A company is in permanent beta: there is always something to improve. Let's say you spend 15 minutes a day reading spams. Compounded over a year, that's three days out the window. Chances are you’re not the only one losing time on junk mails, so go ahead and multiply those 3 days by your company’s size: something as simple as an email filter can save days of work. Those tiny details eventually stack up and can make or break a business.
Now, what can we do about all those hours wasted updating spreadsheets by hand? Do we leave things the way they are, or do we address this issue? This is where software comes into play. According to Deloitte’s 2018 survey on global outsourcing, 9 organizations out of 10 are considering or adopting cloud solutions to gain a competitive advantage.
Your competitors are already on the move, and those with the right digital products are expected to win. The question becomes: should we build those products ourselves, or should we buy them?
An easy mantra to follow would be to outsource anything that's not part of your core activities: if it's none of your business, pay someone else to do the job. Instead of engaging in satellite activities, teams are expected to focus on talking to their customers and delivering value to them.
According to Deloitte still, a third of the companies surveyed expect cloud services contracting to decrease their operational costs by at least 11%. Buying ready-to-use software removes the need for hiring, research, development, and maintenance costs. In the U.S. in 2017, software developers made a median salary of $50 per hour, so paying $5 per month per employee for something as complex as a project management tool becomes a no-brainer.
More than a cost-saving strategy, value is being achieved by driving innovation, developing flexibility, and increasing operational speed: employees can get work done better because it takes less time and it helps them adopt best practices. It's even more true for small and medium-sized businesses where the resources are more limited, by definition.
Software is becoming a commodity and it doesn't make sense to reinvent the wheel. We don't think twice about buying a Microsoft Office/Photoshop/Windows license, so why should it be different with cloud solutions?
On the other hand, making great software is getting increasingly complex. It's not as simple as patching up some code and hope for the best: most projects take months to complete and there is a non-negligible chance that the initial product requirements don’t meet the needs of the end-users.
More often than not, buying a product is the most effective solution both in the short and the long term. That being said, there are specific reasons why building a custom solution can make sense at a strategic level.
Firstly, what you buy can be bought by competitors too.
Running a business usually involves making by-products, and addressing your specific business needs this way can become an additional source of income. Basecamp is a good example. It started as an in-house tool used by the web design firm, and it ended up as a standalone million dollars business: "we tried a few tools, but they were complicated and too hard to use [...] Frustrated, we decided to build our own simple project management app," says Jason Fried, CEO of Basecamp.
If there is no good solution to buy, you have to roll out your own. Perhaps the available products don't align with your company values. Or you have demanding service-level agreements that cannot be met by a third party, like 24/7 support or security standards. Maybe a business partner doesn't have the same dedication towards your projects and it's hindering your organization's growth. For any of those reasons, you might need more control over the products you use: an out-of-the-box solution is often a black box as well.
Even if building your own tools will hinder your growth and won't save costs in the short term, it doesn't have to significantly increase your burn rate either. Thanks to globalization, outsourcing your development activities has never been easier. The talent pool is bigger, more qualified, and the costs are flexible.
Building is also a matter of culture. Alphabet is the most notable example of a company driving innovation thanks to its aggressive product development strategy. And when Alphabet buys a product, it's to make it their own.
On the other hand, building vs buying might soon become an outdated debate. With the rise of the no-code movement led by companies such as Zapier, IFTT, or Bubble, it's never been easier for anyone to build an app that gets things done. Programming becomes visual and intuitive. With a few hours of training, it's within anyone's reach to create software without code.