Build vs. Buy

New Needs

The limitations of packaged software make pricey custom solutions sound more appealing. Indeed, Sawotin says the need for custom software may indicate a distinct competitive advantage or a very new product line or business model.

“Companies either build applications because they believe that they need something that is not available in the market, or because their product offering or business is so unique that no one would ever build an application to support them,” he says.

Pearson agrees: “If you go into research, typically you are going to need custom software for things that are at the bleeding edge. Back when the PC first came out, we wrote software for being able to analyze what’s happening inside the brain, where you put electrodes on a person’s head, and read the brain waves. Nothing existed off the shelf for that. Nowadays, newer areas of research in something like nanotechnology would likely need software that doesn’t exist yet.”

So if you think you have unique needs, should you hire a development firm to create exactly what you want? Or, even better, can your own IT department whip something up?

Eian offers a reality check. “There are very few companies that can build software,” he says. “There are many people who think they can, but even large companies who have well-developed IT staffs are not good at developing software. It’s got to be built to what you might think of as industrial-strength standards , and that is really tough for many application development departments to do. They just don’t have the experience.”

Internally made custom software, then, should usually be limited to very small, simple projects. Pearson points out that if you can build software in house, it will certainly be less expensive than hiring a contractor. The downside, however, is that IT departments usually don’t have time for another project and may require extra staff. Indeed, even if you hire the project out, IT will have to be trained in the way the new system works. They’ll spend a lot of time supporting it.

“I’ve seen the math work in both ways, where it is actually cheaper to build it yourself and where it’s been cheaper to go outside,” Sawotin says. “The difference is, who’s going to end up actually supporting the application?”