Build vs Buy Strategy


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Presented by Chris Halton at Online Publishers Association (Technical Video Day). September 2009

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Build vs Buy Strategy

  1. 1. Consideration of…Build Versus BuyDecision-MakingChallengesSeptember 17, 2009References:Corporate Executive BoardForrester ResearchExperture ResearchNBC/NYTimes/CNBC
  2. 2. Build Versus Buy Decision-Making Challenges Build Ave vs. Buy Street ? When faced with the decision of building When considering a build vs. buy decision, IT Leaders are faced with solutions, IT Leaders vs. buying software several common decision points, each with their own set of are faced with several decision factors: consequences. Sound familiar ? •Total Cost of Ownership over Lifecycle •Features & Functionality •Maintainability & Control •Competitive Advantage, if any ?
  3. 3. Build Versus Buy Decision-Making Challenges Strategic Considerations Project Impact vs. Complexity Market Maturity vs. Competitiveness High High Decision based on Most likely Most likely Ambitious other to buy to build projects factors Strategic Market Impact of MaturityApplication Decision Most likely based on Low impact Most likely to build other projects to buy factors Low Low Low High Low High Application Complexity Market Competitiveness Application complexity is a factor in the decision, as IT Mature markets are more likely to offer sufficient, organizations are more unlikely to build highly complex industry-specific functionality than newer applications. However, several financial services firms less mature markets. build wealth-management software in-house, few Competitive markets are more likely to offer low software organizations develop proprietary Enterprise Resource pricing than markets dominated by vendors. Planning (ERP) Systems.
  4. 4. Build Versus Buy Decision-Making ChallengesTCO Calculation Scorecard A simple method of evaluating the Total Cost of Ownership is to align Lifecycle Milestones side-by-side. Where: TCO = Capital Costs (one-time) + Operating Costs (annual) Build Cost Factors Cost($) Buy Cost Factors Cost($) Software Development Resources $ - Software Licensing $ - Software Quality Control & Testing $ - Software Implementation & Integration $ - Software Configuration & Deployment $ - Application Customization $ - End-User Training $ - End-User Training $ - Ongoing Maintenance & Enhancements (RTS) $ - Ongoing Maintenance & Support Fees $ - Software End of Life $ - Software End of Life $ -
  5. 5. Build Versus Buy Decision-Making ChallengesCommon Build vs. Buy Decision Making MistakesNeed for an Eval Process: Ad-hoc processes create inefficiencies and fail to provide scalable data to inform future build versus buy decisions Project-to-project evaluation processes generate operational inefficiencyVariable Maturity Mature markets may not offer adequate functionality; competitive markets may not offer lower costs than buildingIncomplete TCO Inaccurate decision based on incomplete TCO which don’t capture the full costs and benefits / build and buy optionsMisinformed Requirements Ad-hoc processes do not adequately inform product negotiations with software vendors or development requirements i.e. “Do my requirements match your product offering ?” “I’ve purchased a solution I thought met my requirements, but actually does not “Process Recommendations Establish a Team Software Architect Project Manager Stakeholder Reuse Buy Build •Does current in-house •Does packaged software •Are required applications applications address business address 70% of business features missing from requirements ? requirements? the packaged software ? yes •Can developers customize yes •Does packaged software yes •Can internal resources build existing application to allow customization or or integrate to business address these requirements ? integration w/ third party requirements ? services ? no no Total Cost of Ownership (TCO) Analysis
  6. 6. Build Versus Buy Decision-Making Challenges = Buy = BuildCNBC Global Data System The Next Generation Data (GDS) will provide a standardized platform to retrieve, store and disseminate information, news and market data across all global applications and digital platforms (ex: On-Air Apps such as Ticker, Charting, Web and Mobile). Application Middleware Symbology/ Reference Data Monitoring Admin Legacy History dB System Caching Layer Messaging Layer Feed Handlers
  7. 7. Build Versus Buy Decision-Making ChallengesNew York Times Video Production and Distribution Systems The Video Production Systems will redesign workflow to eliminate redundancy in production, automate approvals and publishing processes and prepare the newsroom for multiplatform distribution of video content. Benefits Bring encoding and transcoding in house to eliminate time and bandwidth intensive file transfers. Secure corporate assets ensuring backup and disaster recovery procedures. Improve metadata workflow and asset tagging for improved cataloging. Support exponential growth in syndication businesses.
  8. 8. Creation Collection Distribution Display o What outside sources o How many distribution o What are the variouso Where are your channels do you have? devices and players youeditors? contribute video? publish to? (UGC, syndicated,etc) o How many codecs ando What metadata must bitrates do you need? o Do you want instantthey input? o What metadata streaming or downloads? format do you ingest? o How fast should the fileso How fast does the go live? o Do you want/havenetwork need to connect o How fast does resources to maintainto storage? the ingest of content need to happen? o How do you want to your own player? integrate your CMS witho How much do they video playback and o What ad units do youshare projects and o What approval mech- anisms do you need? play lists? require?assets? o What search cap- o Do you have a CDN o How interactive oro What is your approval preference? passive do you want theprocess? abilitites do you need? user experience? o Do you need image o Do you need MXML recognition? feeds? o What display metrics do you require? o What are your rules o What are your commerce for storing collected needs? assets? o What reporting/ tracking do you require? o Where is your rights data stored?