The Build Vs Buy Decision Isn’t Always Cut And Dry

Many retailers feel confident they can create their own software in-house. But hidden costs and complexities can turn big ideas into expensive mistakes.

The phrase “if you want something doing properly, do it yourself” has a lot to answer for. There’s been a long-held belief that although off-the-shelf software is quicker and easier to deploy, you’ve got to build something bespoke and/or more affordable yourself.

This belief is partly true. Investing in third party software is faster than developing something from scratch. However, bespoke technology is not always better – or cheaper – than something ready-made.

The True Cost Of Building Your Own Technology

One reason retailers decide to build software is the cost of bought-in technology. Major capital expenditure is hard to swallow when you’ve got your own IT team on tap. But companies underestimate how much you need to invest in such ambitious projects.

True, there are no up-front costs if you have an in-house development team. But, do they have the skills required to build a new platform from scratch? And what’s happening to your other systems and IT requirements while they’re working on the build?

Even with the best intentions, in-house tech initiatives can haemorrhage time and money. I’m not surprised that the average large IT project runs 45% over budget. Technical issues and staff changes cause timelines to slip and costs to spiral. Often, retailers end up outsourcing work to get their software built, at a cost of £500+ per day.

I’ve also seen retailers sink significant sums into software that’s never completed or isn’t up to the job, with OneStock brought in to replace in-house OMS systems that couldn’t deliver what the retailer initially required.

Another classic mistake is not calculating the total cost of ownership. Maintaining a bespoke platform is a huge commitment - with a hefty price tag attached.

Clearly, there are ongoing costs to maintain an off-the-shelf system. But most vendors outline these costs up-front, making them easier to budget. There’s peace of mind in knowing your initial outlay, and what you’ll need to cover during your software’s lifetime.

Coping With Complex Customer Demands

Beyond the bottom line, it makes sense to use the talent in your business for bigger projects. But they must deliver something better than off-the-shelf alternatives.

We all know retailing is a complex beast, and your retail systems need to tame this complexity. I’ve seen this challenge first-hand in order management.

Retail order management used to be a simple, linear process. Not anymore. As consumers hop across channels, it’s much harder to deliver on their demands.

Being able to view available stock in all locations is now the bare minimum. Retailers need to see what stock is saleable, the cost to serve from each location, and many other moving parts. Features that were once ‘nice to have’ like Ship from Store, are now essential to keep up with the competition. We’ve moved into an era of distributed retail order management.

We saw the importance of an agile order management platform during the pandemic. Well-equipped retailers switched to Click and Collect orders within hours, leveraging store stock. Pets at Home did this and collections now account for 20% of their orders.

Even now, conditions can turn on a dime. Retailers with a cutting-edge OMS platform can divert distribution channels in a click. And they can tailor available fulfilment options based on real-time stock data.

Of course, some retailers can build a distributed retail OMS solution in-house. But how long will this take? In the meantime, your competitors buying off-the-shelf software are already reaping the benefits.

How To Choose Between Build Or Buy

The decision to build or buy retail software is far from cut and dry. Your company size, resources, budget and goals will influence your best route forward. The important thing is for your business to embark on new projects with open eyes – and accurate calculations. 

Many retailers have paid the price for making short-sighted decisions. They’ve ‘made do’ with sub-par software, or increased spending when IT’s tied up with the latest big idea. All because building technology looked cheaper and/or easier on paper.  

Equally, some retailers have been burned by vendors promising the earth but not listening to their needs. When the right partner can customise off-the-shelf technology for your operational dynamics.  

To help you avoid these scenarios, OneStock has released a new guide: Retail OMS: Should You Build or Buy?, available through our website. In seven steps, we’ll guide you to the best outcome for your business. 

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To find out more about OneStock and the services they provide to the retail industry, click here.

This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.

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