Building vs. Buying: A Framework for Technology Decisions

One of the most consequential decisions in any technology project is whether to build a custom solution or buy an existing product. As a project manager at Zero8.Dev, I've guided numerous clients through this decision process. Here's the framework we use to make these critical choices.

The Cost of the Wrong Decision

Making the wrong build vs. buy decision can be extremely costly:

• Building when you should buy: Wastes development resources, delays time-to-market, and creates ongoing maintenance burden
• Buying when you should build: Limits customization, creates vendor dependencies, and may result in paying for features you don't need

Our Decision Framework

We evaluate build vs. buy decisions across five key dimensions:

1. Strategic Differentiation

Key Question: Does this functionality provide competitive advantage?

Assessment Factors:

• Is this a core business function?
• Will custom functionality create meaningful differentiation?
• Does this represent intellectual property worth owning?

Scoring:

• High differentiation → Build
• Low differentiation → Buy

Example: For an e-commerce client, we chose to buy a standard payment processing solution but build a custom recommendation engine that leveraged their unique data assets.

2. Time Constraints

Key Question: How quickly does this need to be implemented?

Assessment Factors:

• Market window considerations
• Regulatory deadlines
• Competitive pressures
• Resource availability

Scoring:

• Tight timeline → Buy
• Flexible timeline → Build option viable

Example: For a medical insurance app with regulatory deadlines, we purchased an identity verification service rather than building one, saving 6-8 weeks of development time.

3. Total Cost of Ownership

Key Question: What's the 3-year total cost comparison?

Assessment Factors for Build:

• Initial development costs
• Ongoing maintenance (typically 15-20% of development cost annually)
• Infrastructure costs
• Security and compliance management

Assessment Factors for Buy:

• Licensing/subscription costs
• Integration costs
• Customization expenses
• Potential price increases

Scoring:

• Lower 3-year TCO → Preferred option

Example: For a leave management app, we calculated that building a custom notification system would cost $45,000 initially plus $9,000 annually in maintenance, while a third-party service would cost $12,000 annually. The 3-year comparison ($63,000 vs. $36,000) made buying the clear choice.

4. Integration Complexity

Key Question: How deeply must this solution integrate with existing systems?

Assessment Factors:

• Number of integration points
• Data synchronization requirements
• Authentication needs
• Performance considerations

Scoring:

• High integration complexity → Build advantage
• Low integration needs → Buy advantage

Example: For a social media app for the film industry, we chose to build a custom content management system because it needed deep integration with their existing talent database, which had a non-standard API.

5. Flexibility and Future Needs

Key Question: How likely are requirements to change significantly?

Assessment Factors:

• Market volatility
• Regulatory environment
• Business growth projections
• Technology evolution

Scoring:

• High change likelihood → Build advantage
• Stable requirements → Buy advantage

Example: For an e-commerce client in a rapidly evolving market, we built a custom inventory management system because their unique fulfillment model was expected to evolve significantly over the next 18 months.

The Decision Matrix

We plot each of these five dimensions on a radar chart to visualize the build vs. buy tendency:

[Imagine a radar chart with the five dimensions, where points toward the center suggest "buy" and points toward the edge suggest "build"]

This visualization helps stakeholders understand the multidimensional nature of the decision rather than focusing on a single factor like cost.

Hybrid Approaches

Often, the best solution is a hybrid approach:

1. Buy Core, Build Extensions: Purchase a platform but develop custom extensions
2. Build Core, Buy Peripherals: Develop your core functionality but integrate with third-party services for non-core features
3. Buy Now, Build Later: Start with a commercial solution while developing a custom replacement in phases

Case Study: Leave Management Application

For our in-house leave management app at Zero8.Dev:

1. Strategic Differentiation: Medium (important for operations but not a market offering)
2. Time Constraints: Tight (needed within 2 months)
3. TCO: Medium (moderate development cost, low ongoing cost)
4. Integration Complexity: High (needed to integrate with our custom HR system)
5. Flexibility: High (our HR processes evolve frequently)

Decision: Hybrid approach - we purchased a leave calculation engine but built a custom interface and integration layer.

Outcome: Successfully deployed within 7 weeks, with 40% cost savings compared to a fully custom solution.

Conclusion

The build vs. buy decision is rarely black and white. By evaluating these five dimensions and considering hybrid approaches, you can make more nuanced decisions that balance immediate needs with long-term strategic considerations.

What factors do you consider most important in build vs. buy decisions? Have you used a similar framework? I'd love to hear your thoughts in the comments.