In which circumstances should an organization buy, rather than build, software?

Question

Options

• AThe software is widely available and its features are standardized across most organizations
• BThe organization is part of a regulated industry and has a strong focus on internal policies
• CThe requirements of the organization are frequently changing because of rapid expansion
• DThe consumers of the software have many and varied customization requirements

• A
  86% (18)
• C
  5% (1)
• D
  10% (2)

Explanation

Buying software makes the most sense when the functionality is commoditized - meaning the software solves a common problem in a standardized way that works for most organizations (e.g., payroll, email, accounting). There's no competitive advantage to building something you can purchase off the shelf, and doing so wastes resources.

Why the distractors are wrong:

• B is incorrect because regulated industries with strong internal policies often need custom solutions to meet specific compliance or operational requirements that generic software can't satisfy.
• C is incorrect because rapidly changing requirements favor building, since custom software can be iteratively adapted; purchased software is rigid and slow to update.
• D is incorrect because varied customization needs point toward building, since off-the-shelf products typically can't accommodate many specialized configurations without becoming impractical.

Memory tip: Think of the "commodity test" - if you could walk into any competitor's office and they'd be using the same tool for the same purpose, buy it. If your needs are unique, regulated, changing, or customizable, build it.

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