Buy or build? It's a dilemma every B2B organization has to answer when they adopt (or adapt) a commerce platform to meet changing marketplace realities. Although buying a purpose-built application sounds appealing, there is frequently a concern that the organization may ultimately be better off building an application from scratch.
But recent Forrester research may settle the debate once and for all. In many cases, organizations are realizing a complete range of benefits from robust ecosystems of purpose-built applications, without incurring the costs and inefficiencies usually associated with custom builds. The result is much-needed clarity for organizations trapped in the buy-versus-build dilemma for their commerce applications.
Financial impact of build versus buy
B2B organizations face several commerce technology challenges. For starters, today's business buyers expect more from the companies they do business with. Inspired by the seamless purchase routines they enjoy in the consumer sector, buyer demand for self-service capabilities and exceptional user experiences is at an all-time high.
But buyer expectations aren't the only challenges B2B organizations are up against. When adopting new commerce platforms, businesses need to ensure quick time to market with robust functionality and the ability to scale over time - factors that determine whether the implementation will enhance or constrain business growth.
Not surprisingly, financial concerns also weigh heavily in the adoption of commerce applications and the build-versus-buy dilemma. But a recent Forrester Total Economic Impact (TEI) study of organizations that recently experienced digital transformation sheds new light on the financial impact of purpose-built and custom-built commerce applications.
Based on companies that purchased the purpose-built Salesforce Community Cloud product, the study showed that the technology generated significant financial benefits to the organization, including 207 percent ROI and a net present value (NPV) of $1.7 million.
The study attributed the financial benefits of the purpose-built community application to several factors:
- Avoidance of front-end development and system integration costs
- No software or infrastructure maintenance costs
- Faster time to market (additional time to generate business value)
The same benefits can be expected from a purpose-built commerce application built on a cloud platform. From a financial perspective, purpose-built commerce applications reduce front-end costs, deliver significant return on investment and substantially shorten the amount of time it takes for the organization to begin earning revenue from the technology.
Factors to consider when determining whether to buy or build
Although bottom-line impact is important, financial benefits are only part of the story in the build-versus-buy decision for commerce technology. Experienced B2B decision makers know that there are other considerations that may also determine the success or failure of their commerce platforms.
1. B2B commerce applications must be flexible and scalable
Conventional wisdom says that custom-built applications are more suited to handling organizations' unique issues and requirements. But that's actually not true because custom-built commerce applications typically aren't built to scale over time. Ultimately, they lack the long-term flexibility organizations need to adapt to changing customer needs.
In contrast, many purpose-built commerce applications offer the best of both worlds. In addition to scalability, purpose-built commerce applications can be extremely flexible, enabling the organization to rapidly adapt its technology to evolving market conditions.
2. Speed to market has implications for revenue
The time requirements for developing and implementing a complex commerce application are substantial, even if the organization has the technical experience and domain expertise in-house. Too often, the organization spends valuable time and energy developing the technology rather than using the technology to generate revenue for the business.
Purchased commerce solutions can be deployed much more quickly than their custom-built counterparts. The speed-to-market factor is especially important for B2B commerce organizations because in some cases, a delay of even a few months can mean the loss of significant revenue and market share.
3. Access to knowledge and support is a must
Purpose-built applications usually include access to experts who can assist with the implementation and maintenance of the technology. That's important because in a custom-build scenario, you run the risk of losing the required expertise when developers leave the organization.
According to the Forrester TEI study, organizations that purchased commerce applications spent less on third-party IT contractors than their customer-built counterparts. These organizations not only avoided unnecessary costs, but also reduced the hassle and delays that are inevitably associated with an anemic in-house knowledge base.
The Forrester TEI study provides further evidence that the quantifiable and unquantifiable benefits make purchasing a purpose-built application a much smarter approach than a custom-built commerce application. The right purpose-built commerce application makes the build-versus-buy decision even easier by providing effortless integration with existing solutions and the flexibility to constantly adapt to customer feedback and market changes.