Salesforce Solutions: Buy or Build?

March 27, 2020
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Every Salesforce using organization with in-house developers faces the buy or build dilemma at some time. You encounter a business challenge that needs to be solved in or around your Salesforce org and need to decide if you assign your own developers to build and maintain a solution or if you buy an existing software or SaaS solution. In this article we will discuss the main components of this decision: Cost, Risk and Value. Assessing each component will make sure you make the best decision for your organization. We use the term ‘buy’ to describe SaaS solutions, such as found on the Salesforce AppExchange. In some literature SaaS is referred to as ‘rent’.

Cost

When assessing the costs of a project you need to look further than the initial building or acquisition costs. We identify three stages, each with their own associated costs: Acquisition, implementation, maintenance/support. In addition, you need to consider opportunity costs as well. 

Acquisition

These are costs associated with building or buying the solution. In-house acquisition costs entail all project hours related to the project management, design and development activities.  Buy acquisition costs entail costs for the software such as license fees and (mandatory) onboarding costs.

Implementation

Implementation costs entail hours or other fees related to the implementation of the solution in your environment. With a build decision, these hours are often hard to discern from acquisition costs. That’s not a problem in your decision making, since both these costs are one-off. Other notable costs here are training, testing, (data) migration and customizing bought solutions. 

Maintenance and support

The costs of an in-house solution do not stop when it is implemented. Continuous maintenance is required since bugs will surface, legal/compliance requirements change, your processes change, and compatibility needs to be maintained. Bought solutions will have zero or very limited maintenance and support costs. One thing to check is if support is included in the fee for a bought solution.

Opportunity cost

Very often not taken into account, opportunity costs represent the benefits that are missed due to choosing one option over another. In the buy vs. build dilemma the opportunity costs are roughly ‘the benefits of what you could have built in the same time’ vs. ‘the benefits of what you could have bought for the same fee’. In general, organizations will create far more value building things that can be sold to their customer base than they gain in cost-savings by building in-house alternatives for solutions that are available on the market. This makes sense since the solution provider has roughly the same costs but will spread them out across a bigger customer base against a lower fee.

Recurring costs

Perform your cost of ownership calculation over the period you intend to work with this solution. Keep in mind that maintenance and support, license fees and their associated opportunity costs are recurring. Bought solutions are likely to receive new features and upgrades over time without any added investment. Built solutions keep the same features unless you allocate new resources to introduce new features.

Risk

Every new component in a system carries some risk. It is good to identify these risks and take them into account when making a build or buy decision.

Project Delivery

Getting a project done on time is always a challenge. The more complex the project, the greater the risk of a late delivery (or cancellation of the project). With late delivery come increased (opportunity) costs.

Security

Introducing new software introduces new security risks. These risks can be small (as with Salesforce native apps) or great. Make sure to do a security audit if the solution touches (or can access) personal data.

Operational Risks

Additional software components mean an increased chance of bugs. Try to assess how fast bugs will get fixed in your build vs buy options. Can you quickly have a workaround in place in case the new software will stop working altogether?

Value

One thing to consider in relation to costs and risk is the value the solution will bring.

Business Value

Running a business well is about focus. Focus on increasing the value you generate for your customers is better than focusing on decreasing costs. This touches on the opportunity cost I mentioned earlier. If your challenge relates to your core value proposition; building might be the best option.

Adaptability

If you have very specific requirements to your company or vertical, an external solution might not be able to meet all your requirements. We have chosen to add an Apex and REST API and Apex plugins to our Salesforce app Duplicate Check to enable users to alleviate the adaptability issue with SaaS.

Time to market

A solution will only start delivering value when it’s implemented. Building a solution will always take more time than buying a solution. A lot of value gets wasted during the extra time that is needed to build a solution. This period can range from days to even years.

Should you buy or build?

Factor

Winner

Cost - Acquisition

Buy

Cost - Implementation

Build

Cost – Maintenance and Support

Buy

Cost – Opportunity Cost

Buy

Risk - Delivery

Buy

Risk - Security

Tied

Risk – Operational

Build

Value - Business

Depends on Core Value Proposition

Value – Adaptability

Build

Value – Time to market

Buy

Gartner's case studies reveal that only in a minority of cases is building an application more productive than buying it. When appropriate, buying applications substantially increases productivity and lowers costs.

M. Blechar, Gartner

All in all, if a solution fits your needs, does not introduce unacceptable risks and is not outrageously expensive: just buy it. This will allow you to focus on your core business and grow your company faster in both the short and long term.

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