[cratermoon]

Years ago I analyzed the build vs. buy question and came up with a rule that I later found to be not so original: buy for parity, build for competitive advantage.

Most of any business is commodity stuff, typically things like HR, payroll, logistics, finance, security. Except if your business is one of those functions. Take Amazon's logistics for example. They aren't just any online retailer, they are the dominant online retailer in large part because they optimized the hell out of their logistics pipeline.

But if it's not your bread-and-butter, then yeah, go ahead and change your workflow to whatever COTS software you pick requires. You'll be fine. I worked for an insurance company, and they picked PeopleWare for their HR system and used commodity software tools for their actuarials. I worked for a very large shoe company they has SAP at the core of their (extremely complex) product lifecycle management system because their real business differentiator is their design and marketing.

That same insurance company had a customer sales pipeline tailored to a specific market – high-end professionals like doctors, lawyers, and similar – so they had custom software for that. That same shoe company had customized design and bill of materials systems so they could get their shoes to market quickly and globally.

[jimkleiber]

I've been thinking a lot about the buy (or rent) vs build problem and one factor that keeps screaming at me is: who do I want to maintain it?

If my team or I want to maintain it, then build. If not, then buy/rent. I've built way too many things over the last few years only to realize again and again that things we build will need to be maintained by someone.

As you say, if it's a competitive advantage, then it makes sense for me to fix it, update it, adapt it, etc., otherwise it may be too costly to get distracted with maintaining it internally and easier to pay someone else to do that.

[908B64B197]

I agree with your rule, but I would add something extra:

Only build if you have the talent to do so. Early on Amazon managed to attract serious tech talent to the company. That enabled them to build. If a company can't do that then it's better to buy no matter what.

[cratermoon]

> Only build if you have the talent to do so

I would certainly hope that if the function is part of what differentiates the company competitively that they'd hire the talent. If they're trying to be the best "X" company and nobody who works there is any good at "X", they should fail. The dot-com era is littered with the graves of companies who thought that just having an idea was enough.

[908B64B197]

And yet it's surprising how a lot of companies simply won't match offers or try to play games with CoL. Or worst, consider engineering a cost center when it's central to the business.

[tomnipotent]

> nobody who works there is any good at "X", they should fail.

Except almost every software startup in the last three decades was started by folks that were not experts in the domain they eventually became successful in.

[johnjj257]

Citations needed

[dpacmittal]

Did online shop software even exist when Amazon started?

[mattacular]

I was going to say "yes!" but then I looked it up that Amazon actually launched before Ebay as a business. I don't remember actually using Amazon personally until the 2000s but they've been around since 1994, almost a year before Ebay. I'm struggling to think of any earlier online retailers who would have been building ecommerce software.

[howlin]

Especially in the early days, the main competitors to online retail were catalogue services. I would think they have most business and logistics problems in common, minus running a web site.

[EdwardMSmith]

The Internet Shopping Network launched before Amazon, but I doubt they wouldn't probably have considered licensing any of their platform.

[teddyh]

> buy for parity, build for competitive advantage.

Yes. As Joel Spolsky put it in 2001:

“If it’s a core business function — do it yourself, no matter what.”

— Joel Spolsky, In Defense of Not-Invented-Here Syndrome: https://www.joelonsoftware.com/2001/10/14/in-defense-of-not-...

[cratermoon]

Joel was one of the voices that helped me understand that, while my analysis was useful for myself and the employer at the time, my conclusion was not an especially original insight.

[jmole]

I'd call it "rent for parity", not "buy". If all you have is a license, it's effectively a rental - not a purchase.

Rent for parity, buy or build for competitive advantage.

[scott_w]

In practice this isn’t a problem. Take a non-software example:

Driving instructors typically have their cars on a 3 year hire purchase then return instead of buying. Why? Way back when, my driving instructor actually bought one of the cars. 3 months later, the engine failed and it was out of warranty.

Because of that, he realised that paying a monthly fee meant he had no surprise failures, he returned the car just as the clutch was burning out (learner drivers don’t have great driving technique, weirdly enough), and had a fresh car every 3 years for new learners.

[quesera]

Makes sense, but FWIW and IIRC, the terms of an ordinary car lease prohibit commercial use.

[scott_w]

I don’t know the details but I’m assuming he’s using commercial lease hiring, or the U.K. rules are different. The mileage and wear and tear alone would mean he’d be unable to hide it.

[gukov]

If it's for business use you should be able to expense it.

[danielheath]

If it’s for your own business who do you send the receipt to?

[stickydink]

The government

[masklinn]

Yeah I've never heard anyone think a driving instructor car was a great buy, unless you like replacing basically every driving component which can fail. These cars have it rough. Especially manual. I'm surprised a driving instructor (of all people) would think of doing that without also wanting to do a full engine and transmission rebuild.

[scott_w]

He told me his reasons but he put it down as an expensive lesson learnt.

[voiper1]

I don't think rental covers any and all failures.

[scott_w]

It’s not a rental, it’s hire purchase with a warranty, so the most common things that are going to fail are covered. Other things are just not that likely to fail in the first 3 years.

[cratermoon]

Shows how long I've been around. I still think of commercial software as something you buy and own.

[tomnipotent]

If you can't resell it, you don't own it. Do you have examples of commercial software that you were allowed to resell?

[sireat]

There used to be a pretty big business in US of reselling expensive software licenses (think AutoCad etc). I remember Autodesk trying to stop it and not being able to which brings us to the current day.

Of course now that everything is under pay as you go SaaS model, that's out of window.

Still in Europe it is legal (http://curia.europa.eu/juris/document/document.jsf?docid=124...) and people do resell mundane licenses such as Windows.

[Sharlin]

Pretty much everything was resellable in Europe at least. Used computer games especially were a fairly big thing.

[contingencies]

Nice one. Added to https://github.com/globalcitizen/taoup

[cheez]

You said it better than I ever could have!

[cratermoon]

I can't take credit for the phrase, only for being thoughtful enough in my early career to more-or-less work it out from first principles.