Build vs buy

Why it matters

"Should we build it ourselves or buy a product?" is one of the most expensive decisions a project makes, and it is often made on gut feeling or on the best sales demo. Analysts bring structure: clear requirements, a fair comparison and a recorded rationale that someone can revisit in two years when the decision is questioned.

The options are wider than two

• Buy (SaaS or packaged software): use the product largely as it comes. Fast to start, the vendor handles upgrades, but you adapt your process to the product.
• ConfigureBuying a platform and setting it up with settings, workflows and fields rather than writing code.: buy a platform and set it up with settings, workflows and fields (most CRM and ERP projects).
• Customise / extend: add code on top of a product. Powerful, but every customisation can break at upgrade time.
• Build: write your own. Full control and fit, but you own every bug, upgrade and security patch forever.
• Hybrid: buy the commodity parts and build the parts that differentiate you.

A useful rule of thumb: buy what is commodity, build what is differentiating. Payroll, email and accounting work the same way for nearly everyone; buy them. A unique pricing engine that wins you customers may be worth building.

Total cost of ownership

Compare costs over several years, not just the first invoice:

Buy:    licences/subscriptions x users x years
        + implementation partner + data migration + integrations
        + training + internal admin time
Build:  development team x duration
        + hosting + security and compliance work
        + ongoing maintenance (often 15-25% of build cost per year)
        + the opportunity cost of what that team is not building

The weighted scoring matrix

1. Agree the criteria before you see demos, from the requirements: functional fit, integration (APIs available), security and compliance, total cost, vendor viability, usability, time to deliver.
2. Weight them so they sum to 100%. Stakeholders agree the weights; this is where priorities become explicit.
3. Score each option 1 to 5 against each criterion, using evidence: scripted demos (give vendors your scenarios), reference calls, a trial or proof of concept.
4. Multiply and sum. The highest total is the recommendation, unless an option fails a must-haveA gate requirement that disqualifies an option if it is not met, whatever its weighted score. gate, which disqualifies it whatever its score.

Worked example: Harbor Outfitters CRM

Must-have gates: stores customer consent; has a documented REST API; can import 180,000 legacy customers.

Weighted totals (score x weight, summed):

Vendor A: 4(.30)+5(.20)+4(.20)+4(.15)+4(.15) = 1.2+1.0+0.8+0.6+0.6 = 4.20
Vendor B: 5(.30)+3(.20)+2(.20)+3(.15)+3(.15) = 1.5+0.6+0.4+0.45+0.45 = 3.40
Build:    5(.30)+3(.20)+2(.20)+1(.15)+4(.15) = 1.5+0.6+0.4+0.15+0.6 = 3.25

Vendor A wins clearly, even though Vendor B has the best features. The recommendation document records the scores, the evidence behind each, the risks (Vendor A's loyalty module is newer) and the mitigations (a 30-day proof of concept on loyalty before signing).

Beyond the score

Also check: data ownership and export (can you leave with your data?), where data is hosted, the vendor's security certifications (such as SOC 2 or ISO 27001), contract length and exit terms, and the product roadmap. Sensitivity testChanging a weight slightly to see whether the winner flips; if it does, the decision is close and needs more evidence. the result: if changing one weight by 5 points flips the winner, the decision is close and needs more evidence.

Common mistakes

• Choosing criteria after the demos, which bends them toward the favourite.
• Letting vendors run their own demo script instead of your scenarios.
• Comparing year-one licence price against a build estimate without maintenance.
• Heavy customisation of a bought product, which gives you the costs of both options.
• No recorded rationale.

Quick recap

• Options range from buy to configure, customise, build and hybrid; buy commodity, build differentiators.
• Compare total cost of ownershipThe full cost of an option over several years, including implementation, integration, training, maintenance and admin time. over several years.
• Use must-have gates plus a weighted matrix agreed before demos, scored with evidence.

Try it

The Do tab asks you to build a weighted matrix for a real decision.