Web terms SME operators need to understand #2: Build or buy

This series of articles aims to inform smaller business operators about web technology terms they need to know to be able to brief and evaluate responses from web services providers.Of all the terms we will cover this is the one most likely to save you the most money up front and into the future.

The term “build or buy” has been around technology circles for some time but it has only recently been applicable to smaller organisations.

It refers to the choice organisations must make when purchasing new software applications and new website and/or website platforms.

The build option

If you have the budget you can have a developer custom-build an application or platform.

Those professionals will take your brief and develop a solution that does exactly what you want it to do.

If you can afford that option it is a very attractive one – a website solution that does exactly what you want the way you want it to. 

But customisation comes at a price. You have to pay significant hourly rates to develop the solution and you must pay when you need improvements or additions.

The buy option

The alternative is buying a solution, which means examining all available off the shelf solutions to find for a fit with your requirements and selecting the closest to your needs and budget.

The buy option is considerably more affordable initially and in future.

Because the solution has already been built you don’t need to pay the developer to tailor it to your specific application.

Instead the cost of the build is spread over revenue made by duplicating the solution and selling it to many customers.

But there is a secondary benefit that isn’t always evident to the new player and it is something web developers aren’t renowned for warning you about.

Because the software/platform industry is so competitive solution providers need to constantly upgrade and improve offerings on an ongoing basis. 

Those improvements are offered affordably or sometimes at no cost in an attempt to stop you switching to a competitor.

That factor alone will save you a small fortune compared to the build alternative, where you have to spend considerable time and money having improvements purpose-scoped and built into your base platform.

Would you build a book-keeping solution?

A great illustration of the build or buy option is book-keeping software.

Few small organisations would ever contemplate having book-keeping software built for them because it is so expensive compared to off the shelf solutions.

Now website platforms have gone in a similar direction, so why have a website and/or website platform built when an off the shelf alternative is so affordable?

Not long ago it would have cost well into five figures to have a website platform containing a content management system and a shopping cart purpose built but today you will pay less than $50 a month including website hosting and a template design. 

A common complaint about the buy option is that you never own the computer code used to create your website, although you can own the custom design and your website content.

That may well be true but even if you were to switch platforms four or five times you would still be well in front financially compared to the build alternative.

Why build?

So when would you have a web platform built instead of buying one?

There are two reasons to go down that path.

The first is when you have technical requirements so specific that none of the off the shelf platforms caters for your needs.

The second is when there are commercial reasons to own the code – for example an online service where the technology is intrinsic to the delivery of your product or service and where it can be an asset that forms part of the value of your business.
 
Given the significant upfront and ongoing price differential between the two options it’s a great idea to make sure the buy option is fully explored before considering building your solution.

Have you experienced both build and buy options with your website or website platform? Tell us all about it by commenting below.

In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond.