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Buy versus build


From time to time, every manager must decide between in-house and outsourced development. There is a strong temptation to go for the in-house solution, using resources already budgeted rather than incurring the additional costs of outsourcing. However, this tendency should be counterbalanced by other considerations.


Some of the misconceptions by which people and organizations convince themselves to use the in-house route are:


People just assume they can’t afford to contract the work out, or buy an off-the-shelf product, without really investigating possibilities. They fail to consider the hidden costs of in-house development, especially for projects which involve many stakeholders, contributors, and program assets. Keep in mind that resources expended in assembling assets and learning new tools can add up to hundreds of employee-hours.


Sometimes, resistance to using existing off-the-shelf programs is caused by the “not created here” syndrome: if it was “not created here”, then it doesn’t bear the stamp of our unique corporate culture, our “brand”. It wasn’t built to our unique specifications by our native talent, subject to our quality control standards—therefore it can’t really answer our needs.


Successful completion of a challenging project holds the prospect of a major public relations triumph. But the vision of a big public splash causes people to lose sight of the fact that failure attracts as much publicity as success—if not more.


Frankly, the idea of developing it yourself is alluring: it’s the “fun” part of what we do, the creative part, and the reason many of us got into this business. The problem is that this desire clouds our more dispassionate and rational decision-making faculties.


In sum, building it yourself doesn’t always make sense. So when does it make sense?Here’s a quick decision-making guide: a buy-vs.-build flowchart (Figure 1).