•Updated: Jun 29, 2021
•Published: Dec 4, 2020
Delivering continual value to customers is the key to a winning product experience. But when there's so much that goes into building these experiences, how do you make it easier for your team to create that value at scale? This question is a crucial part of what makes the build vs. buy decision so difficult.
Choosing whether to build a product in-house or purchase an out-of-the-box solution has a direct impact on how you deliver value to customers as well as the product development experience for your team. There's a lot to consider before you choose --- which is why it's so important to look at the underlying drivers that make this decision so hard.
Knowing how to make the build vs. buy decision helps you streamline the product development process and deliver continual value to customers without causing additional stress on your team. When so much of the customer experience is built around your product, this first step can make or break your next release.
5 Factors That Impact the Build vs. Buy Decision
Five core factors impact the build vs. buy decision: cost, time, control, resources, and security. Understanding how these factors contribute to your final decision is the first step towards making the right choice for your team.
Consider how each of these five things impacts your project and goals:
- Cost: Whether it's monetary or opportunity cost, make sure you understand the trade-offs of the build vs. buy equation. Start by cross-referencing the price of a third-party solution with the overall cost of allocating your team's time and resources to a project. Just make sure to calculate how these costs impact your team throughout the project, as well as in the future. Ongoing maintenance and support costs can quickly pile up over the course of your project.
- Control: Building a new product or feature in-house gives you absolute control over every aspect of its design. When you purchase a third-party platform or tool, you cede some of that control to another party. Understanding the implications of this loss of control makes choosing between build vs. buy much easier.
- Time: Scope out how long it will take to complete each project before you begin planning. While it will objectively take longer to build something from scratch, there can also be a considerable amount of work required to integrate third-party tools with your system. Understanding how these two timelines differ helps you decide which option is best for your project as well as your team.
- Resources: Look at how best to use resources to create a seamless experience, then forecast the time it will take your team to move through the product development process. Make sure you know which members of your team are available for any given project as well as the tools they need to use. You don't want to run into bottlenecks or delays because the path you chose doesn't maximize the value of every resource you put toward the project.
- Security: Building a product from the ground up helps you proactively address any potential security flaws but also leaves your team open to mistakes. When you buy a third-party tool, it's important to vet it against your company's security requirements. In today's modern technology market, you need to keep customers safe to build trust in your brand.
The Pros and Cons of Building Your Product In-house
- Provides more control over all aspects of your project
- Helps you maximize team resources
- Can increase buy-in into individual projects by increasing engagement through the team
- Extends release timelines across your organization
- Consumes additional resources from stakeholders throughout your team
- Requires a concrete product development process
Now that we understand the various factors that impact your build vs. buy decision, let's look at the potential risk vs. reward of building a new product or feature from the ground up. Creating an in-house solution provides more control of the development process, but that control comes with additional trade-offs that won't necessarily translate to a better end result.
It can be helpful to look at this decision through a lean product development lens. To get the most out of building a new product or feature from scratch, you need to maximize the resources available to your team.
Let's say you run a payroll management platform, and you want to incorporate live chat into your support infrastructure. To build that product from the ground up would take months of work across every part of your technology stack. Integrating a third-party solution, however, may only take a few sprints to get up and running.
When you're building something from scratch, it's important to consider how the increased development times impact your customer experience. Being able to deliver value to customers quickly is a great way to increase engagement with your product and gain critical feedback.
Choosing to build a new product or feature in-house also requires a considerable amount more work from your team. And this increased workload can potentially:
- push out release timelines across your organization,
- consume resources from stakeholders throughout your team, and
- lead to burnout over time.
You need to remain diligent at every step of the product development process to bypass these potential issues.
If your team is resource- or bandwidth-constrained, building products in-house also leads to the potential for more technical debt. That's why creating a solution from the ground up requires more planning and preparation, as well as a clear sense of how long it takes your team to flow through the product development life cycle.
But taking longer to build something doesn't necessarily cause issues across the board. Being able to take your time to spec out features and refine your product will result in a better offering upon release. You'll be able to identify potential security flaws throughout the process and address them before negatively impacting the customer.
When you're thinking about building something in-house, it's important to understand these factors and tailor the process to your overall project and business goals.
The Pros and Cons of Buying a Turn-Key Solution
- Shortens development timelines, making it easier to bring a new product or feature to market quickly
- Frees up team resources for additional projects
- Helps you release more products with a lean team
- Requires vetting from multiple stakeholders across your team
- Cedes control of support and maintenance to vendors
- Increases up-front operational costs for your team
When you choose to purchase an out-of-the-box solution, it cuts down on the time it takes to bring your new product or feature to market. Doing so will likely increase operating costs but can open up the potential for a more seamless development experience for your team. Just keep in mind that the tools you use need to be tailor-made to integrate with your current infrastructure.
That's why it can be difficult to find a solution that fits your needs. Choosing to buy instead of build forces you to understand your technological constraints on a deeper level --- the integration you choose has to fit with all relevant technology in your stack. And while many of these turn-key solutions offer feature customization to meet your needs, that customization can lead to higher costs or more up-front investment from your team.
One way to look at this is through the lens of needs, wants, and nice-to-haves:
- Needs are the features and technical specifications you absolutely cannot live without.
- Wants are features that would make the process of integrating and supporting a third-party tool easier for your team.
- Nice-to-haves are features that would be helpful but aren't actual requirements to complete your project.
Let's say you're investing in a live-chat and messaging API. Your needs, wants, and nice-to-haves breakdown might look something like this:
This matrix gives you a clear sense of how to prioritize your analysis of any third-party tool. From here, you can evaluate what features are available, their cost to your business, and how difficult it will be to integrate them into your current infrastructure.
Integrating a third-party tool into your technology stack also requires input from stakeholders throughout your organization, which can push out timelines at the beginning of a project. So, make sure you get feedback from all relevant parties. This additional context makes it easier to understand the impact of a new tool on current processes like technical support and maintenance.
Choosing to buy a third-party tool will make your team dependent on that company for support, so you'll need to factor in the time it takes to get responses and resolve issues as well.
You'll also need to look at the impact of any purchased tool on your product security. Most service providers will give a clear breakdown of their security protocols and protections, but it's important to understand how those features impact your team and your customer. Any potential for breach can damage your relationships with customers as well as the perception of your brand in the market.
When you choose to buy instead of build, make sure you spend the time weighing these pros and cons to ensure you're spending money in the right place.
The Build vs. Buy Decision Is Different for Every Project
Before you make the build vs. buy decision, it's important to understand the impact on both your team and the customer. As you go through the process of making this choice, make sure to complete a comprehensive audit of your resources and objectives. Each decision you make sets your team on a path with both challenges and rewards, so it's important to determine what makes the most sense for your current situation before making that choice.