Before I sat down to write this article, I decided to go for a run. I set my course along the lakefront not far from my house. About 200 yards from my front door, I encountered a skunk. I quickly evaluated my options and changed course to avoid getting sprayed with skunk musk.
I‘m sure you’re wondering what this has to do with the buy vs. build decision. Well, it got me thinking about an allegory for the subject, where the runner represents a company embarking on a new project, and the lakefront path is a series of steps the company can take to evaluate whether to buy or build a software solution and the risks associated with each option. The skunk represents the unnecessary risks and costs the company wants to avoid.
Let’s take a look at how it might play out in the context of a transportation management system (TMS) buy vs. build decision. Here are the eight steps you should take to avoid the skunk:
Step 1 – Core Competency: The foundation for your build vs. buy decision lies in determining the core driver that strategically differentiates your company. Does the TMS directly contribute to your company’s strategic advantage? Does it impact the unique nature of your company’s business, providing mission critical activities that result in vital leverage and sustained advantage in the marketplace? You first have to agree on the answers to these questions before proceeding any further down the path.
Step 2 – Identify Architectural, Functional, and Future Requirements: Companies are skilled at gathering business requirements for the buy vs. build solution. Before taking another step, confirm your future business requirements such as scalability, adaptability, and longevity of a solution.
Step 3 – Business Process: In the evaluation process, gather a checklist of your architectural and functional requirements, but don’t fail to look at business process definition. Whether you buy or build, the TMS should be flexible, adaptable, and support current best practice processes as well as future business needs.
Step 4 – Examine Your Company’s Existing Solutions: Assess if another system(s) within your company can offer an acceptable solution. You might already have TMS capabilties in-house and not know it. If there’s existing TMS technology in-house, can it be scaled to provide a complete solution with minimal modifications?
Step 5 – Evaluate your IT Department Identical to a Vendor: Often, companies assume their IT Department has the skill set, bandwidth, and technical ability to deliver a solution. In an evaluation process, your IT staff should follow the same process and be held to the same rigorous standards and qualifications as the commercial vendors. They should compete equally.
Step 6 – Skill Set to Support: Companies often presume in-house development can save money, even though there is a lack of personnel with the appropriate skills. Do an honest assessment of your IT staff for knowledge, cost of additional training, recruiting, and the ability to retain resources to deliver a TMS.
Step 7 – Timeline: Consideration of the solution timeline is imperative to your decision-making process, especially if your business need is urgent. Understand the time to develop and implement an in-house solution versus configuring and implementing a packaged product.
Step 8 – Total Cost of Ownership (TCO): You should fully vet the TCO of buy vs. build — i.e., the cost of acquisition vs. cost of development, implementation, support, and maintenance over the lifespan of the TMS. You should have a solid understanding of TCO before making a decision.
If you determine that your company needs a TMS to be competitive, consider the eight steps above and proceed carefully through your buy vs. build options. As your company takes each step down the path, be careful to avoid the skunks. By mitigating risks such as immature technology, interface issues, inadequate skill sets, vendor instability, costly enhancements and project overruns, you can avoid a smelly mess.
Michelle Maier is an Account Executive at MercuryGate. She has been a sales executive for over twenty years, during which time she has managed over $140 million in sales for her Fortune 1000 clients. She has received numerous performance and service awards for exceptional performance. Michelle is known for her high integrity, intellect and pursuit of excellence. Michelle spent twelve years working as the lead sales representative for General Electric Healthcare, CDW, OFFICEMAX, Northern Trust Bank, AON Corporation, and Whitehall Jewelers. Michelle received her BS from Purdue University and her MBA from DePaul University.
- TechRepublic, “Consider these points when making the build vs. buy decision”
- Nevo, “Build v. Buy A Decision Paradigm For Information Technology Applications”
- TechRepublic, “Buy vs. build: Six steps to making the right decision”
- ProjectSmart.CO.UK, “Build Versus Buy: Making the Right Decision”