Build vs. Buy for Football fans


Only 5 days left until the final match for UEFA 2012.

4 teams remaining, Germany, Spain, Portugal, and Italy. According to the public bets, Germany and Spain (57%) are more than 3 1/2 times more like to face off each other than against Portugal or Italy (~16%).

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The pressure is on for both coaches and players! Making good decisions separates between winning or losing.

In software development cycles, one comes across the decision between “Buy” and/or “Build”. Which approach is the right one? Should one just toss an coin in the air? Or, is there a rigorous process guiding through that decision making process?

A few days ago, I had to advise a potential client on whether they should buy a software package or build in-house their integration tools. Before making the recommendation, I researched online. Even through there exist many industry research firms, such as Meta Group, Gartner, Forrester, … Many of them are paid by their sponsoring companies;, hence, heavily tipped toward buying one or a few products. Other sites from Internet told me that they are

  • Balancing act between risk / reward
  • Number of users
  • Proprietary vs. Standard technologies

They are also a little too vague for me. Hence, I decided to make a little flowchart to guide me through that process.

Build vs. Buy Flow Chart

Despite the pressure to make decisions immediately, one really should look at the problem from a more strategic POV. In the Euro 2012 playoff, the Russian Coach had to quit, despite an early 4 to 1 win against the Czech Republic. http://www.rt.com/sport/football/fursenko-resignation-footbal-rfu-putin-euro2012-mutko-706/   And, the Portugal is still around after losing to Germany in their first game.

The purpose of IT projects are to generate values for the implementing organizations. Therefore, project managers should start by examining whether a proposed project makes business sense, i.e. the business value > the implementation + maintenance cost. Business values come in many different forms, reducing operation costs, streamlining business process, enhancing customers interactions, … Costs also have many different factors, development expense, time consumed, training & upkeep, etc.

When a project shows good value proposition, it should move to next steps. In spite many industry analysts preach, a project can easily become a legacy application with wrong selection / implementation process, even with most advanced & state-of-art technologies. A better approach to make decisions is examining the fit from organization’s business process angle. IT technologies evolve at a rapid pace. The costs of maintaining applications, training, integration would sometimes exceed the initial implementation cost. Hence, non-core IT projects, ones that are outside of organization’s core business competencies would be best implemented by partners (consulting firms). They are experts in those area and can make excellent decisions between using COTS (Commercial Off The Shelve software), SAAS (Software As A Service), or building a custom solutions. Furthermore, the cost of developing and maintaining technical expertise would be spread across multiple projects.

On the other hand, when organization have projects that are integral components of their overall business processes and strategies, they should further examine whether they have the necessary internal resources for completing and maintaining those projects. Outside of budget constraints, the project manager could take several different approaches.

  1. Solution approach – I know exactly what I want and have developed a set of criterions (objectives for success / failure)  With this approach, the main focuses are developing the timeline, resource selection, cost estimation (i.e. how much it costs to buy & subscribe something vs. building something), …
  2. Analytic approach – I have a vision of where I want to be, (for example, I want to integrate one or several platforms, i.e. Supply Chain, CRM, Portal). This will be a good time to think through different possibilities, whether it be using one platform, a mix of platforms, build, or all of above. The strategy here will be addressing multiple issues and develop a roadmap for the future.
  3. Not all projects need to come to a Buy/Build decision. Sometimes, it’s better rethinking the Go/No-Go decision. For example, the game between England and Italy was decided by penalty kicks.

To summarize, even though Buy vs. Build are easy choices, there really exist alternatives. That is to examine the Go/No-Go decision, understand the overall business processes and project value propositions, and consult with partners who have subject matter expertise. It is best to well manage one’s core competencies and leverage partner’s knowledge.

OK, there are still a few days to the Euro 2012 Football final. All the teams are busy training & formulating strategies. While the public opinions decidedly favor Germany and Spain, the outcome is still uncertain. So, remember, Jean de La Fontaine’s Quote: “All roads lead to Rome, but …  think we should choose different paths. [Fr., Tous les chemins mènent à Rome; ainsi nos concurrents crurent pouvoir choisir des sentiers différents.]

There are many different ways to making good decisions, as long as they are good. 🙂

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