Tuesday, February 12, 2013

A Neaderthal named Grongus and Build Versus Buy

A Neanderthal was the first innovator of business productivity tools and started the road to the big question of “build versus buy”. Long before Bill Gates and Steve Jobs, our early evolutionary ancestor (let’s call him Grongus) started spending the time to make tools. He probably didn't do this because it was fun (although maybe Grongus had a little time to kill between hunting and finding shelter). Like many an innovator he got lucky, by observing accidentally that a broken flint could cut things, allowing him to shape a piece of wood to fit alongside another piece of wood and make a frame for a shelter.

So add some time, thousands of years and a plentiful supply of flint, and tools became a natural part of what drew us out of the caves. It was long after Grongus that anybody started to think about making the creation of certain types of useful tools a repeatable thing - a product. Early craftsmen were the innovators of products (pots, spears, bags, etc), and we call all thank Grongus for why the iPhone exists today and you work with a PC or Mac on your desk.

Despite this long history, still today we struggle with balancing the cost of creating custom tools and the significantly extra time it takes to make them into useful, repeatable products. Modern day craftsmen, the innovators of products come at a cost. And as consumers of products we need to remember that if we want more of our unique desires and requirements for a product to be met, we have to pay for that to happen.

Software is a tool and it is the coolest thing, since it lets us create products that would not otherwise exist. There is not a person out there who doesn’t use software, on a PC in the office, an Android in your pocket, setting your microwave to cook a TV dinner, come to think of it the TV itself, driving a car, buying a train ticket at the station. Then there are all the amazing websites, the places where you can buy almost anything without disconnecting eyes and brain from screen (except to dig down the side of the sofa to find where your credit card slipped). And of course there is the enterprise and SaaS software that allow businesses to run more automatically and workers to be more productive.

I’ll say it again: software as a tool is the coolest thing, and that's because of the things that we can create with it. It also highlights the ongoing balancing act between tool and product. It is the balance between the effort to develop useful websites, automate business processes and build databases of your customers, and the exponentially larger time to make that pile of code into a product so that almost anybody can create a website, optimize business process management, or configure a CRM system.

The tool/product balancing act is always hard for innovators. It requires a strong business plan that shows you can create enough user-friendly functionality to hide the nuts and bolts technology, at a cost that is much lower than the number of times you think you can sell this product to people who find it useful. From the customer perspective there is a compromise, especially with business software. There are things businesses want to do with software that can’t be done with pure configuration of software products, especially if your business is in the slightest way unique. Most business software allows for customization, for additions to be made by smart software developers using tools. But then again comes a cost.

Balancing tools with products may mean buying a more expensive and more closely matching product up front to avoid manpower for customization. Or it may be in buying that more expensive product you are wasting a ton of stuff you don’t need, meaning that starting with a lean, lower cost product and paying for some customization is more cost effective. How much you tailor your software for the bespoke solution is often just a matter of taste.

After all is said and done when comparing software tools and products, calculating the “build versus buy” equation never equals a cost of ‘free’. The time you are pulled away from making your business more successful while you learn and configure software products, or the time you pay others to do the job through software development, it all carries a cost. If you have strong requirements for a website, a business improvement application or a customer marketing automation tool, you can expect there will be a price, in expenses or opportunity cost. The only way this cost (of the product and configuration and customization) can be avoided is to reduce your requirements and expectations to virtually nil, so you can use a free, advertising supported, sign-up and go product. And compromize heavily to accept where there are gaps.

If you have unique business requirements, creating the perfect product you can configure absolutely to your needs is time-consuming. With free products you get what you pay for with a leaner product that requires it to be customized with additional effort. Do you want to pay more for a product so you can do the work yourself? Or will you employ somebody to do it for you? One way or another software developers, business analysts, project managers and YOU all hope to get paid. You have options that Grongus never had: it is just about finding the balance of "do it yourself" or "done" that works for you.

Challenged with a build-vs-buy conundrum or selecting the right software for your business? Leave a comment to share your thoughts.

A post from the Improving It blog
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