To Build or Buy? That is No Longer The Question – Part I

This a very important concept to grasp, because knowing there have been thousands of software improvements over the years, representing the collective wisdom of hundreds of companies, is the key to understanding why COTS software now dominates the marketplace.

The concern most organizations have with the embodiment of institutional knowledge in the software best described by the question: “Well, if everyone in my business uses this how am I going to create any differentiation in my processes, am I going to be forced to do everything the same way my competitors do it?”

The short answer is no. Just as we’ve moved from writing our own software, we’ve also recognized modifications to standard packages are also very expensive. It is well known that 80% of the total lifetime cost of software is in the maintenance, so changes to COTS are as bad as writing it yourself.

We’ve moved from the era of customization, where we create expensive, hard-to-maintain changes to software, to the era of configuration, where the software vendors have figured out it’s much easier to create software with extreme flexibility and allow the users of the software to incorporate the uniqueness of their processes by changing the configuration of the system as they implement it.

In most major software packages you find lots of “switches” which allow subtle changes in the way the package works. This is not to say that configuring software is simple. Sometimes it can be quite complex, but the beauty is these configuration changes do not have to be re-done every time the vendor comes out with a new change to the package.

Owning an off-the-shelf package has a huge amount of benefits for most companies. The key is understanding how to select the package.

Daniel Gingras has been CIO of five major companies and is a partner at Tatum Partners, a nationwide professional services organization of senior-level technology and financial executives who take on leadership roles for client companies. He has more than 30 years of IT experience and teaches computer science at Boston University. He can be reached at [email protected]. In Part II of this article, Gingras will explore the COTS selection process.