The decision to build or buy is a typical dilemma for any technology implementation, but it can be particularly challenging when considering the latest technologies. Because development teams are less likely to understand what it will take to succeed fully, it's common to underestimate the resource or time commitments when building in-house. This can lead to delays, disappointment, and false starts. The good news is that many off-the-shelf solutions for new technologies like machine learning, blockchain, VR/AR will likely suit your business needs. That said, when you're building on the same technology as your competitors, it's harder to create differentiation.
Knowing whether to build or buy can also be complicated by several misconceptions. Recognizing them early is a key part of the decision-making process. Below are a few to avoid to make the best business decision.
Misconception #1: Buying means you’re not innovative (or lack technical muscle)
There is no shame in adopting off-the-shelf technology solutions if they work just how you need them to. There's also real value in knowing the vendor you buy from is committed to making regular improvements (so you won't have to). For example, if an identity management tool like Auth0 checks all of the boxes on your wishlist, there is no need to spend the development time and cost creating your own tool.
Similarly, an e-commerce brand that wants to deploy machine learning technology to improve product recommendations for its customers might be tempted to build its own solution in-house. But existing solutions are likely sufficient to get them where they need to go, so why not put those development resources to better use elsewhere?
Misconception #2: Building in-house automatically gives you the best solution
Even though you know your business and systems better than any third-party vendor, it doesn't mean that you can build the solutions you need better than they can. Consider the identity management example above. Often, it's wise to leave tech like identity management, document design (Adobe, etc.) and file-sharing tools (Box, etc.) to the experts in those respective fields.
While new solutions may pop up and replace or condense the core technologies mentioned above, there will be some instances where the decision to buy will need to be reversed. Which leads us to our third misconception.
Misconception #3: A build or buy decision is hard to reverse
Just because you’ve chosen a build or buy path for a new technology, doesn’t mean you’re stuck with this decision forever. A technology purchase may serve as a step toward innovation. That is, once you’ve started using it and want to gain new value, you can bring primary development in-house. Conversely, you may see innovation in the marketplace eclipse what you’ve developed in-house. It’s important to monitor the solution’s value and know when to fold or double-down.
As discussed above, an off-the-shelf solution for machine learning may serve your customer product recommendation goals completely. But if you've discovered other ways to leverage machine learning that will truly differentiate your business, then devoting internal development resources to it may be the most fruitful option. For example, let's say an e-commerce business offers customized clothing. Converting the customer's uploaded image into a screen print might be easy. However, a pattern that needs to be stitched on requires a design conversion by a hired artist. This can add time to order fulfillment and increase overhead costs. Because it's a rather niche opportunity, this business may choose to bring development in-house. Creating the capability to serve customers better while lowering labor costs could become a competitive advantage.
For most companies, it’s better to skew toward a ‘buy first’ mentality. If, after browsing the market’s offerings, you determine that what you want a) can’t be bought or b) could be a competitive differentiator for your business, consider bringing development in-house. Keep in mind, however, that with any in-house build, there will be competing priorities and limited resources. Talk with stakeholders and customers about their needs to determine how to prioritize this new tech, so you can deliver a truly unique solution that both satisfies customers and doesn’t overwhelm your internal resources.