Determine When to Outsource

Depending on who you are and your level of skill set you might be biased towards how you develop application systems. As an engineer, you automatically assume that if you want to bring a new system to your organization, the way you would do it is to develop it yourself. After all, you have the skills and the sweat equity ready to bring your product idea to life a lot quicker than depending on some unknown source right. While that may apply in some scenarios, in others it is not implicitly clear whether or not a system should be designed and developed in house or by an external source.

You have to recognize as a business owner that some parts or even all of a new system to be built may be produced by some third party vendor. Some companies have established clear guidelines that determine how they acquire new software. That is, whether you choose to build your system in-house or use an external third party to develop your solution. One thing that is super important is that you must know exactly what you need to build before letting some software vendor tell you what you need. Else, you may end up with software that does not solve your real business and user needs.

Custom Development

Custom development is the most “flexible” option anyone can go with building software solutions. As with custom development means you get to build the system exactly how you want for your given use case, business needs and you get to build it in any way that is interoperable with your current IT infrastructure. In some situations, the challenges being addressed requires some serious engineering to solve them. With these challenges, developers cannot readily find package software that is capable of performing the tasks required for a successful implementation which makes custom development your best option.

Building a system in-house also builds technical skills for your staff within the company. As developers work with business users, their understanding of the business grows and they become better able to align information systems with strategies and needs. These same developers gain the experience needed so that future projects applying similar technology become much easier.

Custom software development requires a dedicated effort that includes long hours and hard work. Many companies have development teams that are already overstaffed on projects. Facing a huge backlog of systems requests, and other projects to work on, you easily realize that your staff just does not have time for another project. Also, a variety of skills are needed around project management, technical, functional and design principles to have your project executed smoothly. Computer professionals, especially highly skilled individuals, are quite difficult to hire and retain.

Building software from scratch contains a lot of risks and has no guarantee that the project will be successful. Life happens, developers quit, get pulled away to work on other projects, business obstacles, technical obstacles that could cause weeks or even months in unexpected delays. There are a ton of risks to consider developing your own solution. Having an understanding of these risks will better aid your decisions.

Package Software

Your business needs may not be unique and perhaps you wouldn’t want to repeat something that already exists that can solve your immediate needs. Getting a package software solution could be your best as there are various solutions out there that are commercially available rather than developing your own solution.

Your company might have a need for office tools, you didn’t think of building any of them, did you? Not when Microsoft Office exists. So that’s what I mean by finding an already built solution. It can be more practical to purchase software that has already been created. These package software often comes with experience and expertise of the suppliers who produce them giving much-needed assurance in its quality and longevity.

However, a major set back when it comes to package software is that you must accept the functionality that comes with the solution. Meaning, the solution might not be a perfect fit but it’s the closest thing to an out of the box solution. What do you typically do then? What you’ve always done, of course, you will need to find some workaround to make the solution work for you. Perhaps the suppliers have a structure in place that allows you to add on to the system that gives you the customization you need.


Outsourcing has become the acquisition choice that sometimes requires zero (0) in house resources. Businesses can hire external software providers that can create the system and have all the resources surrounding the successful execution of the project.

Outsourcing firms offer great benefits to an organization that doesn’t have the bandwidth to develop its own system. Outsourcing your software project can create opportunities to reduce costs and effort on the organization part.

Outsourcing doesn’t come without costs. You have to consider how you will protect sensitive information in your organization or lose control over future development. The firm you outsourced the software to might not exist in a few years which requires you to find a new development partner that may not be experienced with the code base of the project. When outsourcing work to other companies you miss the chance of developing your own internal team, instead, you willingly allow the expertise to be transferred outside the organization. Important skills are gone as soon as the contract ends. There is a big rule that I think is great to follow, you shouldn’t outsource what you don’t understand. Think about it, if you don’t understand what are you doing, then what exactly is it that you are expecting? If you conduct all the necessary analysis and planning then you should be aware of you what you need.

How to Choose Acquisition

So now you have a clear idea of the options on how you can acquire software but how do you really choose? What are the metrics you’ll test against to determine the best choice for business and your team? Let’s take a look at considering your business needs, the experience of your team, the skills required to build the system, and the time allotted for its completion.

Business Needs

So what are your business needs? It is typical that if your business needs are common and a solution already exists in the marketplace that will meet the needs of your organization then it usually makes sense to select a package software solution.

If your needs are unique then you definitely wanna consider building a custom solution that is specific to your needs. Especially when you’re requirements are complex and demanding that a package solution cannot address these needs successfully. Outsourcing can help your organization develop solutions and acquire the specific solution that it needs

In House Experience

Looking at the skillset of your team is another guiding factor to determine when to build custom solutions in house. If your in-house team has all the functional and technical needs of the system, it is perhaps easier to build the solution in-house than if these skills didn’t exist. Otherwise, it would be wise to look at a more package solution or partner with an outsourcing firm.

Project Skills

So you perhaps do have a dedicated development team. Well the next question to ask yourself is if your team has the technical ability to undertake the project. Having technical skills in one programming language like Java or C# is different when the system to be built requires a completely different set of skill sets.

Project Management

Developing custom solutions requires excellent project management skills and development methodologies that are proven. There are a lot of tasks that cause a project to go off track, like funding obstacles, distractions from project members doing too many things, overly demanding business users. Choosing to develop your own custom solutions is applicable if you are certain that you have the expertise in house to coordinate activates and ensure the project remains on track and successful. Outsourcing projects also require you to check that project management tasks are managed and your software partner has everything under control on their end. Although, outsourcing firms will typically removing a lot of the burden of you managing the project yourself.

Time Frame

Time is always a factor but when you’re definitely short on time you want to start looking for a system that is already built and tested. You can have a clear idea of how long the software will take to integrate and what the final outcome will look like. If you choose custom development, the time frame to estimate exactly when the solution can be completed is extremely difficult especially when you consider how many projects end up missing important deadlines. Choosing custom development means, you are paying close attention to project management requirements as well as developing the correct solution for your business needs.

Final Thoughts

Once you have a good understanding of your business needs and all the factors that drive your acquisition strategy that best fits your project needs only then you will be in a better position to understand how exactly you can implement. Don’t be quick to jump in action mode without analyzing all the factors. You may save your self millions of dollars and months, picking the right solution.

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Comments (2)

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