Build, Buy, Partner…Focusing on the Buy Option
March 21, 2023 • Daren McCormick (PointClear Solutions)
5 Min Read
In previous posts, I’ve written about the pros and cons of building your new or next-generation product internally, leveraging your own resources, or partnering with an outside organization that specializes in developing software solutions. With today’s post, I’ll focus on the “buy” option and the reasons you may or may not want to consider buying an off-the-shelf product to address your needs.
The decision to buy a product versus build or partner depends on several factors including, among other things, your overarching goals, resources, and capabilities.
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Why Consider Buying an Off-the-Shelf Product?
- Time to market: Buying a product can significantly reduce the time it takes to bring a new product to market.
- Cost effectiveness: In many cases, buying a product can be more cost-effective in comparison. This may especially be true if the product is highly specialized and complex.
- Access to expertise: Buying a product can give you access to a team that has expertise in that given product.
- Reduced risk: Buying a product can often reduce the risk of failure, as the product has already been developed and proven in the market.
Objective Consideration of the Options:
Determining whether the “Buy” option is best for your business requires an unbiased approach and careful consideration of a number of important factors. The following steps will be essential in support of your ultimate decision:
- Define your business needs: This is the first step in the decision-making process. Understanding the specific problems you’re trying to solve (pains) or opportunities you’re trying to capture (gains) is central to making the decision.
- Conduct a cost-benefit analysis: Consider the upfront and ongoing costs of buying, building, or partnering, including factors such as time-to-market, cost-effectiveness, and access to expertise.
- Evaluate your resources and capabilities: Do you have the necessary expertise, resources, and infrastructure to build a product in-house? Can you afford to buy an existing product or partner with an established vendor?
- Assess the market: Is there an existing product that meets your needs?
- Consider the long-term implications: Will buying, building, or partnering best align with your company’s strategy? Which approach will provide you with a competitive advantage or limit your flexibility in the future?
Why Not Consider the Buy Option?
There are scenarios where building or partnering may be more advantageous. For example, if your company has unique requirements that cannot be met by an existing product, building a custom solution may be the better option. Additionally, if your company is trying to enter a new market with a new product or service, partnering with an established vendor in that market may be the most efficient way to gain a foothold. Ultimately, the decision to buy versus build or partner should be based on a careful analysis of your company’s goals, resources, and market conditions.
The Product Selection Process:
If you’ve determined that buying an existing product is best for your organization, you will need to determine criteria for selecting the right vendor and product.
By following the following steps, you can make sure you ultimately select the right product for your business and that the implementation process goes smoothly:
- Research available products: Research products online, speak with colleagues or industry experts, and attend trade shows for a better understanding of the players in the market.
- Evaluate vendors: Evaluate vendors based on factors such as reputation, track record, customer service, and pricing. Look for vendors who have experience working with companies like yours and who can provide references.
- Conduct a product demo: Schedule a product demo with the vendor to give you an opportunity to see the product in action.
- Request proposals: Request proposals from vendors that best meet your requirements. The proposal should include product features, pricing, implementation timelines, and support services.
- Evaluate proposals: Carefully evaluate the proposals, paying attention to details, including hidden costs and potential roadblocks for implementation.
- Negotiate terms: This may include pricing, implementation timelines, support services, and any other terms that are important to your business.
- Finalize and execute the contract: Once you’ve agreed to terms, execute the contract and transition into the implementation.
There are three options for businesses to obtain a product: building, buying, or partnering. Building a product in-house can provide a customized solution, but requires specialized expertise, time, and cost. Buying a product from a vendor can be more cost-effective and efficient but may lack customization. Partnering with another company can provide access to expertise and technology but may require careful management of the partnership. Ultimately, you should carefully evaluate each option and select the one that best meets your needs and aligns with your strategic goals.
Want to learn more about the options for your next solution? From idea to implementation, our in-house experts can help guide your company’s next successful tech offering. Contact us to learn more.
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