Hey tech trailblazers! We previously discussed the benefits and value of procurement orchestration and why every organization should adopt this. Now, let’s talk about a decision every organization faces at some point in that process: Should you build or buy your procurement orchestration platform?
The Scooter Adventure: A Lesson in Build vs. Buy
To kick things off, let me share a recent adventure I had with my son. We decided to build a custom scooter from scratch. We planned, sketched, and bought all the necessary materials. It had his drawings on it, we added lights all around it, a box as a basket, and one of the coolest features we added was an electric bell that allowed him to record a custom message that played whenever he rang it. It was a fun, bonding, and educational project, but it also took a lot of time, effort, minor cuts and bruises, and many unexpected trips to the hardware store.
The result: A beautifully decorated scooter that yells “I love you” whenever you ring the bell but lacks the safety, speed, and reliability of a store-bought one and can’t ride on any surface that is not 100% smooth without falling over.
In this blog, we’ll cut through the noise and demystify the benefits of building vs. buying your own system. Buckle up, because we’re about to show you why buying your procurement orchestration platform is a total no-brainer!
Myth # 1: Customization is King
What People Think
Building your own platform means you can tailor every feature to your exact needs. It’s like designing a dream home where every room is exactly how you imagined.
- Full Control Over Features: You’re drawn to the idea of customizing every feature of your procurement platform. This includes tailoring workflows, approval processes, and reporting mechanisms to fit your organization’s specific requirements.
- Perfect Fit for Complex Procurement Workflows: Procurement processes are intricate, often involving multiple stakeholders and compliance requirements. You believe that building your own platform allows you to design workflows that seamlessly integrate with existing systems, like ERPs and P2P platforms, without compromising on functionality.
Reality Check
While customization is appealing, the reality is more complex and costly in the procurement world.
- False Choice: While it might seem that if you buy an orchestration solution off the shelf it will be rigid and hard to configure, the reality is that the right orchestration solution can offer similar customization levels in a resilient fashion that doesn’t lock you to your specific current needs.
- Overlooking Industry Best Practices: Established platforms come with best practices built in, and refined through years of feedback from multiple clients. Your custom solution may miss out on these critical, battle-tested features, leaving you reinventing the wheel.
- Integration Challenges: ERPs and P2P platforms are notoriously complex and highly customizable, making integration with a custom-built solution challenging. Integration issues are a common pitfall in custom software projects, often leading to delays and increased costs.
- Security and Compliance Risks: Procurement involves handling confidential and sensitive data, such as supplier information and financial records. Off-the-shelf solutions often come with built-in security features and compliance measures, whereas custom-built platforms require robust security protocols and ongoing monitoring to mitigate risks.
Myth # 2: Full Control Equals Better Performance
What People Think
Having full control over your platform means you can ensure it’s perfectly optimized for your needs, just like tweaking your car for maximum performance.
- Total Command Over Resources: You believe that building your own platform allows you to optimize resource allocation and scalability based on your organization’s specific procurement volumes and needs.
- Quick Adaptation to Changes: In the fast-paced world of procurement, you think that having full control means you can quickly adapt the platform to changing market regulations and internal processes, ensuring agility and responsiveness.
Reality Check
In reality, maintaining this level of control requires significant expertise and resources, especially in handling procurement-specific challenges in a constantly growing compliance landscape.
- Scalability and Performance Challenges: Procurement activities can vary widely in volume and complexity, from routine purchases to strategic sourcing initiatives. Custom-built platforms often struggle to maintain scalability and performance under fluctuating demand, requiring continuous adjustments to infrastructure and resources.
- Expertise and Lacking Requirements: Optimizing and maintaining a custom procurement platform demands specialized skills and ongoing investment. In contrast, off-the-shelf platforms are crafted with expert insights and have undergone extensive testing, incorporating customer feedback over time to meet evolving needs. This iterative process ensures that the platform addresses not just known requirements but also unforeseen challenges — reflecting the idea that ‘we don’t always know what we don’t know.’ For instance, Opstream’s interviews with over 400 procurement professionals have enriched our understanding of these dynamics, guiding the development of comprehensive procurement solutions.
Myth # 3: Building is Cost-Effective in the Long Run
What People Think
Building your own platform is a big upfront investment but saves money over time, just like buying bulk groceries to save on weekly shopping trips.
- Initial Investment Justifies Long-Term Savings: You perceive building your own platform as a strategic investment that will pay off by eliminating recurring licensing fees and reducing dependency on third-party vendors.
- Flexibility and Control Over Costs: With full control over development and maintenance, you expect to minimize long-term expenses associated with software upgrades and custom feature enhancements.
Reality Check
The financial calculus of building versus buying isn’t always straightforward.
- Unanticipated Expenses: Custom-built software often incurs unexpected costs such as bug fixes, updates, and integration issues. Many projects get canceled before completion, often due to budget overruns.
- Long-Term Financial Drain: Maintenance and updates of a custom platform can become a significant ongoing expense. Buying a solution provides a clear cost structure, making budgeting easier and more predictable. According to a study by PwC, 29% of custom software projects fail due to cost overruns, often stemming from unforeseen development challenges and integration complexities.
- Opportunity Costs: While building your own platform may offer some potential cost savings, it also ties up resources that could be allocated to strategic initiatives and innovation. Market-ready solutions provide predictable costs and faster time-to-value, supporting agile procurement operations.
Myth # 4: Integration is Seamless When You Build
What People Think
Creating your own platform means it will mesh perfectly with your existing systems, like puzzle pieces fitting together seamlessly.
- Tailored Integration: You believe that building your own platform allows for tailored integration with your existing IT infrastructure and procurement stack, making them all fit perfectly together, ensuring seamless data flow and operational efficiency.
