Back before lockdowns, I used to spend a fair bit of my time giving talks.
I remember one time giving a talk in Queenstown for a private event, and I was telling some stories from Naked Bus. When I finished and we opened to Q&A’s someone said this:
“So, you weren’t really a bus business. You were a software business”.
I stopped for a moment and the rest of the audience was clearly a bit confused with the comment.
I thought about it.
I realised that he was right. Naked Bus was a software company, not a bus company. After all, we didn’t own any buses or employ any drivers. But we had brilliant software that absolutely disrupted the industry and made a decent dent in our competitor (we gained 40% market share from nothing in only 7 years).
Now that I have Winedab I realised it’s just the same. I don’t really have a wine business. It’s a software business – that in the end results in delivering awesome wine to our customers.
But the reality is: what we have is really good software that we built (with ThinkLazy of course). That is our IP and competitive advantage.
I’m telling you this because I’m often asked by clients whether they should buy (or more often, these days, rent) existing third party software or build their own.
Twenty years ago, the answer was probably more straightforward. The cost of the building was so high, and the risk of failure so great, that buying established software was, in most cases, the safest thing to do.
But the world changes and the options have changed as well.
Now, when we talk about building software, we are not talking about starting with a clean sheet of paper.
Software architecture has changed dramatically. Instead of building monolithic pieces of code, we build small modules and link them together. Many of those modules can be re-used. Or in other words, modules and micro-services.
Nobody builds their own payment gateway now. Everyone just uses Stripe.
So, when you develop software these days, you are developing what is going to make you stand out from your competitors. You are not going to spend time building Stripe (a module), but you should spend time and effort on building what makes you unique.
The reality is, we have frameworks that do much of the heavy lifting, managing requirements such as user registration and authentication.
All of this means that the costs and risks of custom development had radically reduced.
So, build or buy?
The key, as always, is to ask what is the purpose of the thing you are building (or buying).
What does it enable you to do better?
Or better yet: what is going to get you closer to your customers and let you stand out from your competition?
What does that mean? I’ll use Winedab again. Essentially, it’s a wine subscription service. So far, so vanilla. There are many tools that manage that, extremely well.
But in one way, it is different. We match people’s individual tastes to the wines we select. Our taste quiz collects data in a unique way, and our selection is data-driven.
None of that is available out of the box. It is a differentiator, so we hand-built that.
For the rest, we used WordPress and Woocommerce, which enabled us to stand up a complete e-commerce system in two weeks.
There is other bespoke development – our warehousing operation is pretty unique, in that we can pack a box of six different wines in 2.5 minutes. But we have integrated all of this into the WordPress platform, which is robust.
This brings us to another question:
Is the 3rd party software fit for purpose?
I’m going to assume here that the software works, is not buggy, and is supported.
What is more important is whether it supports your key objectives or the key purpose you are using it for.
An example. If you have a physio clinic, you are probably using a Client Management System. Most client management systems work well. But they are not good marketing systems.
If your key objective is to get more clients, a tool that manages clients through your processes is probably not going to support your requirements. The system will have some marketing tools, but they are an afterthought.
In a nutshell, if your purpose is more sales, then that client management system, is not fit for purpose.
To be frank, if you do use what everyone in your industry is using (the same client management system), you will very likely be very similar to your competitor as well.
My answer is fairly simple: build what makes you unique and use micro-services out there to make the building easier. And you need to know this – that is when a great developer or CTO or agency needs to help you with.
I’ve been making sure we build what makes us different for years and that’s working for us (and most of the world’s successful businesses).
However, if you don’t have developers and you don’t understand much about technology you need someone can help you.
Software houses are hard to work with because if you don’t understand the problem and the why, they will develop code – not solutions.
That is why we are different. We are an innovation house that builds software – as a solution to a problem.
So if you have this challenge and want to talk to someone about build vs buy – our team is all ears.
Founder & Director