National Connections, Local Ownership
National Connections, Local Ownership

Clark: The digital transformation dilemma: Build, buy, or both?

Originally appeared in Fleet Owner

In a recent IdeaXchange blog, I discussed the three main reasons digital transformations fail. What isn’t disputed is that organizations must embrace digital transformation if they are going to remain competitive within their specific industry.

“While the trucking industry has historically been apprehensive about adopting change, many view digital transformation as a vital ingredient to the success of their businesses,” a recent Siemens article stated.

Once the decision has been made to undertake this initiative, the next issue is whether to purchase an out-of-the-box solution, build your custom solution, or implement a hybrid “build-buy” solution. At a recent NationaLease meeting, Ryan Schreiber, chief growth officer for Metafora, detailed each option along with drawbacks and benefits.

A “buy” option may appear faster and more affordable, but many out-of-the-box solutions are “built on decades-old thinking,” according to Schreiber. You’re also limited in your ability to modify or upgrade the solution, making you reliant on vendors for maintenance and updates. Even more important, when using the “buy” option, functionality doesn’t always match your specific business processes.

Although these solutions are more cost-effective, there are licensing fees to consider along with customizing costs since they do not offer much flexibility. However, the upside of buying software, besides cost-effectiveness, is that it can be quickly deployed, which means you can capitalize on the benefits of digitization.

Building your solution also has warning signs. First and foremost, this is an expensive undertaking; you must make an upfront investment in time and money. Unless you have an experienced technology development team in-house, you will have to turn to an outside vendor to handle every aspect of the build. That takes a considerable amount of time. Plus, if you’re working with a third party to build the right solution for your needs, the developer needs to understand how your company operates, adding time for a learning curve even before attempting a build. The upside here is that customization is the cornerstone of a build. You build software that answers your business’s specific needs, and you can use it as a differentiator.

Unless you have a significant budget to invest in a build but you still want differentiation, a hybrid build and buy may be your best investment. According to Schreiber, in this approach, you build differentiation and buy the rest. By purchasing a solution that has features applicable to most common business needs, you can then focus on the more time-consuming build for meaningful work, providing quicker initial speed to market. Because you’re investing in the best of both worlds, you can then purchase or build to solve specific workflows and meet rapidly shifting business and market needs.

Whichever choice you make really depends on several factors: budget, internal resources and capabilities, and need for differentiation and ownership.