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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 resourdce 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 soluitons 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 dependanton 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 nmait 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.

3 comments on “Weighing Build Versus Buy with Supply Chain Apps

  1. terryasmith
    February 6, 2018

    wow, so what this is for) 

  2. michaelmaloney
    October 13, 2018

    It all depends on how much the company is willing to fork out as an investment sum to first start up an IT infrastructure. If they have quite a hefty amount to spend, then why not save all the trouble and simply buy a ready-made one from a vendor. They would have to also bear in mind that they will have to pay for vendor maintenance fees as well in the long run. If this does not seem to be worth the expenses, then building one from scratch is advisable provided that they have the necessary skills to do so. Without a professional IT team who is proficient for such a project, the IT infrastructure could fail even before work processes can commence from it. However, the company wouldn't need to pay additional fees to an external vendor as the IT team's payroll is already included.

  3. markgrogan
    February 22, 2019

    As a business owner myself, I have always thought that doing things myself would save money. But when you don't have the time and perhaps you may have the money to bring other people in to build things up for you and take over some responsibilities, you need to weigh if the cost has started to become more worth it…

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