To Build or Buy? That is No Longer The Question - Part I - Page 1

Dec 15, 2006

Daniel Gingras

The past 15 years have seen revolutionary changes in the software market, driven by significant increases in both hardware processing power, and an improvement in the way software is designed and developed.

In addition, a move to blend development in lower-cost development centers across the world, coupled with standardized design methodologies, we are now seeing a world where there is an almost limitless supply of unique and specialized software available at “relatively” reasonable prices.

It may be that your particular industry now has a plethora of choices available for even the most specialized applications which previously required custom software development.

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Having taught system analysis and design, and technology strategy at Boston University’s graduate school for almost 15 years, I’ve seen the slow but exorable move from a world where CIO’s made complex and difficult “build or buy” decisions for specific systems, to a world where almost all software is now “commercial off the shelf” (COTS). This means there is almost no “build or buy” decision left to make.

Most informed management would look pretty closely at an IT organization which proposes writing an accounting or manufacturing system, and rightfully so, because there are a multitude of choices available to any size company from pure startup to Fortune 500. The questions we now focus on instead of “build or buy” is how to efficiently select COTS packages in the “post-build” era, and when should you think of retiring formerly home grown software in favor of something more mainstream.

The shift from development to acquisition of software in the commercial environment also has profound implications for IT as we focus less on software design skills to business skills, project management skills and communications skills. Increasingly, we see organizations that have difficulty understanding that both the skill level and mix must change as corporations move from writing their own software to acquiring and integrating standardized packages.


There’s a natural tendency on the part of many organizations to think their businesses are absolutely unique, and “no one else does what we do.” Anyone who’s implemented enterprise resource planning (ERP) systems, has heard that canard at almost every turn, but in truth, unless you have a proprietary, patented business, and you are the sole global supplier of your goods or services, you are like many other businesses.

You may manufacture a very unique product, but the essence of manufacturing is common across almost every manufacturer. If you’re hearing the “we’re really unique” mantra, you need to step back and re-evaluate whether you really are.

In truth, there are major commonalities in most businesses, particularly manufacturing businesses. They generally fall into a small number of common types, and there is COTS for all of them. In general, once you find the type of package—accounting, ERP, business intelligence,—you will find there are dozens of companies furnishing the types of systems you need.

These packages are generally used by hundreds or even thousands of companies very similar to yours, and the key thing to remember here is the “institutional knowledge of all of these companies is embodied in the processes defined by the software itself.”

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