30 lines
3 KiB
Markdown
30 lines
3 KiB
Markdown
# Buy vs Build
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Modularization of enterprise software components. This makes running businesses more sustainable.
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## Bulid vs buy an off-the-shelf solution.
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Bulding enterprise data systems is hard and expensive. This is why many companies decide to purchase an ERP like SAP, which is able to handle financials, purchasing, stock, customer relationships, reporting... This seems to be the safest choice by far
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* Popular applications tend to be less buggy, more secure and feature-rich.
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* Third party appliations by popular vendors tend to add synergies, like easier integrations and a wider range of vendor choices for support and maintenance.
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* The total cost of ownership tends to be lower by the buyer, even considering that companies like Oracle and Salesforce are immensely profitable.
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!!! info
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Some software vendors are so profitable that many wonder if they're charging excessive margins for their products. Larry Ellison, CEO and founder of Oracle, owns [the sixth largest island in Hawaii](https://en.wikipedia.org/wiki/Lanai), and the 2022 Formula One Championship season winning team was "Oracle Red Bull Racing". The parnership between Oracle and Red Bull is somewhat funny since most are positive that companies selling soda make huge margins selling a bad product mostly thanks to marketing.
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But appearances can be deceiving.
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* If the problem is complex, the solution will be complex as well. It may take multiple years of effort and tens of consultants to fully deploy one of these products.
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* Proprietary software is always bundled with some additional vendor lock, like supporting a small subset of proprietary storage systems.
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* Buying software implies vendoring knowledge. If there's a critical issue with one of these components and the vendor is not able to provide support, or it bankrupts and disappears, the engineers within the corporation won't be able to fix the issue no matter how smart they are.
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The most common scenario is to run a mix of applications: mission-critical operations are run by custom, in-house-developed applications maintained by the IT department or functional areas, while other less critical operations like Marketing use third party tools. I've encountered many corporations that run most of their operations on custom-built software, but they decided to buy a proprietary CRM like Salesforce to support their Marketing and Sales departents. Most projects executed by IT deparments are related to data integrations between two existing tools, or between existing and some new tool the leadership decided to purchase.
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## Bespoke software and the false buy vs build dichotomy.
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There's a third option, which is somewhat in betwen buy and build: hiring a third party with a solid track record to develop a custom application with the goal of getting the best from both worlds. Bespoke software by a solid vendor may provide:
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1. Lower risk, since the vendor has built similar applications for previous clients.
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2. The application is fully customized, and knowledge stays in-house, since the development can be closely followed by the staff engineers. |