[LarryMade]

while it may be a point that they may have to rewrite it down the road, the advantage is they retain the logic so they don't have to start again from square one with a new vendor trying to get their system to work.

Also they could opensource it or sections to get help in hardening the code, create interoperability APIs, or anything they choose. Such an option is usually not a possibility with a private vendor.

Another issues is when you do have a significant change in law or policy getting the vendor to get those updates out in a timely/inexpensive manner may not be so easy.

Interoperability is overrated, what happens when HR decides they to get a new system? ...and that new system doesn't work with your current tracking system X but only with the much more expensive and over complex Y pro system?

I guess it comes down to is how important is it to have your hands on the data and process? I know some schools are really tiring of the "new system every five years or so" cycle that they go through (this can include, besides software, new hardware, training, reassigning staff responsibilities - all depending on the systems needs,) having control of costs and process might help them in the long run.