A woman in a shirt, with a ponytail, is pointing at the screen of a laptop on a desk in a warehouse aisle, while a man in a fluorescent vest watches over her shoulder.

Developing In-House Vs. Buying Off-The-Shelf

PART II

PUBLISHED 15 JULY 2022

A lone programmer wearing spectacles, sits in front of two monitors and a keyboard looking as if he's pondering something.

In-House Development Pros And Cons

In the previous blog we discussed the development of Warehouse and Transport Management Systems, and started to make comparisons between developing in-house or buying off-the-shelf. Following on from that we can now look at the pros and cons of keeping your development work internal.

Pros

  • As mentioned previously, there can sometimes be the view that an IT department is an expensive fixed cost, and that by keeping development within the company this will give the IT team “something to do”. Depending on the company, there may indeed be an element of truth to this idea.
  • The development costs are perceived as being cheaper, as there should be less money being drawn out of the company account.
  • One major plus point for many is that they will have “total control” and not be influenced by a software house, or other third parties.
  • Where development is of strategic importance, having “full” control may be vital.
  • The client can define and should get exactly what they require.
  • The software should be built to fit in with existing in-house systems.
  • The interface should be familiar, although that is not our general experience.

Cons

  • Spending valuable money on developing a system from scratch is almost like “reinventing the wheel”.
  • Clearly defining the project and specifications is an involving task. Both operational and technical staff will need to be involved, using up valuable hours – this is not only an IT department job!
  • Tight deadlines and time constraints could mean that time is not on your side.
  • How “right first time” do you need it to be? The reality is that complex projects can take twice as long and end up costing several times more than the original budget!
  • Your IT team might not have the specific skill set required for certain areas of the development.
  • If you bring in outside specialists, they might not have relevant warehouse experience or, in the worst case, be working to their own agenda.
  • Debugging issues can be prolonged.
  • Developers can turn into an in-house technocracy with whom managers may find it difficult to argue.
  • The programmers are not likely to have learned lessons from others’ mistakes or benefit from others’ good ideas.
  • The system may have little inherent flexibility and scalability.
  • The process can drive a company further down a unique, or dead-end, development branch and into dependency on a particular developer, or development team.
  • Modular upgrades are unlikely to be available.
  • There is an over-reliance on one department to produce the goods.

Finally, a major question that you have to ask about in-house development will be “is it actually cheaper?”. Let’s assume there is a £40,000 yearly cost for employing a single developer, so you will pay £200,000 over, say, a five-year product life. For that same £200,000, assuming 20% per annum support and licence charges, you could buy and maintain a £66,000 software package. And this does not include the opportunity costs of delaying implementation of a solution whilst design, programming, testing and debugging takes place.

The pros and cons of any software system obviously have to be weighed up before any installation takes place, but here we have laid out those related to an in-house development, and in the next blog we’ll go over those belonging to an off-the-shelf purchase to allow for a full comparison to take place.

Next: Part III – Off-The-Shelf Pros and Cons


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