Computer systems and software seem to go out of date as soon as they hit the market. This presents agencies with the dilemma of whether it makes more sense to build a custom system or buy a packaged solution. When building or buying a new IT system, there are a number of things to consider. For a custom system design, an agency will have to deal with hard costs such as development, testing and implementation. For off-the-shelf packages, there is initial package cost, ongoing license fees, and possibly costs to customize, configure, modify, test and maintain. For application service provider, software-as-a-service or other cloud-based solutions, consider the security and data privacy requirements to determine if hosting should really be provided by the agency or VITA, or if a private cloud is required vs. a public one, and consider all associated costs for the different data hosting and data storage environments. Build vs. buy decision points are the same regardless of the procurement:
Additionally, major IT supplier consolidation has led to new pricing models and bundling options that give business owners much greater leverage. Open source software may deliver the best of both worlds, with hybrid approaches that combine purchased and custom-built components. When evaluating whether to build or buy, an agency must understand the total costs during the software life cycle, which are typically seven or eight years. Research studies show that 70% of software costs occur after implementation. A rigorous lifecycle analysis that realistically estimates ongoing maintenance by in-house developers often shows that it is cheaper to buy than create a solution. In addition, as more cost-effective, attractive market solutions become available, it may be more favorable to replace aging proprietary applications with proven commercial solutions. When conducting a build vs. buy analysis, there are some decision points which can help with the analysis: