Nickolay Schwarz, CTO of BenchPrep, discusses the merits of building your own enterprise software versus buying it.
As organisaions undergo rapid digital transformation, everyone is trying to figure out that magic software formula that will create efficiencies, reduce costs and maximize performance.
According to Gartner, The overall IT spending is expected to grow at 2.8pc and reach $3.87trn in 2020. Meanwhile, global enterprise software spending is projected to grow 8.2pc in 2020 to total $466bn.
But when exploring the ways enterprise software can help an organisation reach its objectives, the question of whether to build or buy it is one of the first and most challenging puzzle.
Companies often hit a paralyzing roadblock when weighing the pros and cons, encountering long-term consequences if the wrong path is chosen.
There are several important factors and challenges that organizations face when considering whether to build or buy, such as:
- Scalability
- Bandwidth and resources
- Technical Acumen
Below is a list of common considerations and resources for CIOs to better understand the build vs. buy debate, in order to help them navigate the complex decision-making process.
Identify the problem that needs to be solved
Often times, companies decide to build their own software in an effort to solve too many problems at once. Concerned that a third-party solution won’t meet their specific and customised needs, they develop an in-house platform, attempting to check the box for several issues.
More often than not, this results in an overly complicated program that is too difficult to build or use. Pinpointing a specific objective as to why software is needed in the first place is key, and most of the time, there’s already software readily available to help solve the problem at hand.
Leveraging a third-party enterprise software solution to improve a defined business need will allow your organisation to effectively do so, allowing time to prioritize and allocate resources for other important business operations.
Calculate the total cost of ownership
The total cost of ownership (TCO) is one of the most important considerations when deciding to build versus buy.
Questions that organisations need to ask include: Does your learning program contribute to a profit center or fall under a cost center? Do the benefits of owning the process outweigh working with experts who build and maintain enterprise software 100pc of the time?
The true cost of building, maintaining, and operating a long-term software solution can be tricky to calculate. In-house solution costs are rarely predictable and often result in greater expenses than expected. These high cost overruns can lead to project abandonment and internal dispute over how to solve the problem at hand.
When exploring options to buy a software solution, an initial cost may cause sticker shock for some, but when the cost is given up front, it provides your organisation and decision-making committee with transparent information for budget and resource discussions. Long-term objectives need to be outlined to determine scale and growth needs.
Understand the stakes
In a world of open-source development and consumer apps, it can be difficult to understand the value and benefits that enterprise-level software offers. Building a powerful enough software solution for enterprise typically takes years of work and expertise.
When an organisation does take the leap to take on a development project, chances are that third-party solutions that specialise in building software are already ahead of the game. Even before writing a line of code, it’s important to consider the long-term resource investment. In-house development requires continuous iteration, testing, training, monitoring, and many other technical updates in order to stay relevant and sticky.
Turn to the experts
Particularly for our customers, organizations are quickly realizing the need to look beyond traditional learning management systems (LMSs) of the past for their education and training needs.
While an in-house LMS once allowed organizations to store and manage content, learners today demand a more engaging and efficient learning experience. In order to provide a comprehensive, adaptive, data-driven, scalable learning platform, extensive technical acumen and ongoing support is required.
It’s never been more urgent to stay current and relevant to customers. As markets quickly move away from traditional methods, you’ll want to make sure to work with a solution and experts you can trust to stay ahead of the curve.
Ultimately, when enterprises conduct an internal assessment of objectives, resources, and definitive goals, they can consider the aforementioned options in part of evaluating the vacillating decision of whether to build or buy.
Nickolay Schwarz is the CTO of learning success platform BenchPrep. He first joined the company as a senior software engineer in 2011 and later on became a lead software architect. He holds a degree in computer science from Illinois Institute of Technology.