In Part 1 of this series, I wrote on the first three of five things to look for in a build versus buy scenario. Now, without further interruption, is Part 2 - Implementation and ROI:
4. Consider the Project Scope – Proven Implementation versus New Application Development
According to a report by the Standish Group over thousands of software projects, 40% failed completely, ad additional 33% were “challenged”, meaning that they completed late, went over budget, or were completed with fewer features and functions than originally specified. Even more staggering, a recent study by Gartner Research revealed that nearly four in ten major software purchases ended up as "shelfware" - software that was purchased, but never implemented.
The root of all these challenges lies in the ability of the project to be defined properly. With custom developed solutions, the project scope encounters obstacles not foreseen at the outset of the project, and it is extremely difficult to estimate the time and expense associated with a major development project. This is primarily due to development of new features not inherit within an existing application or customer developed application creates a tendency to change and modify the scope “on the fly”. The result, according to the Standish Group, estimates that 52.7% of all custom application projects cost 189% of the original estimate provided.
Software vendors with best practices built-in draw on a history of implementation of similar processes, and have implemented hundreds of projects of similar focus and scope. These implementations follow a proven process, and follow a pattern of project management that delivers the product on-time and within scope.
5. Return on Investment: Look for the Hidden Cost of Development
While many custom-built applications outline a broad scope for a project, without having a best practice approach it is impossible to determine how long the project will actually take. Vendors that offer a best practice solution are able to leverage years of implementation and product development to accurate scope out a project and will not incur the same project overruns custom developed solutions encounter. Consider the following breakdown on build versus buy conducted in a Standish Group Report:
When comparing these two scenarios, we can assign a risk ranking to build versus buy, as illustrated in the risk matrix below:
Because a best-practice configured solution requires little to no development costs, and uses a proven method of implementation to ensure projects are kept on scope, the actual risk associated with implementing is considered lower than that of a custom-built application. This is primarily due to the unknown factors that can occur in custom development, as well as long-term costs to update and maintain the custom-built system.
Avoid the Dangers of Buy…then Build:
When making the decision of build versus buy, it is important to determine the level of development required, in either case. While many off the shelf software systems will claim to have the best practices built out of the box, what is often not determined is any level of custom development that may be needed after the software is purchased. Often times, purchased solutions will incorporate a framework of best practices within their solution, but in order to tailor the system to meet your needs, the system must be custom developed. As a result, the customer is left with a purchased solution that will need a custom development project added into the purchase, creating the same challenges with a purely built solution. Look for systems that have the flexibility to adapt to specific processes without any need for custom development. These solutions often enable the administrator (or “Power User”) to configure all aspect of the system to meet unique business needs. Configurable systems such as these completely eliminate any custom development needs, and provide a truly flexible and adaptable system that embodies the purpose of a purchased, best practice solution.
The decision to implement Enterprise Software is not a simple task. Software solutions typically represent an investment of 5-7 years, often up to a decade for many organizations. When weighing the options of determining software selection, the “Build versus Buy” decision is one that will always come up, and requires careful consideration on the path to take for your investment.
While both options have merit, many organizations opt to leverage the existing best practices implemented within the industry, the proven track record of success and innovation, and the most flexible technology that will help them seek returns on their technology solution. For many, the growing trend lies in purchasing a solution that provides the most functionality and features, and presents the lowest total risk to the organization.
 Standish Group CHAOS Report