Blog, Pricing

Build vs Buy: Commercial Software or Build-Your-Own for Commercial Excellence

By David Anderson
June 9, 2020

As businesses consider investment in software systems to automate front and back office business processes, many consider building a custom system with internal or third-party resources versus implementing off-the-shelf commercial software options.

Having spent a few years alongside businesses making these decisions (on both sides of the fence, as a customer and vendor), I wanted to share my perspective on how to think about these decisions and to highlight things that are often overlooked.

The first thing I notice in these situations is that everyone thinks they are special. Although it is often tempting to believe that your business is unique and requires a custom-tailored solution to address its uniqueness and complexity,  you should fully understand the reality of the downsides of custom solutions and trade-offs associated with custom or in-house solutions versus software solutions that already exist.

As well, it is important to understand for any commercial software options, the practical extent to which commercial software may be set up and how it can be configured to the needs of unique customer needs. The “last mile” is important, and any worthwhile commercial software solution will have the ability to be set up using lightweight configuration to meet the needs of individual situations, so don’t automatically discount commercial solution vendors’ ability to do so.

Firstly, think about the basic dimensions on which you should base your project decision:

  • Uniqueness – Exactly how unique is your business process?
  • Funding & Resource Environment – What is the availability and timeline of funding & resources required for your project?
  • Time Constraints – When do you need a solution in place?
  • Culture – What is the political environment in IT for commercial vs in-house work?

I have a personal bias toward commercial software and find commercialized software typically have value over in-house custom-built solution for some of the following reasons:

Custom Solution: Positives

Custom Solution: Negatives

• Built to your exact needs • Fixed-in-time solution (no new capabilities
• Great control over software design • Can be dificult/expensive to maintain, improve, migrate with business changes over time
• Competitive differences – having a different solution than your competitors can be an advantag • True total costs of in-house solutions are often not honestly accounted for, and underestimated
• Use of costly internal, non-expert resources to design solution
• Slower time-to-value (develop and deploy)
• Often lack tangential capabilities for mobile and integration
 

Commercial Software Solution: Positives

Commercial Software Solution: Negatives

• Faster time-to-value, rapid deployment • Often trade-offs for out of the box process criteria vs. built-to-spec process
• Future value of enhancements, evolution in product roadmap • Less control; may require some adoption of standardized, non-custom process
• Lower cost with honest accounting for custom
• Designed by software experts – customers benefit from solutions designed around focus on core business problem with years of customer experience and input from professional design process
• Broader ready-made capabilities for solution and data administration, integration, security and performance
• Superior performance and security standpoint
• Commerical grade support and training for users
• Commerical grade support and training for users
 

Choosing the right option and its ability to address the uniqueness of your individual business, business unit, geography, and IT environment context is certainly important. In my personal opinion, the benefits of commercial software should mean that it is given your “first look.”  If ready-made solutions are able to suit the nuances of your business, it is clearly a better choice than custom.  If ready-made does not meet those needs and if there are downsides to changing your process to fit the standard, only then should you consider custom solutions. I hope that this has helped you think through that evaluation.

If you are considering commercial software to support a commercial excellence transformation in your business, reach out to us so that we can help you understand the facts and all that is possible with ready-made, quick-time-to-value solutions for commercial process and price management in your business.

If you’re embarking on a commercial excellence journey and are focused on price optimization and management, download the Pricing Software Buyers’ Kit for everything you need to gain a deeper understanding of the market landscape and ask the right questions when evaluating vendors.

  • commercial excellence , commercial software pros vs cons , pricing , time to value

    David Anderson

    David Anderson is a Boston-based Business Consultant with Vendavo. Since 2001 he has led and consulted on pricing & commercial process transformation at some of the world’s largest companies. After joining Vendavo in 2016, he has specialized on driving value & outcomes with Vendavo’s high tech, medical device, and process industry customers. Dave is a manufacturing process engineer by training (BS, MSE from Kettering, Purdue), and received his MBA from Harvard Business School.