Marek Sodolski

Vice President Europe/Global

To buy or to build: is that (the right) question?

When implementing technology, it’s necessary to take many factors into account. From the business point of view, the most important among them include:

  • adaptation to current and future needs of the organisation (e.g. “what will we achieve by implementing this technology?”, “what will we lose if we don’t?”, “are we ready in terms of staff and processes to implement this technology?”);
  • cost (of project, maintenance, and technology development);
  • time to market.

Until now, the companies interested in expanding digital solutions within their organisations had to choose between purchasing technology or developing it in-house. At present, they can also reach for a framework that allows them to combine the advantages of both these solutions.

TO BUILD (Technology developed in-house)

The advantages of having original solutions are obvious – they are built based on own experiences, thus allowing to develop software freely in a way that solves all problems.

However, software development and implementation is a branch of business in itself. It’s difficult to develop own software, especially in large, international companies, as it requires assembling an in-house team of software developers and managing their work. It proves to be a challenge already at the stage of recruitment.

On the surface, assembling a team of competent IT specialists doesn’t differ much from employing specialists in other areas. They need an inspiring environment, leaders, fair wages and challenges that will give them the energy to work. In the case of IT, however, finding people with appropriate skills proves to be much more problematic. Data gathered by the Sedlak & Sedlak law firm indicates that the IT industry is currently understaffed by more than 50 thousand specialists, whereas by the end of 2020 this number may increase to even 800 thousand software developers and IT specialists in the entire Europe.

In consequence, developing a solution in-house significantly delays time to market and, sometimes, leads to falling into the trap of sunk costs.

TO BUY (Purchasing proprietary software)

The purchase of proprietary software significantly shortens time to market. What’s more, leading suppliers quickly sense new market trends and improve their products depending on clients’ needs. An additional advantage is also access to documentation and a database of specialists proficient in specific solutions.

However, the supply of software in the form of a closed set of specific functionalities also has its drawbacks. The fact that the product is finished means that it can no longer be modified. It’s the same with SaaS, where one can only configure available functions. Therefore, such software isn’t cut out for the specific company. It might lack some important features and have ones that this particular organization doesn’t need. Nevertheless, as the company has to pay for them, de facto wastes money.

The purchase of software doesn’t mean that it’s not necessary to have an in-house IT team. Once again the problem becomes finding competent staff. In this case, however, the team must perform different tasks than when developing a solution from scratch.

Staff responsible for software implementation and maintenance performs different tasks and the nature of its relationship to the company is completely different than when developing software from scratch. That’s why more and more companies opt for outsourcing. Since appropriate competencies cannot be bought, they should be rented. For this reason, Deloitte indicates that as much as 31 percent of all work carried out globally in IT departments was performed by outsourced workers.

For all its advantages, proprietary software also a drawback: its maintenance team expands as time passes. An alternative is to reach for frameworks.

Let’s Framework! (“blocks")

Framework, as the name suggests, is a frame within which we develop an in-house solution from out-of-the-box components. In the case of e-commerce, these would be absolutely basic components like the shopping cart or product catalogues, and also solutions tailored for a specific industry or business model. If a specific add-on is not featured, it can be developed in-house without the need to write the entire solution from scratch.

Frameworks available on the market (e.g. SAP Hybris) are surrounded by a network of implementation partners, which means that on the one hand it’s not necessary to ensure a high involvement of the in-house IT department, while on the other the market allows to find a partner with appropriate experience and competencies. Many such organisations develop extensions that are later published on dedicated marketplaces. Therefore, when using frameworks it’s possible to utilise the experience and work of an enterprise from the other end of the world.

A perfect example is Jira, a project management tool developed by Atlassian. In practice, the number of available extensions and its flexibility makes it possible to adapt this solution to suit various specific needs of various organizations that are often far from each other. Jira is used by Apache Software Foundation, Fedora Commons and even NASA as well as the US Department of Defence.

Framework combines the advantages of proprietary software (time to market) with the flexibility of in-house solutions (a solution comprised of ready-made components).

The power of specialists

A separate advantage of using frameworks is the reduction of the in-house IT team in favour of cooperation with an experienced partner, i.e. a software house.

These types of organisations focus their business activity on software development and IT. Software is a product supplied to customers. Through this, similarly as in the case of body leasing, the company gains access to highly qualified workers. A software house has a real interest in employing specialists with narrow qualifications, as due to supplying services to many customers it’s able to provide them an appropriate amount of work and fully utilise their capabilities.