Web has come a long way from its humble beginnings in the early nineties. Simple static web pages have given way to sophisticated online applications with a full-range of social media capabilities. Somewhere along the way, many Application Service Providers (ASP) and Independent Software Vendors (ISV) have sprung up and flourished into thriving industries. What’s truly amazing is that ASP’s and ISV’s are spread all over the world-wide-web truly democratizing the internet and providing customers a wide range of choices and extremely attractive price points. Think of just about any application functionality – blog, forum, photo gallery, classifieds, dating site, social networking etc. – and you will find more than a handful of options ranging from free scripts, freeware, shareware to high priced SaaS (software-as-a-service) based full-fledged solutions. All of them just a proper search term and a few Google pages away…

Given this vast choice, whenever we build applications for our clients, we often face this age-old question: Build or Buy? Sometimes, we ask this of ourselves, and other times, our clients ask us. The answer to this question can have profound cost and strategic implications as we move down the product life cycle.

The answer is not always simple or at least not one that can always be arrived at with just a casual consideration. As any good project manager will tell you, the devil is in the details!

So what are some key factors that are important to consider in answering this question that usually has critical economic and strategic implications?

• Total Cost of Ownership for each option (on surface this often supports buy option, but dig deeper)
• Extent of visual branding required vs. permissible by purchased software
• Extent of functional customization required (customization is expensive!)
• Integration with legacy systems or databases (often a big factor when considering for an established business model)
• Availability of Source Code
• Technology platform compatibility – hosting, competency of internal support resources
• Application usage volume/traffic/licensing costs (per server/site etc)
• Intellectual Property issues

As you can see, when you consider all of these factors, the decision requires a thorough analysis from multiple angles – technology, legal, business, marketing and finance. A good decision avoids expensive reworks later. Sometimes, when the window of opportunity is lost or under exploited because of incorrect buy or build decision, rework may not even be an option. That can be very costly!

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