One question that I hear a lot of people asking is whether they should buy or build the software that they need to run their enterprise. This is often a difficult question to answer. One thing I can say having lived through many major software purchases is that the main cost was understanding a system that was purchased and that cost of understanding turned out to be far greater than expected. Large, expensive software products are often more costly to purchase then the price tag would indicate.
If you can gain a competitive edge through embodying it in software then it’s almost always better to build rather than to buy. This applies to entire products. Technology companies are sometimes purchased because of their customer base or inroads into a particular market segment or any number of other reasons. Of course, I’m not talking about off-the-shelf software. I’m talking about integrating essential components that were not developed in-house.