Build vs. Buy

Software lies at the heart of almost every company’s day-to-day operations. Whether it is an application to run manufacturing machinery, a customer relationship management tool for the sales force, or an RFID-based distribution system, software is central to the way organizations do business.

But many companies make software choices based on how they see themselves, not on the specifics of the situation. In the question of whether to buy an off-the-shelf package or have a custom computer program written, few firms are fully aware of the pros and cons.

Some CEOs see themselves and their team members as iconoclasts—the sort of people who think outside the box and cannot “settle” for software that’s already on the market. Others are loath to have software built because they fear the cost of creation and upkeep—and isn’t there already software out there that does almost everything?

“Organizations will have kind of a guiding principle,” says Chris Sawotin, vice president of sales and solutions at SafeNet Consul-ting, Inc., a technology consulting company in Minnetonka that does software modification and development. “Their corporate culture will lead them to say, ‘We are going to buy our applications,’ or ‘We will build them internally.’”

Meanwhile, the choices are be-coming more complex. In the past, you could either buy a client-server product off the shelf or have it written for you, says Carol Ferrari, vice president of marketing at software developer Firepond, Inc., a Massachusetts-based company with an office in Mankato. But now there are hybrid options such as partially customized software and hosted products that offer a choice of configurations. With each, the ROI depends on the level of customization you need, the size and capability of your IT department, and your management style.

A Good Fit?

Off-the-shelf software should be your first try. When you buy an existing package, you share the development cost with every other person who uses it. And it already exists; there’s no need to wait for it to be developed and tested.

“Certainly, you always want to first look at what is available off the shelf,” advises Kim Pearson, CEO of New Boundary Technologies, Inc., a Minneapolis-based IT management consultancy and software developer. “But then you really need to look at what you are trying to accomplish. Is the software flexible enough to do it? Will the software adapt to what you are trying to do, or do you have to adapt what you are trying to do to the limitations of the software?”