Buy? Build? Why Not Both?
A ComTechAdvisory Whitepaper
BUY V. BUILD
ComTech’s study showed that commonly considered reasons to favor build over buy were to have complete
control over delivered functionality while avoiding generic and unnecessary functionality. The idea that each business is different was also a key criterion along with the view that users knew their own business best. On the other
hand, the cons were led by issues such as not being an IT organization and having the depth of IT skills internally
to deliver, maintenance and keeping the solution current. The overall cost of internal development was also a key
concern along with inability to access busy business resources and their knowledge of the business. The time
taken to complete the project and the fact that requirements would almost certainly drift and change over that
period was also highly ranked.
Finally, the respondents understood that adequate commercial solutions existed anyway. The respondents also
demonstrated that while an internal build might satisfy various
stakeholders in the organization, it was invariably delivered
over budget and time.
In fact, background research on the Internet will quickly
demonstrate that the buy v. build argument is often an emotive one and is unsettled; there seems to be a dichotomy of
expert opinion on the topic. Perhaps that is because the question can’t be answered philosophically but has to be a specific
decision for a particular company, specific business culture,
specific set of business processes, and application area?
When it comes to E/CTRM software, one needs to consider that there is a wealth of commercially available applications that have mostly been built to be highly configurable to
cater for all the varieties of differences between firms that buy,
sell, trade, move and manage commodities. Every commercially available application already includes adequate basic
functionality around trade capture and so on while there has
been sufficient focus on areas of specialties such as various
risk metrics, analytics, logistics and so on, to provide basic
coverage for most needs in these areas. Despite all of that,
it is a truism that certain buyers will have certain additional
needs either in terms of further depth of functionality or additional key strategic or proprietary business processes. This
is, after all, why most commercial solutions remain a 70-80%
fit to requirements at best and even less for certain industry
segments and commodities.
Perhaps the biggest area of weakness in commercial solu-
tions is in catering for a broad set of requirements in a single
solution? We have in mind here larger, global, multi-commodity, supply chain businesses that historically have either built
internally or acquired a hodge podge of off the shelf commercial solutions. This is essentially the top tier identified by the
ComTech study, however one should not forget that middle
tier companies might often hold as much complexity yet without the transaction volume and scale.
Quite clearly, a number of factors need to be considered in
making a buy v build decision and these are absolutely critical
in nature. These too were identified by the ComTech report
and include availability of internal IT and project management
resources without which, an internal build is a non-starter.
Another key issue is should your key business specialists be
working on an IT project or deployed on the front line of the
business? For without their expertise and input into the project, a suboptimal result is all that can realistically be expected.
Finally there is the cost of an internal development to consider
as well as the timescale for delivery.
In considering both the generic and specific challenges
around making a buy v build decision, the final analysis must
be that it will always be a company-by-company decision. Many
of the criteria for consideration are related to availability of resources and business expertise, costs both direc