How to decide when to buy software and when to build it

Every company may be a software company now, but that doesn’t mean you have to build it all yourself. When can you buy the same standard apps your competitors use? Why should you invest in building your own? And when you do build, how little code can you get away with? We explain.

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The appeal of the cloud has long been that you don’t need to do everything yourself, leaving you more time and resources to concentrate on what makes your company stand out. A classic example is that you buy electricity from the grid rather than running your own fleet of generators because having electricity doesn’t make you unique. The same is true of internal software, which you need to be efficient and reliable, but in most cases you don’t need it to set you apart from your competitors.

“It used to be that your customer didn’t know or care if you and everybody else bought Oracle Financials, or the same ERP package, unless you messed it up. Now they care,” says Jeff Lawson, CEO of cloud communications platform provider Twilio. “The things you know you need to buy are things where all you can do is mess them up. The best thing you can do by building out your own data centers over using AWS is have down time. The best case scenario for running your own email server is that the mail gets there; the worst case is that email doesn’t arrive.”

One thing to watch in the build vs. buy decision is employee satisfaction, especially when it comes to the tools they’re using to interface with your customers, says Lawson. “That’s what smart organizations are focusing on,” he says. “One of the line of business shifts we’re seeing is putting people in power who want to build great customer experience and use software to do it. Company after company and industry after industry is realizing that this is how you have to do business.”

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