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Buy vs Build: How to Make the Right Choice for Your Business
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Buy vs Build: How to Make the Right Choice for Your Business

When your company needs new software or to replace an existing one, this framework will help you make the right decision.

Alex Di Mango's avatar
Alex Di Mango
Oct 11, 2024

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Buy vs Build: How to Make the Right Choice for Your Business
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👋 Ciao, Alex here. Welcome to a new free edition of Not Just Bits, and thank you to all the readers and those who support my work. Every week, my goal is to share lightweight and informative resources for CTOs.


When your company needs new software or wants to replace an existing solution, you face a key decision:

should you buy a ready-made product or build your own?

Both options have pros and cons, and the right choice depends on your goals, timeline, and resources.

Let’s explore both paths and introduce a strategic framework that will help guide your decision-making process.

Buying Software

Buying software means choosing an existing solution that’s ready for use. Many companies provide software solutions designed to fit general needs. Buying is often seen as the quicker and simpler route, especially for standard business operations.

Advantages of Buying

  1. Quick to start: Off-the-shelf software is usually ready for immediate use, meaning you can get up and running quickly.

  2. Lower upfront costs: Purchasing software is often cheaper at the start, as it avoids the costs of development.

  3. Less risk: Established products come with support, regular updates, and fewer unknowns, reducing the risk for your business.

  4. Support included: Most software providers offer help and ongoing maintenance, so you don't have to manage these tasks internally.

Disadvantages of Buying

  1. Less flexibility: The software may not fully fit your needs, and customisation options are often limited.

  2. Vendor dependence: You're tied to the vendor’s pricing, updates, and features, limiting your control over the software’s evolution.

  3. Ongoing costs: Subscriptions, licences, and additional charges can add up over time, making the solution more expensive in the long run.

Building Software

Building software means creating a custom solution tailored to your exact requirements. This approach takes longer, but it offers full control over the product’s design and functionality.

Advantages of Building

  1. Tailored to your needs: You can design software that fits your business perfectly, with no unnecessary features or limitations.

  2. Full control: You decide how the software works, when to update it, and what features to add, without relying on an external vendor.

  3. Competitive edge: A custom solution can provide unique features that give you an advantage over competitors using standard tools.

Disadvantages of Building

  1. High upfront costs: Building software requires significant investment in time, money, and resources.

  2. Longer time to launch: Development can take months or even longer, delaying your ability to start using the solution.

  3. Ongoing maintenance: Once you build the software, your team must handle updates, bug fixes, and improvements.

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How to Decide: Key Questions

  1. Is this core to your business strategy?
    Start by asking if this solution is central to your business. Is it crucial to own the intellectual property in this area? If it’s a core component of your business model, building may give you the control and ownership you need.

  2. How unique are your needs?
    If your requirements are highly specific to your business, building may be necessary. If not, a ready-made solution could work just as well.

  3. How quickly do you need the solution?
    Time-to-market is critical. If you need a solution fast, buying or using no-code platforms is typically the quickest option.

  4. What’s your budget?
    Consider not just the upfront costs, but also the long-term costs. Compare the recurring cost of a SaaS subscription to the cost of hiring full-time employees (FTEs) for development and maintenance. While SaaS might seem cheaper initially, FTEs may be more cost-effective over time, especially with high usage or complex requirements.

  5. What level of control do you need?
    Full control over the system may be vital if you require customisation or plan to evolve the solution. If control isn’t crucial, a bought solution might suffice.

  6. What level of integration do you need?
    Consider the complexity and cost of integrating a bought solution with your existing systems. Will you need customisation, or can you use it as-is?

  7. What are the risks?
    Assess the security, compliance, and vendor risks. In a regulated industry, these risks can strongly influence whether to build or buy.

  8. Do you have internal expertise?
    If your team has the technical skills, building may align with their expertise. If not, no-code/low-code platforms or buying may be more practical.

  9. Roadmap control and time-to-market
    While control over the product’s future is important, consider how long it will take to build versus buy. How crucial is it to get the solution in place quickly?

Balancing Vision with Practicality

CTOs with a technical background and those with a business focus often approach the build vs buy decision differently.

A CTO who has spent years building software may prefer custom solutions. They see building as a way to tailor systems to the company’s exact needs. But building software comes with challenges. It requires ongoing maintenance, fixing bugs, and long-term costs to keep the software running smoothly.

A CTO with a business focus, however, often looks for existing solutions. They ask, “Is building this the best use of our time? Can we solve this with a product already available?” Their goal is to save time and money, making sure resources are used wisely and avoiding the extra costs of custom development when it’s not needed.

The best CTOs combine both views. They know when building is essential and when buying makes more sense for the business.

Using Wardley Mapping to Guide Your Decision

One strategic tool that can help make the buy vs build decision easier is Wardley Mapping. This framework, developed by Simon Wardley, helps you map out the components of your business, see where they are in their lifecycle, and decide which areas need innovation (build) and which can be satisfied with existing solutions (buy).

Canvas designed by Ben Mosior. Visit https://hiredthought.com/wardley-mapping for more information.

How Wardley Mapping Works:

  1. Identify User Needs: Start by defining what your users (internal or external) need from the software.

  2. Map the Value Chain: Break the solution into smaller components. Plot each component on a map according to how visible it is to the user and its maturity.

    • Visible: Components that users directly interact with (like user interfaces).

    • Invisible: Hidden components (like back-end infrastructure).

  3. Classify Each Component: Use the map to classify components into three categories:

    • Genesis: New, innovative technologies (often best to build).

    • Custom-built: Components that add specific business value (build if it differentiates you).

    • Commodity/Utility: Mature, well-understood components (best to buy).

  4. Decide Where to Innovate: Wardley Mapping helps you decide where to innovate by building custom solutions and where to buy existing tools that meet your needs.

Benefits of Wardley Mapping

  • Visual clarity: You get a clear picture of which parts of the project are critical to your business and which can be handled by standard solutions.

  • Focus on value: This helps you focus resources on the areas that deliver the most value to your business.

  • Avoid reinventing the wheel: The map makes it easy to spot when buying is the smarter choice for mature, standardised components.

Balancing Innovation and Cost Control in Software Development

A senior engineer or technical strategist plays a crucial role in maintaining the balance between innovation and cost control. They recognise that while custom software development may seem attractive, it can quickly consume time and resources if not carefully managed.

By using tools like Wardley Mapping, they help the team focus on building solutions that offer genuine competitive advantages, while opting for off-the-shelf tools when appropriate. This strategy helps avoid unnecessary development costs and ensures the team stays aligned with the company’s long-term objectives.

A Mixed Approach

In some cases, a hybrid approach works best. You can buy a core software solution and then build custom add-ons to meet your specific needs. This allows you to leverage the speed and stability of existing products while tailoring certain aspects to fit your business more closely.

Conclusion

When deciding between buying or building software—whether you need a new solution or want to replace an existing one—both junior enthusiasm and senior experience have their place. Junior developers often favour building for the thrill of creating something new, while senior tech leads weigh the long-term costs and benefits.

Using frameworks like Wardley Mapping can guide your decision, ensuring that you invest resources in areas that offer real value and competitive advantage. The right choice depends on your business goals, but combining strategic thinking with experience can help you choose wisely.


✅ Before you go:

  • Please share this post and invite your network to subscribe to the Not Just Bits newsletter.

  • Feel free to connect with me on LinkedIn.

See you next week! Best, Alex Di Mango


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By Alex Di Mango · Launched 2 years ago
Lightweight and Informative Resources for Navigating Your CTO Career Challenges.

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