Build vs. buy: how to make the right technology decisions

Why the question keeps coming up

Every business that relies on technology – which is most of them – faces this question repeatedly. It isn't a one-time decision made when the company first buys software. It comes up every time a new requirement emerges, every time an existing tool stops fitting, and every time someone asks whether they'd be better served by something custom.

The reason it's hard is that both options carry real costs that aren't always visible at the time of the decision. Buy looks cheaper upfront. Build looks like it gives you more control. Neither is straightforwardly true, and neither is straightforwardly false. The answer depends on the specific situation, and getting there requires honest analysis rather than instinct.

The case for buying

Commercial software exists because many businesses share the same problems. A well-established CRM, for instance, reflects years of product development funded by thousands of customers, each contributing feedback that has shaped its features. When you buy it, you're getting the benefit of that accumulated investment immediately.

The practical advantages of buying are significant:

• Faster time to value – you can be operational in weeks rather than months
• Continuous development by a vendor whose entire business depends on the product improving
• Security patching, compliance updates and infrastructure are the vendor's responsibility
• Embedded best practices from the experience of many customers in similar situations
• Predictable costs, at least in the near term

For anything that isn't a genuine differentiator – finance, HR, general project management, most CRMs – the case for buying is strong. These are solved problems. Building your own version rarely produces something better, and always costs more than you think.

The case for building

There are real situations where buying isn't the right answer, and they're worth being precise about.

Build makes sense when the capability you're creating is genuinely a competitive advantage – something that differentiates your product or service in a way that matters to customers. If your process or data model is unusual enough that no off-the-shelf product fits it without significant compromise, that's a legitimate case for building. If you need complete ownership and portability of your data, or if the function is so central to your business that being locked into a vendor's product roadmap is an unacceptable risk, then building gives you the control that buying cannot.

The honest version of the build case is narrow. It's not "we could probably do this better ourselves." It's "no available product handles our specific requirement, and this is core enough to the business that the ongoing cost of maintaining custom software is justified."

What the decision actually depends on

Four questions do most of the work here.

Is this core or non-core? Build where the capability is a genuine competitive differentiator – where it directly affects why customers choose you over a competitor. Buy everything else. The discipline is being honest about what actually sits in that first category. Most things don't.

What's the maintenance overhead of building? Software needs to be maintained indefinitely. It needs to be updated when dependencies change, patched when vulnerabilities are discovered, adapted when your requirements evolve. That's not a one-time cost – it's a permanent one. Build decisions that look affordable at year one often look very different at year three.

What's the total cost of ownership comparison over five years? Buy often looks cheaper in year one and more expensive by year five, particularly once vendor price escalation at renewal compounds. Build often looks expensive in year one and cheaper later – but only if the maintenance burden is honestly accounted for. Running that comparison is the only way to make a clear-eyed decision.

What's your internal capability? You can't build what you can't maintain. If your business doesn't have the technical capability to support a custom build over time – or isn't prepared to hire and retain that capability – then building creates a dependency you may not be able to sustain.

Total cost of ownership: the full picture

Total cost of ownership (TCO) is the full cost of a technology decision over its lifetime, not just the initial price. It's the number that should drive the comparison, and it's almost always larger than the headline figure on either side.

For buying, TCO includes: licensing fees, implementation and configuration, integration with your existing systems, training, support and the annual price increases that vendors typically apply at renewal. Data migration costs when you eventually switch are also part of the picture – and they're often significant.

For building, TCO includes: design, development and testing, deployment infrastructure, ongoing maintenance and bug fixes, the cost of adapting the system as your requirements change, and the opportunity cost of developer time spent on internal tooling rather than customer-facing product. Don't forget the cost of the original developers eventually leaving and someone else having to pick up code they didn't write.

A five-year TCO model for both paths, built honestly, often produces a different answer than the instinctive one. It's worth doing before committing.

The hybrid approach

The binary framing of build vs. buy misses a third option that's often the right answer: buy a commercial platform and extend it via its API or plugin architecture.

This approach lets you capture the core benefits of a mature commercial product – vendor-funded development, security, compliance, ongoing support – while retaining the ability to build differentiated capability on top of it. Your customer portal runs on a platform maintained by a vendor; the specific logic that makes it unique to your business sits in a layer you control.

It's not a perfect option. You're still subject to the vendor's platform decisions, and deep customisation can create its own maintenance burden. But for many businesses it represents a better trade-off than either pure path.

Common mistakes in both directions

Buy decisions go wrong in predictable ways:

• Underestimating implementation cost – the licence is rarely the majority of the bill
• Not accounting for price escalation at renewal – vendors know you're invested and act accordingly
• Failing to negotiate data portability and exit rights upfront – by the time you want to leave, your leverage is gone
• Choosing a platform that can't integrate with your existing systems, creating silos rather than solving them

Build decisions go wrong differently:

• Scope creep – the initial brief expands, the timeline stretches and the budget follows
• Underestimating the maintenance burden once the initial build is done
• Key-person dependency – the developer who built the system leaves, and nobody else understands it
• Building prematurely, before the requirement is stable – buying a commercial solution for 12 to 18 months while the requirement is still being understood would often have been cheaper and faster

How to run the decision properly

A structured process produces better decisions than gut feel. It doesn't have to be complicated.

Start by documenting what you actually need – not in terms of features, but in terms of outcomes. What does the system need to enable the business to do? Where does the current situation fall short? This gives you something objective to evaluate options against.

Get quotes for both paths. For buy, that means vendor proposals and implementation estimates. For build, that means scoping conversations with development partners and internal assessment of what it would take to support the result.

Model TCO over five years for each option. Include the costs that are easy to forget – migration, training, ongoing maintenance, renewal escalation.

Assess your capability to execute each path honestly. A build that relies on capability you don't currently have – and aren't certain you can hire and retain – carries risk that should be priced into the comparison.

Then decide. The process doesn't eliminate judgement, but it replaces instinct with information – which is a meaningful improvement.