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The Bonus of Both
Greg Seyk understands these realities. As CIO of VisionQuest, a Tucson, Ariz., company that offers intervention services for at-risk youth and their families across the country, Seyk recently took the build-and-buy approach to creating a Medicaid billing package that would accommodate billing in multiple states, since every state's method of doing business and calculating reimbursement is different.
The buy was an upgrade to the company's Lawson ERP system (from version 7.0 to version 9.0). But since the Lawson system didn't address the individual vagaries from state to state, there was a build component as well. VisionQuest partnered with a small Pennsylvania software development company to write applications that would get the job done. Company programmers did the work in a matter of weeks.
"I try to approach these situations from the perspective of what the CFO or CEO would ask me about risks," says Seyk. "Can we mitigate those risks by doing both build and buy, and if so, is it reasonable to accept those risks in the name of the business?"
Another variant of the hybrid approach is to do both through service providers. That's what Doug Harr, CIO of Ingres Corp., a database company in Redwood City, Calif., often does. Because he has a tiny IT shop, Harr has signed up for on-demand applications and application development in the areas of customer relationship management (Salesforce .com), ERP (Intacct), human resources (ADP) and email (Insight).
Some could argue that because Harr is purchasing this software from vendors, he's adopting the buy method. Harr, however, disagrees, noting that he only pays for the applications when he needs them, and he has support contracts that include customization where applicable.
"Let's say I go and buy a big SAP or ERP solution -- I'm going to depreciate that over the life of that product," he says. "If instead I can get into a solution where I can pay by the month or year, it's a better way to do business when, as we know, the market goes through cycles."
Of course, often the decision comes down to whether the functionality of an application can give your business a competitive advantage. "If you can differentiate yourself in the marketplace or with your customer base by writing your own software, then you should do it," says Larry Bonfante, CIO at the United States Tennis Association in White Plains, N.Y. "If you can't differentiate yourself, don't." Bonfante, who runs all the IT for the annual U.S. Open tennis tournament with a staff of 30, usually tries to find an off-the-shelf package. While the USTA considers itself a .NET shop, the organization will go outside that for certain projects that would be better served by Web services or perhaps open source.
IT leader James Woolwine, who spent years as CIO of Majestic Insurance, today is PMO executive at CT Summation, a software company in San Francisco. His view: The key to application development is the initiative to make all off-the-shelf packages table-driven. This allows CIOs to tweak products on their own, tackling every aspect of the mashup approach in-house. Ultimately, he adds, these tables will be so easy to use that business analysts could make the changes, obviating the need for application developers altogether.
"Many CIOs will say, 'Our business is so unique that we can't buy off-the-shelf software,' or, 'We are special and we have to build,' " he says. "Choosing this path and freeing up IT people for bigger and better projects could save everyone a ton of aggravation down the road."
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