Buy or Build: More On Costs

The failure rate of custom software development projects is high, with some research indicating 8 out of 10 projects fail (for more details, click here).  All of these projects do not fail during the design and coding stage, or even in testing.  Rather, some of the important weaknesses become apparent during the years after installation when 70 % of their overall cost is incurred.  This results in further secondary costs, in lost staff time and potentially disrupted services. 

Even those few projects that have some apparent success must face exorbitantly higher ongoing costs for years after installation.  The lifetime cost of a built application can easily exceed twice the cost of an application obtained from an established vendor. 

A hidden cost in the build option is the significant time involved in the development.  The largest percentage of costs, and the largest time investment, occurs in the years after delivery. 

Because a commercial application has already gone through several cycles of design, testing, and implementation on a much larger scale, your return on investment begins almost immediately upon delivery.   On the other hand, when choosing to build, there is an extended development period that occurs after installation.  Any savings of staff time or other returns can be significantly delayed during this time. A solution from an established vendor could be saving you thousands of dollars in staff time, while a custom developer will still be dealing with software adjustments, responses to design weaknesses, or performance concerns. 

There is certainly a cost in this lost opportunity that must be included in any buy/build decision.

Support can be a labor intensive task, and so costs can be significant.  While most established vendors will provide you with a fixed maintenance price based on spreading their costs among other clients, support on a custom application can lead to some very high unexpected expenses. 

While some custom built applications will decide to rely on IT departments for support, this often assumes that IT time is not an expense.  Anyone who has reviewed the salaries of IT professionals knows this is not the case.  Busy IT departments must split their time across a variety of projects, and supporting a custom application can mean they are pulled away from what could be much more important tasks.  Piling on another application does have significant costs, and can lead to support delays that can seriously affect services.

Overall, an established vendor provides you with a fixed support cost at a much lower rate than is possible with a built application through a distribution of those costs among all their clients.  Plus, their time to respond and resolve an issue  related to their software will be significantly better than an IT support person not directly familiar with the application.

For anyone considering building a case management system, or modifying an existing system that was built from scratch, we strongly recommend you read the article in detail.