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Buy vs. Build: What Should Companies Invest In?

Posted by Harold Engstrom on Nov 7, 2018, 3:13:00 PM

Business process automation is now critical to most companies. The question many ask is should you build the workflow and integration software that you need, or should you buy it?  This Buy/Build decision is extremely common. Big companies that want to apply workflow to one or more internal processes (meaning they are not building a software product to sell) often weigh whether to invest in their own proprietary software versus in-licensing.  Below we discuss the options companies have when faced with finding a workflow solution

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Companies that make and sell software solutions - either on-premises or SaaS - make the same decision. Each type of user/consumer has to consider the following:


  • Cost to Build

  • Cost to Maintain

  • Time to Build

  • Risk (turnover, IP, technical, security, etc.)

  • Complexity


In almost all cases, buying is the best decision.  At the low end of the complexity spectrum, if there is a need for a simple linear workflow engine to route tasks or documents in static designs, then that exists at a low price point from many reputable companies.  Building this same functionality is easy, too, but not as easy as simply licensing cheap, supported software from many vendors. At the high end of the complexity spectrum, a company’s need for flexibility, complex workflows, sub-workflows, recursion, integration, analytics, business intelligence, business objects, and built-in forms would also lead to the decision to buy instead of build.  In the middle ground, between simple and complex, how does a company decide whether to invest in developing its own solution or to invest in licensing or subscribing to a professional BPM/Workflow solution? We discuss the options below.

Cost to Build:

What will it typically cost a company to build a custom workflow solutions?  

  • Low end: it will cost a mid-level developer training on a workflow engine (such as Microsoft Workflow Foundation,) the cost to develop the simple user interface, and cost to develop the system workflows and reports.  Perhaps it costs 600 hours of time - maybe $50,000

  • High end: it will take a small team of developers and testers - somewhere between 10,000 and 30,000 hours.  The total cost will be between $1.5MM and $4MM.

  • Middle ground: how complex are your workflows?  How much flexibility do you require? How responsive does the system need to be?  What kind of metrics do you need to collect and report out? Do you need visualization?  How will you integrate between systems, if that is required? I will likely take somewhere between $150,000 and $1M to build a solution in this range.


Cost to Maintain:

  • 10%-25% of the original cost to build


Time to build:

  • Low end: 2-4 months

  • High end: ~2 years

  • Middle ground: between 6 months and 2 years


Risk:

  • How strong is your technical leadership?  

  • Is your technical team stable?

  • Do you have specific security requirements that must be satisfied?

  • Do your solutions require a level of robustness that you can provide?

  • Can you absorb schedule slippage and increased costs?


Complexity: in general, the more flexibility, robustness, throughput, and connectivity that your solution requires AND the harder the solution is to reduce to robust specifications, the more the buy/build decision points towards buy.


Cost to Buy option:

The cost to maintain even a simple solution will be $5K-$10K per year, but few solutions will be that simple.  The cost to maintain the typical middle complexity solution will be $50K-$300K per year. And at the high end, the maintenance costs will be higher.  By contrast, an annual subscription to existing best-in-class workflow will generally cost between $6K and $70K. Annual subscriptions include patches, upgrades, and some level of support.  And workflow companies will often prioritize your needs on their development path.

One last consideration: do you have the ability to manage and execute a software project that corresponds to the level of difficulty of your BPM/workflow needs?  Obviously, this is critically important because the whole project team must be in place and have the proven experience to execute on a project of your required complexity for risk to be manageable.

In conclusion, several factors will determine whether it is wisest to buy or build your solution.  It is almost always the case that finding a good BPM/workflow partner is preferable to the costs and risks entailed in satisfying all but the most basic business process automation requirements.

Learn more about FlowWright's workflow solution and set up a custom demo. 

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Topics: BPM Application Scaling, workflow efficiency