Unit 4.3

How Software is Acquired: Build vs. Buy

IT 231: IT and Application

Learning Objectives

By the end of this chapter, you will be able to:

✅ Describe the different methods of acquiring software.
✅ Explain the pros and cons of buying (COTS) vs. building (custom) software.
✅ Define open-source software and SaaS.

The Core Decision: Build vs. Buy

When an organization needs new software, it faces a fundamental choice:

BUILD 🛠️

Create a custom solution from scratch.

BUY 🛒

Purchase a ready-made product.

This decision impacts cost, time, and how well the software meets your specific needs.

Option 1: Buy It 🛒

Commercial Off-the-Shelf (COTS)

Definition: Pre-existing software purchased from a commercial vendor, designed for a general audience.

Think of it like buying a car from a showroom. You choose from existing models.

Examples: Microsoft Office, Adobe Photoshop, SAP ERP.

COTS: Advantages vs. Disadvantages

Advantages 👍

Lower Upfront Cost: Cheaper than building.
Faster Implementation: Ready to deploy quickly. ⚡
Reliability: Well-tested by many users.

Disadvantages 👎

Imperfect Fit: May not meet all specific needs.
Lack of Control: Dependent on the vendor for updates and support.

Option 2: Build It 🛠️

Custom Development

Definition: Creating a new software application from scratch, tailored to an organization's exact specifications.

This is like hiring an architect to design and build a custom house just for you.

Custom: Advantages vs. Disadvantages

Advantages 👍

Perfect Fit: Designed for your exact needs. 🎯
Total Control: You own the code and can make any changes.
Flexibility: Can evolve with your business.

Disadvantages 👎

High Cost: Very expensive upfront.
Time-Consuming: Can take months or years.
High Risk: Projects can fail or go over budget.

📊 Build vs. Buy: At a Glance

Factor

Cost

Time

Fit

Control

Buy (COTS)

Low

Fast

General

Low

Build (Custom)

High

Slow

Perfect

High

Key Trade-off: You are usually trading perfect fit & control for lower cost & faster speed.

Beyond Build vs. Buy

The choice isn't always black and white. Two other popular models have emerged:

Open-Source Software

The "community-built" option.

Software as a Service (SaaS)

The "rental" or subscription option.

🔍 Other Methods: Open-Source Software

Definition: Software whose source code is freely available for anyone to use, inspect, modify, and distribute.

The software itself is free, but you might pay for support, customization, or implementation.
Examples: Linux OS, Apache Web Server, Firefox Browser, WordPress.

🔍 Other Methods: Software as a Service (SaaS)

Definition: A subscription-based model where software is hosted by a vendor and accessed over the internet.

You don't own the software; you "rent" it.
Usually a monthly or annual fee.
Examples: Google Workspace, Salesforce, Microsoft 365, Dropbox.

Practical Application: Scenario

Case Study: A Trekking Company in Pokhara, Nepal

A new trekking agency needs software to manage bookings, guides, and customer information. What should they choose?

Buy (COTS): Purchase a generic tour operator software. (Fast and cheap, but might not handle unique Nepali trekking permits well.)
Build (Custom): Hire a Kathmandu-based dev team to build a perfect system. (Ideal fit, but very expensive for a new company.)
SaaS: Subscribe to a cloud-based booking system like FareHarbor. (Low upfront cost, but ongoing fees and less control.)
Open-Source: Adapt a free open-source CRM like Odoo. (Free software, but requires technical skill to set up and maintain.)

Key Takeaways

The "Build vs. Buy" decision is a fundamental choice in IT strategy.
COTS (Buy) is fast and cheap but offers less flexibility.
Custom (Build) provides a perfect fit but is expensive, slow, and risky.
Open-Source and SaaS are popular alternatives that offer different models of cost and ownership.

Thank You!

Any questions?

Next Topic: Unit 5.1 - Understanding Databases

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