If there is a really good version of what you are looking to build already proven and available
    For example, why would you build your own BI? There are lots of choices in the market for BI solutions that you can embed with your solutions in order to give your customers analytics capabilities and add value to the products you are already offering.

Recommendations when making a buying decision:

  • Buy a more mature application that’s been on the market and out there proven for at least 3 years – the vendor name doesn’t matter so much as long as it’s been out there 3 years or more
  • Don’t buy a X.0 version – the kinks probably won’t have been completely worked out
  • If off the shelf versions won’t work, consider outsourcing

Obviously, there are pros and cons to building versus buying your own application and you have to consider other situational factors as well. But there are definitely distinct reasons for when you should make a buy decision versus a build decision.

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