Enterprise software: The build or buy-in debate

Over the last decade the buy/build equation for enterprises has fluctuated back and forth. This is because making the decision over which to choose has been heavily driven by both the accessibility and ease of each approach. Organisations naturally lean towards the most accessible method available at the time.

The latest survey by end-to-end multi cloud technology solutions firm, RackSpace, has revealed the changing trends and sheds light on the shifting application of the ‘build versus buy’ approach and summarises that the ratio of building versus buying application has not actually changed, but the way that customers assess whether to build or buy has.

There have been three main findings from the survey, which focus on making strategic decisions, if choosing to build, the adoption of low-code/no-code solutions for businesses will increase and in the case where they decide to buy, SaaS adoption will increase.

Jeff Deverter, the RackSpace’s CTO, summarised the findings: “When it comes to the build vs buy dilemma, rather than one dominating the other, our research and experience tells us that both methods have immense value if implemented for the right reasons.”

Strategic approaches

The research revealed tech decision makers don’t plan on moving strictly away from build towards buy, or vice versa, but there is a shift in strategically choosing when to build, and when to buy. For example, 72% of respondents prioritise building customised applications for customer-facing purposes, because it creates differentiation. With hiring and training skilled workers among the greatest business challenges today, it is essential that valuable developer hours be used to build applications that customers will notice and that will eventually impact revenue. In fact, 67% of those surveyed agreed that digital transformation and the need for differentiation is actually driving the need to build applications in-house.

Low-code/no-code solutions

Organisations choosing to build will increase their adoption of these solutions and will also continue the trend of ‘working smarter’, democratising application development and allowing organisations to leverage user-friendly build tools to bridge the gap in developer skill sets. 72% of participants said their organisations use low-code/no-code platforms for this purpose and  a massive 86% said they are satisfied, or even extremely satisfied with the low-code/no-code developments.

Increased adoption of SaaS in buying option

SaaS products are rising in favour as they continue to become more robust in their capabilities, highly customisable and also easier to implement. RackSpace’s research has indicated a rise in SaaS as the preferred option when buying applications, to enhance crucial, but non-differentiating areas of business. The survey showed 62% of people think ease of use and implementation as the main reason for buying software and 65% thought that with today’s SaaS advancements, it is possible to create differentiation in a pure SaaS world.

“It is clear right now that the trend is to reserve developers and their build time for the highest impact work, while filling in the gaps with purchased technology,” concludes Deverter.

Pros and Cons

James Percy, founder and MD at software developers, Verasseti, says in his experience, plenty of businesses are commissioning or building their own software, rather than opting for a package. He adds it’s rare that despite the range of software available increasing, that something matches exactly what most businesses require.

“Indeed, independent software development is absolutely alive and well,” he says. “Figures suggest the UK software development industry grew 5.3% per year on average between 2016 and 2021 and is now worth  around £34.4bn.”

Percy listed the pros of building your own as organisations are getting exactly what they need, giving them a competitive advantage, minimal ongoing costs, simpler integration with existing systems and the option of selling their software to other companies to recover the cost. He added the cons include high costs, expensive and sometimes not possible customisation, and being beholden to suppliers who may not be around five years in the future.

Varying viewpoints

However Rob Hodgson, warehouse management system and e-commerce fulfillment expert at retail software firm, Mintsoft, said investing in an already-established software solution, rather than building your own, has several benefits.

“If you are looking to implement technology quickly, investing in a solution that is already there means you’ll be able to get to work faster. Another benefit is that more often than not, you’ll be supported by a team of onboarding experts as well and part of a community of other users, so having relationships with like-minded industry experts is an added bonus,” he says.

Hodgson added on-boarding existing software was also often more inexpensive, with flexible and transparent pricing options usually offered, meaning costs can be spread and can be up and down-scaled as needed.

“Ongoing enhancement is another benefit to consider,” he adds, “Established solutions will have a dedicated team who constantly review and enhance the platform and launch new releases on a regular basis, creating innovative solutions so you don’t have to spend the time and money doing it.”

Digital consultancy Samepage’s founder and principal consultant, Aidan Dunphy, said he thought the downside to using packaged products has always been that they cannot precisely meet the needs of every customer, requiring a level of compromise and workarounds to adapt the solution to any specific business context. He added they tend to have many features that aren’t required by every customer and therefore can be cumbersome to use. This, he says, is a frustration and can cause businesses to resent generic solutions and their true costs and risks should not be underestimated, he warns.

“As any software author will confirm, understanding business requirements accurately and sustainably is a never-ending challenge. By locking your business into using software that is designed for exactly one organisation can result in learning from best practice being missed. However, in general, I would recommend using packaged software for any activities that aren’t mission-critical, or represent significant competitive differentiation.”