- Control Over Data Integration: Custom-built solutions promise greater control over data integration points, what information gets tracked and collected, reducing the risk of data silos and enhancing visibility across cross-organizational procurement processes.
Reality Check
Integrating custom-built solutions into existing procurement ecosystems presents significant challenges and risks.
- False Choice: It is compelling to believe that something we define would integrate better and faster without systems, but ERPs and legacy procurement systems often require intricate integrations that are prone to compatibility issues and operational disruptions. Off-the-shelf platforms offer pre-built integrations and standardized APIs, simplifying deployment and reducing integration risks.
- Lack of Resiliency: Highly tailored integrations to your current stack and configuration can become fragile. Any small change to the underlying systems can require significant resources to adjust and maintain the integration, leading to ongoing headaches and costs.
Myth # 5: Building Provides a Competitive Edge
What People Think
A unique, custom-built platform gives you an advantage, just like having a one-of-a-kind gadget that no one else has.
- Customized Capabilities: You envision a custom platform that delivers unique capabilities tailored specifically to your procurement strategies and competitive goals.
- Agility and Differentiation: Custom-built solutions promise agility and adaptability, enabling rapid response to market changes and emerging procurement trends.
Reality Check
While customization can offer strategic advantages, the benefits may be outweighed by the complexities and trade-offs involved in custom software development.
- Risk of Over-Engineering: Custom solutions may prioritize uniqueness over usability and scalability, potentially limiting adoption and operational efficiency. Market-ready platforms leverage industry best practices and user feedback, offering proven functionalities that support competitive differentiation and business growth.
- Focus on Core Competencies: Building and maintaining a custom platform diverts resources and attention from core business activities and strategic initiatives. Market-ready solutions allow organizations to focus on innovation and value creation, leveraging standardized features and continuous updates.
- Resource Diversion: Building a custom platform diverts resources away from your core business activities. This time and effort could be better spent on strategic initiatives that drive growth and innovation.
- Leveraging Best Practices: Pre-built platforms incorporate industry best practices, which can actually provide a stronger competitive edge by enabling you to adopt proven strategies and technologies quickly.
Myth # 6: Building to My Exact Specs Will Be Quick
What People Think
If I build the platform to my exact specifications, it’ll be quick and efficient. It’s like designing a custom t-shirt – pick a size, add a logo, and voila, it’s done!
- Efficient Development: You assume that because you know exactly what you need, the development process will be streamlined and efficient, leading to a quick launch.
- Minimized Adjustments: The belief is that by defining your specs up front, you’ll avoid the need for costly and time-consuming adjustments later on.
Reality Check
The reality is more like trying to design a spaceship when you’ve only ever built paper airplanes. What you think is your exact spec is likely missing a lot of crucial elements. Established platforms have been battle-tested and honed with input from countless users, providing features you didn’t even know you needed. Plus, if software development isn’t your core competency, expect delays. Lots of them. Your “quick” project might take twice as long as anticipated.
- Incomplete Specifications: Your initial specifications may not account for all the features and functionalities needed for a fully operational platform. Commercial platforms have been refined through extensive user feedback, over time, ensuring comprehensive functionality.
- Extended Timelines: Development projects often face unforeseen challenges. Research shows that custom software projects take 66% longer to complete than initially estimated, especially when development is not a core competency.
When Does It Make Sense to Build Your Own Procurement Orchestration Platform?
Despite all the myths we’ve busted, there are indeed some specific situations where building your own procurement orchestration platform might be the right call. Here are a few criteria and circumstances that could justify the build approach:
Highly Specialized Business Needs
If your business operates in a highly specialized niche with very particular requirements that no off-the-shelf solution can meet, building a custom platform might be necessary. However, these cases are rare and should be carefully evaluated.
Critical, Unique Requirements
If you have a specific, high-priority requirement that no existing solution supports and this feature is crucial to your business operations, building might be justified. This could be something like a unique compliance need or a proprietary process that’s central to your competitive edge.
Innovation and Competitive Differentiation
If your business model relies heavily on a novel approach or innovative procurement process that requires a custom-built solution to maintain your competitive edge, then building might be the way to go.
Conclusion
When it comes to the build vs. buy decision for your procurement orchestration platform, the scales tip heavily in favor of buying.
Building your own procurement orchestration platform is a lot like that scooter project. Sure, the idea of creating something unique and tailored to your exact specifications is exciting, but the reality involves a lot more complexity, hidden costs, and ongoing maintenance than you might expect. While the allure of a custom-built solution might shine brightly, the hidden costs, ongoing maintenance, and potential pitfalls often outweigh the perceived benefits. Off-the-shelf solutions offer robust, scalable, and well-integrated platforms designed with best practices and industry standards in mind.
Buying a pre-built platform allows you to leverage the expertise and innovations of seasoned developers, ensuring you have a reliable and efficient system in place. This lets you focus on your core business activities, driving growth and innovation without the distractions and challenges of maintaining a custom solution.
So, unless your business has highly specialized needs or unique requirements that no market solution can meet, buying a procurement orchestration platform is not just the easier choice but the smarter one. Embrace the convenience, reliability, and strategic advantages of a pre-built solution, and let your business thrive.
And as for my son? He now rides his Micro Maxi scooter to preschool every day, zooming along with ease and a big smile on his face. While it was great quality time, we bonded, and had fun throughout the entire process, the scooter we built wasn’t really usable. Sometimes, the smart choice is simply buying the best solution out there and enjoying the ride.
Still deciding whether to build or buy a procurement platform? Get in touch with us to learn how Opstream can give you the best of both worlds. Customize and integrate your current systems with our highly flexible orchestration platform, and benefit from industry best practices and top-tier procurement capabilities.
