Weighing Build Versus Buy with Supply Chain Apps

Today, IT technology may be one of the biggest enablers of supply chain efficiency. Organizations, then, are aware that finding or creating the right capabilities is central to business success.

When enterprises buy complicated IT infrastructure, whether it is hardware, software, systems or anything else associated with such infrastructure, they are faced with a major decision: whether to buy this thing from a vendor or build it themselves. It is important to make the correct decision, or else you might be setting up yourself for a disaster.  Let’s consider the options by weighing the pros and cons of each approach.

Build it with your own team

This approach involves an IT team with the right skillset and expertise. A project manager, one that has a proven ability to deliver in this domain, would be a critical element well.

Pros

1. This approach, properly managed, could achieve results at a lower cost.
2. The availability of open source allows for further cost reduction.
3. Integrations, if properly managed, could be done easily.

Cons

1. All best practices that the industry segment needs won’t be available in your solution.
2. A key employee leaving can present a major problem.
3. Sustaining continuous improvement can be challenging.
4. Staying on top of industry trends can be difficult.
5. Homegrown apps often lack adherence to solid industry grade security standards.
6. In this era of disruption, organizations will lack the nimbleness and agility to adapt to fast changing technology trends.

Buy it from an external vendor

Finding the right external option starts with clearly setting the mission and the priorities of the project, and developing a clear understanding of the problem that needs to be solved by the project.  A formal project charter, which has been thoroughly reviewed by all stakeholders in business and IT, allows organizations to get beyond saying they need a new warehouse management system (WMS), logistics management system (LMS), or enterprise resource planning (ERP) solution. Further, an internal pilot will also help clearly define the desired end state.  Next, the organization would need to engage a number of vendors solutions against the desired solution, then select and implement that solution.

Pros

1. All the best practices are available in this solution.
2. Organization is less dependant key internal employees.
3. Talent is available in the market to support the system over time.
4. External vendors have the ability to stay on top of industry trends.
5. Even though you might build customizations, the vendor will continue moving the capabilities of the product forward.
6. Solid support options available in case of a crisis.
7. Adoption of new technologies, such as cloud, becomes easier.

Cons

1. External solution may be expensive in the short term.
2. Integration to other systems might turn out to be complex.

The answer seems clear: We’ve hit a stage of technology where, most often, buying a solution is the right answer. Of course, there may be a moment when you need something out of the ordinary, or you need to keep it top secret and proprietary so making it yourself would appeal. Go ahead and name it if that’s the approach that is going to change the game and catapult you to a leadership position.

So what has been your experience? Have you every weighed out the make versus by decision? In the end, did you find you made the right decision? We’d love to hear your thoughts.