During the COVID-19 pandemic, organizations with strong software infrastructure not only kept their operations running—but in some cases, expanded it. This has led business leaders to focus more than ever on the software systems that keep business running smoothly and help ensure continuity.
Naturally, the twofold imperative to drive efficiency and lower expenses became top-of-mind for CTOs across sectors. Your fellow professionals are increasingly relying on modern tools to meet these challenges and ensure excellence amid a digital-first landscape.
Buying—rather than building—software has been the top choice for organizations in the last 20 years, thanks to the abundance of commercial off the shelf (COTS) solutions. These packages were typically cheaper and could be deployed much faster than the time needed to build custom applications.
On the other hand, software development tools and integration frameworks have come a long way—and agile development methodologies are back in vogue.
As a result, the debate between building and buying software has been revamped to accommodate both approaches: Build AND buy.
This article discusses how CTOs can get the best of both worlds when embracing a hybrid approach—and key considerations to ensure success.
Buying for Speed. Building for Scalability
The choice between building custom software or COTS software is based on a thorough evaluation of the organization’s specific needs, long-term goals, available budget, and resources.
The hybrid approach addresses the various facets of software development and opens the door to new opportunities. This trend has accelerated with the rise of low-code platforms, which allow faster development cycles with reusable components.
Moreover, today’s ever-evolving role of CTOs encompasses the need to balance innovation, scalability, and efficiency. That’s why many are accelerating their efforts to align technology with business goals, managing risk—and maximizing ROI.
Going the “hybrid way” not only empowers CTOs to address these imperatives, but also enables them to accelerate speed to market, improve flexibility, and efficiently manage vendor and internal development risk.
This hybrid approach helps reduce the risk of overspending on unscalable builds or buying software that doesn’t align with long-term business goals.
The ultimate benefit of a hybrid approach is the ability to jump-start functionality and ensure faster deployment. By starting with tried-and-tested software, CTOs can meet both fundamental and new challenges that are critical to business continuity without breaking the bank.
However, as complex operations arise, so, too, does the value of customized software.
To combat limited customization and lack of scalability, over time, teams can build custom solutions or even integrate their chosen COTS with existing features to establish unique workflows—and carve out a competitive advantage.
5 Considerations Before “Going Hybrid”
Total Cost of Ownership (TCO)
While COTS solutions might seem like a favorable, cost-effective purchase, CTOs must consider the total cost of ownership (TCO) beyond the sticker price.
Ongoing expenses such as subscription fees, maintenance fees, customization, and possible upgrades can add up. Moreover, Invesp revealed that 38% of SaaS providers are leveraging the usage-based pricing (UBP) model, where they charge based on actual software usage.
In addition, as time passes, custom-built components added to the COTS foundation may also have their own maintenance and integration costs that will require specialized skills or vendor services.
It’s critical that you perform a detailed TCO analysis to forecast short- and long-term expenses.
Integration and Interoperability Risks
When connecting COTS with custom-built applications or other internal systems, integration complexities will surely arise.
In particular, incompatibility can result in inefficiencies, data silos, or operational disruption associated with the handling of proprietary or legacy systems. The good news is that integration risks are addressable up front.
CTOs can determine whether COTS products are compatible with existing systems and whether custom development teams have the skills to fill in functionality gaps. An initial deployment can be made, with a pilot testing phase to help identify possible issues.
Make sure you refine integration before rolling out to limit disruption and maintain data continuity.
Data Security and Compliance Challenges
Risks are everywhere, and data security and compliance are becoming increasingly complex with stringent GDPR, HIPAA, and CCPA regulations.
Technology officers understand that custom-built modules may not be secure if they are not designed with resilience in mind. In addition, procured software may not provide the required customization to ensure compliance with specific regulatory requirements.
CTOs must make sure that data encryption, access controls, and audit capabilities are in place across all components. And when it comes to procuring solutions, decision-makers should lean on vendors who:
Ensure ongoing security monitoring
Maintain vigilance over recent security updates
Have a proven commitment to compliance and protocols
Vendor and Third-Party Dependencies
Dependency on third-party software can introduce many risks.
Just recently, Broadcom’s recent acquisition of VMware has caused a range of concerns among client organizations. Many foresee price increases, reduced innovation, and loss of customer support.
To avoid the same situation, CTOs must diligently evaluate the stability of their chosen vendor before integrating them into the enterprise’s foundation. Additionally, technology directors must ensure that vendor roadmaps align with their organization’s evolving needs.
They should also work to mitigate the risk of being overly dependent on a single provider, diversifying reliance by creating a proprietary solution or workaround when feasible.
Resource and Skill Set Alignment
A hybrid approach might demand a more diverse skill set than either an all-in COTS or a custom approach.
CTOs have to assemble the right team, with expertise in vendor management (to manage external solutions) and development experience (the coding and system integration skills to create bespoke solutions).
To address both sides of the equation, perform a skills gap analysis to determine if any internal capabilities are lacking in areas that require reinforcement or training. If you don’t have the in-house expertise for a particular area, consider building relationships with contractors or consultants who can help plug the gaps.
This will support both the COTS and custom components of the hybrid system for sustained success.
Conclusion
Today, it’s no longer likely that the “build vs. buy” conversation remains unchallenged.
The hybrid approach affords a strategic path to both efficiency and flexibility, mixing COTS software with custom-built solutions.
Employing a hybrid strategy, however, depends a lot on several factors: TCO, integration and interoperability risks, data security and compliance, vendor dependencies, and skill alignment.
However, it also offers flexibility and scalability, ensuring that businesses are prepared to face the challenges of an increasingly digital-first world.
By evaluating both short- and long-term needs, aligning with vendor roadmaps, and ensuring internal capabilities, CTOs can confidently navigate the complexities of software infrastructure.
