Build or Buy?, or Why Tech Firms Should Purchase Tech
To build or to buy? This question seems to trip up tech firms more than other types of businesses. An automaker would never decide to buy a vehicle from another automaker. And if GM decided that they wanted a plane or a rocketship, clearly they’d opt to purchase that vehicle rather than retool one of their own facilities. Concerns regarding cost, time, and (above all) quality and safety would take priority, but GM would not face any difficult decisions in this scenario.
But the question is a sticky one for tech firms. Recently, our own consultancy faced such a dilemma. We sought to develop our sales pipeline with an application that managed outgoing email campaigns. The tailoring of such a custom application is EXACTLY what we do, so it was a no-brainer, right? Why would we buy something that we could quite easily make for ourselves? Obviously, we were going to build this application.
It might take a few weeks. Then we’d have to troubleshoot. Also, we’d need to fashion a product interface that our marketing team could work with effectively. In the commercial sphere, such potential issues are expected and accounted for: they are baked into our SOW and built into our timeline and our processes. But when we build an application for ourselves, the firm’s only revenue is what it’s saving in the purchase cost of an equivalent item off the shelf. Hm. Think about that.
Moreover, any engineers working on this application wouldn’t be producing for our clients–you know…what we pay them for. To make matters worse, our sales pipeline would be frozen with lots of marketing people twiddling their thumbs while we spend weeks building and working the kinks out of an email application that we needed like yesterday. Maybe this isn’t such a no-brainer.
When are we tempted to build?
Control and Customization–We feel that building allows us to create a solution precisely tailored to our needs, which offers flexibility and control over the design and function.
Learning and Pride–When we make something, we gain valuable experience in the process as well as a sense of accomplishment and validation of our skills.
Cost-effectiveness and efficiency–If we have the tools lying fallow in-house, then we might think that we can build something quickly with minimal (if any) additional cost.
Now, you may notice a few issues with these temptations. First, with the proliferation of firms focused on AI, the need for control and customization is a bit…outdated. The sheer number of products coming to markets increases the options any tech leader may select from, reducing the need for customization or control. And while it’s difficult to argue with the value of learning, how often can a learning experience become a euphemism for an unsuccessful (and maddening) undertaking? As we all know, it’s great to take pride in one’s work…until it isn’t. And as for consideration of cost and time, if we have such a luxury of resources at our disposal…how efficient are we really?
When we should buy:
Convenience and Time Savings: Buying pre-made products saves us the time and effort required to design and construct something from scratch. This convenience can be particularly valuable if your time is at a premium…and whose isn’t?
Quality Assurance and Customer Support: Purchasing products from reputable manufacturers often comes with quality assurance and continued support. This means we can rely on professional craftsmanship and have peace of mind knowing that any issues will be addressed through warranty coverage and customer support.
Cost-effectiveness and Efficiency: In some cases, buying pre-made products can be more cost-effective than building, especially when considering the total cost and time required for construction. Additionally, firms geared towards producing an item can often offer low prices because they already have the infrastructure required for building the item.
As with the temptation to build, we may question the rationale of buying a pre-made item. Is the product a match for our needs? Will the product present issues related to quality, security, and safety? Also, you will notice that concerns of cost and efficiency are criteria of either option, so… Is it really more cost effective and efficient to purchase this product?
In our case, we ended up opting against building that email application. And while our initial search resulted in many pricey options with far more features than we were looking for, pretty quickly we located an affordable product that performed all of the functions we required. Once we checked our pride, the solution became quite obvious. Within a matter of days, our marketing team was humming along while our engineers worked on products for clients. Easy peasy. No second guesses. In truth, when we face a build-or-buy, the answer is almost always buy.
A Third Way–The AI Agency
Even with numerous products on the market, your firm may find a unique need that is simply not to be found on any shelf. By employing a consultancy in AI, machine learning, and data science, you can purchase the customization and control of building the item for yourself. Better yet, your contracted agency takes responsibility for the difficulty of the project, concerns over safety and security, and maintenance and support of the product. And as with any purchase, the only resource we expend is money. And once we can reduce a decision to dollars and cents, we often that our resources of time and productivity have more value when allocated towards our clients.
Build or buy? Ultimately, smart leaders know: if you can buy a product that allows you to get down to work for your clients, then you should almost always buy. Purchase the product and focus your energies on the work that pays. And if such a product isn’t available on the market, then maybe it’s time to ask an AI agency like Lloom to build it for you.
