Question

A business is faced with a decision to build or buy a system. Give a written descriptions, charts, and outlines on the following

1. Various steps needed to purchase or develop a system in-house

2. Budget considerations

3. Staffing considerations

4. Time considerations

5. Risks 6. Maintenance plan

Answer 1

VARIOUS STEPS NEEDED TO BE CONSIDERED TO PURCHASE OR DEVELOP A SYSTEM IN-HOUSE:

• strategy and Competitive Advantage
• Cost
• Scale and Complexity
• Quality
• Matirity or Commoditization
• Time
• Internal Resources - staff expertize
• Risks
• Support Structures
• Greater assurance of continual supply

BUDGET CONSIDERATIONS:

Most companies do not have a big budget for building enterprise-level software. This is why it can often be easier to justify a monthly recurring payment or even an annual expense for a third party product.

the budget must include the long-term technical debt associated with hosting and maintaining your solution, in addition to the upfront costs.

• Implementation costs
• Ongoing costs
• when evaluating whether to buy or make it is mandatory to understand the total costs that are occured during the all stages of software development life cycle.
• We need to check whether we can build the system with the requirements we have or do we need to buy some equipment like new machines, Installing the new licensed softwares and so on. In this case, we need huge amount to buy and install.

MAKE:

• Incremental inventory-carrying costs
• Direct labor costs
• Incremental factory overhead costs
• Delivered purchased material costs
• Incremental managerial costs
• Any follow-on costs stemming from quality and related problems
• Incremental purchasing costs
• Incremental capital costs

BUY:

• Purchase price
• Incremental purchasing costs
• Any follow-on costs related to quality or service.

STAFFING CONSIDERATIONS:

Build:

• In this case, first we need to know whether our current staff has the capabilities to build the system or not.
• Do you need to recruite staff who has the capability to make the system.
• If staff has littile Technical Experience, they need External support.

Buy:

• In this Case, we receive both the technology and the expertise.
• Most of them offer a dedicated customer representative who can help you to get the most out of the system.

So, there is no need of staffing when we buy the system.

TIME CONSIDERATIONS:

• Typically, it takes more time to build a system.
• If the current staff doesn't know the technology used to build the system, then they should undergo some training sessions which is time consuming.
• In case of buy it takes less time. It allows you to deploy and start fastly. so, less time is required.

RISKS:

• Build allows for managing risks related to the solution, and allowing for modification
• Buy puts risks such as development problems and time slips on the vendor.
• Buy allow an organization to rely on professional support structures and/or open source communities –Risk: non-responsive or costly
• Build requires building that capacity in-house. –Risk: costl

MAKE or BUY DECISION Strong control needed > MAKE Advantages of MAKING Low cost Better quality Unique characteristics Better time management Moderate control needed > PARTNERSHIP Weak contro needed > BUY LOW Risk tied to BUYING / OUTSOURSING Size, power of producer Technical capacity of buyer