Chapter 27
Package and Vendor Selection, Outsourcing and Offshoring
27.1 MAKING THE BUY OR BUILD DECISION
When a new solution is required to resolve a business problem, there is often a decision to be made whether to build it internally or to buy a packaged product. In some conditions it is more cost effective to buy; in others it makes more sense to build the solution in-house.
The overall cost of the solution, whether it is built or bought, should include the cost of delivering the solution to production and the ongoing expenses of the solutions once they become part of business as usual operations. For example, a vendor might build a solution for a very low cost but the ongoing support and maintenance fees may be high. Equally an internal team might be able to deliver a solution relatively cheaply, but the entire team might need to be retained to support the solution in production.
The following are possible reasons to build:
- Costs: The cost of an internal development may or may not be lower than either the purchase of a software package, or the fees paid to external developers.
- Expertise: Depending on the nature of the product or system being introduced, there may be more expertise within the firm than there is outside the firm.
- Competitive advantage and intellectual property rights: If the firm requires an application that will give it some competitive advantage, it might not wish to share the intellectual property with a software vendor that could then sell the application ...
