Most organizations underestimate the cost and lost opportunities when they embark on a strategy to build applications rather look at COTS or SAAS solutions. They fail to take into account the other significant hidden costs and impact a decision to build has on the business. The attached presentation of mine attempts to highlight the benefits of COTS and SAAS offerings.

1. Build or Buy?
Ambareesh Kulkarni
2014

2. Commercial Of the Shelf (COTS) Costs Less
Compared to Custom apps. , COTS is far more cost-effective
Cost less to develop
Pre-built features speed implementation
Cost less to deploy
Scalability enables more economical infrastructure
Cost less to maintain
React quickly to change and growth
Deliver higher business value
Robust features & more useful information
Maximize business benefits
Greater adoption from better performance, reliability and usability

3. Build often Seems Like an Obvious Solution
Q
No
A
Not too much, given
the requirements
What would be the cost of
developing the app in-house?
IIS servers, MSSQL
databases
What IT infrastructure do
we have in-house?
.Net developers
What IT skills do we
currently have in-house?
Is it feasible to develop the
application in-house?
Yes, the requirements
appear fairly simple
Is there an existing product that
achieves what users need?

4. Opportunity Costs in Custom Dev
Issues Associated Opportunity Costs
Slower time-to-market
Lower revenues, higher expenses, poorer
customer service, reduced business benefits
Lack of functionality Loss of employees, customers and partners
Performance and
reliability problems
Lost revenues, opportunities
and productivity
Growth demands
Unpredictable reliability and
costs as system scales to
meet increasing user
demands

5. Risk Management: COTS vs. Custom
Custom Coding COTS
Time to Deployment
As much as 5 times longer
development cycles
80% fewer person-days in
development means faster
deployment
Maintainability
Cost of maintaining a custom
application
SUMMARY
Easy to add and change when
business and technology
environments change
Scalability – volume
Unknown and difficult to predict
scaling properties
Scalable architecture requires far less
systems investment
Scalability –
application complexity
Increasing difficulty and cost to
maintain complexity growth
No limits to complexity –
start simple, grow with needs
Reliability
Thorough testing requires huge
investment of time and capital
Tested internally and by thousands of
customers every minute of every day
Risk
High risk inherent in custom
development
Scalable, reliable server-centric
platform with pre-built features that
reduce project risk

6. COTS Costs Less Than Custom
Compared to Custom applications, COTS Solutions are far more cost-effective
Cost less to develop
Pre-built features speed deployment
Cost less to deploy
Scalability enables more economical infrastructure
Cost less to maintain
React quickly to change and growth
Deliver higher business value
Robust features
Maximize business benefits
Greater adoption from better performance, reliability and usability
SUMMARY

7. Development Timeline For Custom Apps.
COTS
Focus on gathering
requirements
Requirements
Gathering
Gather requirements on core
functionality
Prototype deployment,
not functionality
Focus on rapid
implementation
Prototype only what
can be coded
Develop core capabilities before
focusing on user requirements
Prototyping Deployment
Requirements
Gathering
Prototyping Development
TIME

8. Maintenance Timeline For Apps
COTS
Development
Upgrades/
Enhancements
Create new functionality, change existing functionality, and
re-test every modification
Maint.
Maintenance
TIME
Development

9. Opportunity Costs in Custom Apps
Issues Associated Opportunity Costs
Slower time-to-market
Lower revenues, higher expenses, poorer
customer service, reduced business benefits
Lack of functionality Loss of employees, customers and partners
Performance and
reliability problems
Lost revenues, opportunities
and productivity
Growth demands
Unpredictable reliability and
costs as system scales to
meet increasing user
demands
SUMMARY