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Off the shelf, or build yourself? How to make strategic technology decisions

Justin Day discusses the critical factors that organisations must consider when deciding to purchase ready-made technologies, or developing bespoke systems in-house.

Knowledge Centre

The Buy vs Build dilemma

When it comes to making technology decisions, organisations often face the classic "buy versus build" dilemma. This choice can significantly impact both technological capabilities and business operations. In this blog post, we will delve into the critical considerations that organisations should weigh when deciding whether to purchase off-the-shelf solutions or develop bespoke systems in-house.

Key Considerations: Technology and People

The buy versus build decision fundamentally revolves around two main factors: technology and people. Both aspects are often conflated or overlooked, but they are crucial in making an informed choice.

Technology Considerations

From a technological standpoint, the primary question is whether there is a commercially available off-the-shelf (COTS) product that meets the organisation's needs. These products are pre-built and can be readily purchased. Alternatively, the organisation may consider developing a custom solution from the ground up, creating a proprietary system that precisely fits their unique requirements.

When evaluating COTS products, the key is to determine whether they fulfil the majority of the organisation's functional needs. If a product performs 90-99% of what is required, it is usually more sensible to buy it rather than to build a custom solution. Technology should be seen as an enabler of business outcomes rather than an end in itself. If a pre-built solution can effectively support these outcomes, building a new one might not be necessary.

However, in cases where specific needs cannot be met by existing products, developing a bespoke solution may be justified. This is often seen in niche sectors like public services, where specific operational requirements cannot be addressed by general market offerings.

People Considerations

The decision also involves evaluating whether to use managed service providers (MSPs) or to build an internal team to manage and maintain the technology. MSPs can provide the necessary expertise and resources, offering scalability and stability. However, building an internal team gives the organisation greater control and can foster deeper institutional knowledge.

Organisations must consider the long-term costs and risks associated with each option. Building an internal team involves not only the initial hiring but also continuous training and the risk of key personnel leaving. MSPs, on the other hand, offer stability and a broader skill set but might come with higher upfront costs and perceived loss of control.

Private vs Public Sector Approaches

Historically, the public sector has often been ahead in the technology game, thanks to initiatives like the UK Government Digital Service (GDS). The private sector, particularly large companies, has since caught up, and now both sectors approach the buy versus build decision similarly.

In both sectors, cloud adoption has been a significant factor, with early excitement around building custom cloud solutions now giving way to a more balanced view. The lessons learned over the past decade have highlighted the complexities and costs associated with building bespoke systems.

Skill Shortages and Strategic Decisions

A key factor influencing the buy versus build decision is the availability of skills. Recent reports, such as one from Forbes, have highlighted a perceived reduction in skill shortages in areas like networking and network security. However, the reality is that specialised skills, particularly in emerging technologies like AI and machine learning, remain in high demand.

Organisations need to realistically assess their internal capabilities. The lack of skilled personnel can lead to significant risks, including security vulnerabilities and operational inefficiencies. Therefore, leveraging MSPs who have the necessary expertise and resources can often be a prudent choice.

The Hidden Costs and Benefits of MSPs

While MSPs are often seen as expensive, they offer hidden savings that can be crucial for long-term success. These include avoiding the costs associated with hiring, training, and retaining skilled personnel. MSPs can provide consistent service and mitigate risks associated with turnover in internal teams.

Furthermore, MSPs can offer economies of scale, spreading their resources across multiple clients. This ensures that they can provide a depth of expertise that might be unattainable for individual organisations building in-house teams.

Addressing Perceived Loss of Control

One common concern with using MSPs is the perceived loss of control. Historically, some MSPs have made it difficult for organisations to access their own data and configurations, which has led to a lack of transparency and flexibility.

However, the landscape is changing. Modern MSPs are increasingly adopting a hybrid approach, allowing clients varying degrees of control and visibility into their systems. This flexibility is crucial for rebuilding trust and ensuring that organisations feel empowered rather than constrained.

The Future: A Balanced Approach

The pendulum has swung from an over-reliance on MSPs to a preference for building in-house. However, a balanced approach is emerging as the most effective strategy. Organisations are recognising that while certain bespoke requirements may necessitate in-house development, the stability and scalability offered by MSPs are invaluable.

As technology continues to evolve, the decision to buy or build will remain complex. Organisations must continuously assess their needs, capabilities, and the market landscape to make informed choices that align with their strategic goals.

The buy versus build dilemma requires a careful evaluation of both technological capabilities and human resources. By considering the hidden costs and benefits, addressing skill shortages, and balancing control with flexibility, organisations can make decisions that support long-term success and innovation.