To Buy or to Build?
Choosing between packaged and custom solutions
by Robert Faletti, Blue Archer Principal
Visit any technology tradeshow and you will find scores of vendors selling packaged software solutions. From the all-encompassing enterprise resource planning giants to small niche applications, there's a packaged solution for virtually every need. You will also find a fair share of consulting groups eager to build you a custom solution from scratch.
This decision to build or buy faces every company that is considering a new system of any kind. In nearly all situations, there is a very definitive reason to decide upon one solution or the other. An understanding of the pros and cons of each type of solution, along with the scenarios where each works best, will help your organization make the most intelligent- and cost effective- decision.
Packaged applications (aka: out-of-the-box, shrink wrapped, or canned) are most effective as enterprise or department-wide solutions. If you're implementing a solution for your entire accounting function, or to handle the full scope of your manufacturing process- from raw materials receipt through processing and shipping, then a packaged application may be the best fit. A glut of packages are on the market, and the odds are good that one will be a fit.
One of the main drawbacks to packaged applications is usually the cost. Most packaged applications include a wealth of functionality, and a price to go with it, so if your need is very narrow, you may end up purchasing more functionality than you need. It is also very rare that an organizations process are a perfect fit for the package's configuration, so plan to spend, at the very least, half to double the package cost to configure and customize the application to fit your solutions. Your only other option is to change your processes, again adding hidden, but very real, cost. Finally, most package applications require the purchase of a yearly maintenance agreement, usually 15% to 20% of the purchase price, whether you use it or not.
Custom applications are most often required for a very narrow or specific need, extremely complex business processes, or for an organization that must operate multiple divisions, plants or locations that all possess varying or disparate processes.
Contrary to popular thought, custom applications are usually much less expensive than packaged solutions when used for the proper business need, both initially and over time. New technologies allow the rapid construction of solutions, and remain stable over time, resulting in low total cost of ownership. Once put into production, custom applications are inexpensive to maintain, providing that the system is properly built.
Custom applications can be potentially dangerous if built with outdated technology, or technology that is not mainstream. The danger lies in the inability to find qualified or reasonably priced employees or consultants for future modifications to the system. Also, the wrong technology can make it very difficult to upgrade or migrate to a new system when the time comes.
No matter what type of solution you choose, it is critical that a strong understanding of your business needs is in place before you build or customize your system. Whether you utilize in-house or outside resources, be sure to include all system documentation as a clearly defined deliverable- this will ensure you retain all system knowledge for future upgrades or changes to the system. If your solution is custom, be sure you own the rights to the source code.
For more information, Robert Faletti may be reached at 412.353.1048, or at rfaletti@bluearcher.com.
