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Managing the Build / Buy Decision

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Slides Scott Stokke recently used in his discussion w/ mentees of The Product Mentor.

Synopsis: Evaluate between building internally or buying a software or service for your platform or feature. Continuing discussion on how to get buy-in from stakeholders.

The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.

Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.

http://TheProductMentor.com

Published in: Education
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Managing the Build / Buy Decision

  1. 1. MANAGING THE BUILD / BUY DECISION Scott Stokke Director, Product Management First Advantage scott.stokke@gmail.com linkedin.com/in/scottstokke
  2. 2. 2 • Recovering Developer • Product Manager / Director – Startups – Fortune 500 – B2B / B2C – Director / Business Owner at First Advantage • MBA WHO AM I?
  3. 3. 3 WHAT ARE WE TALKING ABOUT? Do you build it yourself? Do you buy from someone else?
  4. 4. 4 • No time constrains on your project - (ha!) • Technology is a strategic differentiator • Technology or process is core to your offering • Technology hasn’t been built before (or no vendors available) – Not all features are in off the shelf software • You have an available technology team (or one can be made available) HOW DO YOU DECIDE TO BUILD?
  5. 5. 5 • Technology or process is a commodity • Provides no differentiation • Not a core competency – Don’t want it to become one • Time constraints on project (time to market) • Lack of expertise in house HOW DO YOU DECIDE TO BUY?
  6. 6. 6 BENEFITS Build • Control your own destiny • Control all features and timing of features. – Custom processes are easy to solve. • Competitive Advantage – No one else has this Feature Buy / Partner • Complete product immediately – Reduced time to market • Maintenance and updates are done without intervention • Reduced costs – Ability to use resources in other places
  7. 7. 7 POTENTIAL ISSUES Build • Resources for maintenance and updates. – Increased costs and expanded staff • Build / maintain specialized expertise in product • Time to market – Usually need more time to get project done Buy / Partner • Product many not have all the features you need – Need to influence partner roadmap • May need to integrate – Need to budget for cost of integration • Partner business viability – How long will partner support this product? • Are competitors using this product?
  8. 8. 8 • Make sure you’re clear on the problem you’re solving – Is there an MVP? Are there Intermediate steps? • Do you’re diligence – Understand the importance of what you’re trying to do • Make an assumption and test – Run the numbers – Get quotes – Test drive HOW DO YOU DECIDE?
  9. 9. 9 • Beg • Business cases – Cost benefit analysis – Doesn’t have to be fancy! – ROI, if proven, makes the difference! • Organizational aptitude – Is your organization a “build it here”? HOW DO YOU GET WHAT YOU WANT?
  10. 10. 10 • Lots of options – depending on the vendor – Negotiate! • Smaller, nimble vendors have more flexibility – Exclusive contracts – Code escrows and customizations • Be Creative! – Incrementally buy what you need (users) – Delayed payment terms – Joint go-to-market plans • Leave yourself some options – Don’t sign that 10 year deal BUY – HOW DO YOU MAKE IT WORK?
  11. 11. 11 Problem: Personal finance application. Help consumers budget and save. Issues: • Need to test market quickly – Space is crowded • FinTech solution new business problem, no current expertise in the space. CASE STUDY – FINTECH STARTUP
  12. 12. 12 CASE STUDY – DOCUMENT MANAGEMENT COMPANY Problem: Document Management company adding workflow to application to allow users to approve / route / report on documents Issues: • Company feels this feature will be a differentiator – No players have this feature • Opens up the company to new potential verticals when feature in place • Need to get to market fast
  13. 13. 13 FINAL THOUGHTS • Not always a clear answer • Understand the scope of the problem – Validate Assumptions • Know your organization – Are they predisposed one way or another? • Keep end goal in mind – What you’re trying to accomplish should drive your project
  14. 14. 14 THANKS! Scott Stokke scott.stokke@gmail.com linkedin.com/in/scottstokke

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