Build or Buy

I am often asked whether it is better to buy a management system or build one on your own. This question seems quite tricky, if you consider that I manage a company that builds and sells a translation management system. But it makes more sense when you also know that I used to manage a translation company in the past.

So I have stood on both sides of the fence and can help you analyze this question and the different components of your final decision. Let me suggest a few different factors that I think should be taken into account.

PRICE / COST

Comparing the price of the two options is tricky.

Putting it simply: when you buy, you have to pay for the license for each user. And nobody likes to pay.

When you build it – you have no license fees and you have an unlimited number of licenses. However, you have to develop, maintain and support your own solution. These costs are often hugely underestimated.

People tend to think that developing a simple solution is quick and cheap. That’s not true when you realize that building a tool means you virtually need to create a new business unit within your organization.

You will need someone to define the needs you have and how you want to solve them with your system. You will need UX designers to design it, developers to code it, testers to test it, an HR assistant to help you find and hire all those people; and a project manager to lead the whole project over a substantial period of time. That is not cheap and not quick at all. And by the way, if you are a translation company, building a software house is not your core business.

The costs of maintenance and further development of the system are almost always forgotten when comparing the “buy or build” options. And in fact these costs will be higher than the initial development cost over time.

There are several reasons for that. Firstly, when you initially describe the functionality you need, you will forget and consequently leave out a lot of it. Secondly, even what you include on your list might be completed in an over-simplistic way rather than the broader scope, covering more advanced scenarios, which you will become aware of only after you test the first version of the system. Then, before you are even ready with your version 0.9, your requirements will already change. And even worse, when you finally start using the new system (some 1-2 years after you started the development project) you will realize that the market situation, project types or other factors have changed over time and you also need to reflect these changes in your own system.

RISK of missing the goals

When developing your own system you are only planning and hoping to get in the future what you dream of today. But in the process of developing the system, you will come across barriers that you did not even know existed. So there is a huge risk that what you will get as a result will not perfectly represent what you expected. This means there will be delays in your project and you might have several cycles in which your systems will be developed and evaluated.

In the case of the “off the shelf” solution, you know what you are getting. You can demo it, test it, run proof of concept – whatever. What you get is what you see.

SCOPE – what the system will be doing

Typically, when you develop your home-grown solution it will be much more limited in comparison with advanced systems available on the market. This is because you will be trying to limit your costs, limit your expectations and you will be underestimating the needs for future customizations. You feel that you know what you want, so it will be much easier than building a system for everybody. The point is though, that even if you are only one company, you have many employees. And each of them might want to work in a slightly different way, would have different projects, different scenarios to run, different expectations towards the system, etc. That’s why you need extensive customization capabilities anyway.

The system you buy will contain much more functionality and customization possibilities because it is tested and used in many more scenarios. Moreover, all customers are financing its development, so it will always be richer and better prepared to cover more needs and scenarios than yours. Think about how many people you will dedicate to create a system for you. On the other hand, providers who sell management systems hire dozens of people who focus only on this one thing, as it is their core business.

TIME and VALUE – when you can have it

Nobody buys a system for pure pleasure. You want to have one because you need one. Companies implement management systems to increase work efficiency, reduce project management costs, increase speed and shorten deadlines, integrate several technologies that they are using, provide portals to their vendors and clients, etc. They all see a lot of value in having a modern system.

When you decide to build a system on your own, you must account for at least 1 year of working on it. But usually it will be much more. During this time, you will not be consuming the value that you expect from the system. You will start seeing value only a year or 2 down the road And that’s only if all goes well, which is not automatically guaranteed.
When you buy a system – you can start implementation right away. Of course it takes some time, but your own system would also need to be implemented. When buying a solution, however, you just have to focus on optimizing the implementation process. But you can usually start from day 1. That’s why the value that you get from the system will come to you a year or 2 sooner.

To sum up, I think only the biggest players, with revenues counted in the tens and hundreds of millions of Euros, should consider building their own management system. For others, after a precise and honest consideration of all aspects, it is far too expensive and a very bumpy road to take.

In the end, I would add one more aspect to your analysis – the FOCUS – what is your core business? It is an element which is very rarely taken into account. But you need to answer the question, “Is building software the business you are in?”. Or is a system just a component of your Translation & Localization business? Do not lose focus. Concentrate on your core competencies and where you make your profits.

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Andrzej Nedoma
Andrzej Nedoma is the Co-founder and CEO of XTRF Management Systems, a global translation management platform provider for translation companies of every size, in-house corporate language departments, and public organizations. His company helped hundreds of translation and localization agencies in 30 countries to leverage their potential. Andrzej was awarded with the Polish Entrepreneur of the Year 2006 title in the category “Services”.

He has been building his translation industry expertise since 1996 as a business development manager and as a Managing Director for a leading Central European translation company LIDO-LANG Technical Translations which was eventually sold to Sepro Group from Spain.

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