Roland Dürre
Tuesday September 30th, 2014

Entrepreneur’s Diary #101 – Make or Buy!?

How to find the right kinds of people – and why recruitment is an anti-phrase!This is a question I often had to answer during my entrepreneurial career. And it was never easy to reply to.

You often need some tool in order to better organize affairs in your enterprise. It might be a small software solution, a new process in the infra-structure, a tool providing a particularly ingenious service, or a special marketing or sales activity.

More often than not, what you will need are software solutions. Those were the times when we, as an IT enterprise, had to decide:

Should we produce it ourselves or buy it? Make or Buy?

This is not only true for software. Processes, too, are something you might either define yourself or find a counsellor to assist you. For instance, you can also design simple tools for administrative tasks – and they work surprisingly well. 
For our second Christmas Party in 1985 in the Villa Stuck, we even made our own snack sandwiches under the supervision of a master cook. We also bought our champagne from the wholesale. Incidentally, that was one of our best Christmas parties ever.

One positive factor about doing it yourself is that it is authentic and traditional. In fact, you gather new know-how in your enterprise. It might also be considered a positive effect that a tool you designed yourself will help you to define your own distinctive line on the market. And it can be considerably cheaper than the mega-functional market product many of the functions of which you do not need, anyway.

However, doing it yourself might also have negative side-effects. The result might look amateurish. In the long run, it might well be more expensive than buying it in the first place. Using idle resources (“resources that lie unused”) which basically were meant for other use is dangerous, because developing your own tools might cause those tools to get a life of their own.
New functions that take a long time to maintain are suddenly sought after and you will have to live with the fatal obligation to further develop tools – which might sometimes cause exploding additional costs.

On the other hand, if I buy the desired solution or service, I will probably get a professional system, and possibly even at a cheaper price? I can focus on my central business and will not use up future resources by perhaps relying on sometimes very precarious island solutions.
As you can see, there are many rational reasons pro and contra “make” and “buy”. You have to take many things into consideration. One of the most important, perhaps the most important, questions about “make or buy” might be: 
What will the persons employed inside the enterprise accept better: the self-made product or the bought product?

After all, what good will the best and most professional marketing (and expensive) agency do if your own organisation does not accept it? What positive effects will the best Leads from a presale activity with external partners have if your own sales department is not interested? Sometimes you get the “not invented here” syndrome.

What good will the best process software do if the simple self-made one is lived by the users? What use is the best social media system you ever bought if the people working in your company prefer the simple, internally designed Wiki?

This brings us to a simple conclusion:

Whenever I am interested in something totally new, the question: “make or buy” is not really relevant. It is a lot more important whether or not your employees will accept it. And this is the criterion following which you can then decide if you want to make it or order it elsewhere.

However, when we are talking software, there might be another best way: 
Use an open source solution and be part of the community.

RMD
(Translated by EB)

P.S.

For more articles of my entrepreneur’s diary, click here: Drehscheibe!

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