How This CPO Approaches the Buy vs. Build Decision for Software Components

3 min read

Product managers are often tasked with either buying technology from a third-party vendor or building it in house. Here’s how Dafna David, CPO at the rapidly growing travel app Bridgify, makes this crucial decision.

Jenna B.
Jenna B.
Published June 21, 2021 Updated November 24, 2021

Adding new functionality to a product can be a time-consuming process that requires a knowledgeable engineering team and significant resources to solidify long-term stability. And certain features — especially those requiring real-time infrastructure — can be costly and difficult to build from scratch.

Third-party tech providers afford product managers more choices when it comes to improving their product. Rather than building functionality from the ground up, integrating pre-built components can be faster, and in many cases, more affordable and high-performing. The buy vs. build decision is an important one, as it impacts your product’s time to market, development resources, and competitive advantage.

Dafna David, chief product officer at Bridgify, a B2B2C white-label solution for the travel industry, knows a thing or two about making the buy vs. build decision. As CPO for a fast-growing tech company, here are the top questions she asks herself when making this choice.

Question 1: Am I Adding a Core Functionality to my Product?

When making the decision to either buy or build new functionality, David first scrutinizes whether the project is core to her product’s main mission. “Consider if the feature you want to build is the spine of the product,” recommends David. “If the functionality is not at all crucial to your product or to the mission of your product team, it might not require the dedicated attention of your development team. It may be better to outsource it.”

Buying ancillary components from a third-party tech provider allows your company’s engineers to spend the majority of their time building and improving your product’s main service. For example, Bridgify’s core functionality is technology that cleans, manages, and aggregates data to match user interests for personalized, AI-powered itineraries. Having this technology built in-house enables David to have complete control over this capability. When adding a tool to find and compare the best prices for tours, activities, and attractions, however, David made the decision to buy and integrate third-party components because, while important, the product’s main focus and value proposition is highly customized trips with off-the-beaten-path experiences.

Question 2: How Will My Product Scale?

Preparing your product for future growth is vital. While some internally developed solutions may work optimally for your product’s MVP, components can slow down or even cease functioning when your product (hopefully) starts to gain thousands, hundreds of thousands, or millions of new users. It is paramount to balance your requirements of today with your needs of tomorrow. “Scalability is the name of the game,” says David. But understanding scalable components can be tricky.

At first glance, building functionality in-house may seem like an easier solution, especially if your company has a capable development team. But more complicated product features can take months or even years to build and may not represent the most efficient use of engineering time. Most features require consistent maintenance, too.

On the other hand, while third-party components are typically faster to integrate thanks to developer-friendly SDKs and UI Kits, vendors with underdeveloped or buggy infrastructure may have issues supporting your massive user increases.

From your MVP to your established product, focus on building a scalable product roadmap to prevent performance interruptions or significant maintenance costs down the line.

Question 3: Is My Tech Provider a Partner?

If you do choose to use a third-party vendor to add functionality to your app, find a provider that can be your tech partner — not just your supplier. “The chemistry with the team you’re working with is very important,” says David. “Is the vendor answering your questions? Do they seem authentically interested in solving your problems or understanding your core business?” These questions indicate how your working relationship will manifest.

Do your due diligence before signing a contract. Participate in product trials or demos, read through case studies, and explore a tech vendor’s documentation to understand how third-party components can support your product vision. “Some service providers don’t value long-term relationships with their clients,” explains David. “I always want to be sure that our partners can scale with our business.”

Thorough Tech Component Evaluation

The buy vs. build decision can have high consequences for your company, and the onus is on product managers to strategically lay the foundation for a product’s future success. It behooves PMs to weigh the cost, scalability, time-to-market, and performance of software components, and to be realistic about your engineering team’s capabilities and the potentially long-term investment required to build functionality in-house.

A thorough evaluation of your unique needs, company mission, and end-user experience will help set your product up for success.

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