In house vs Off the shelf Procurement Software

In-house vs Off-the-shelf Procurement Software

When making a case for a procurement or finance software investment, any business with a sizeable IT function will inevitably need to consider whether to build that software in-house or to use a commercial off-the-shelf (COTS) system.

Obviously, either option should prove to be better than relying on manual processes or a system that is no longer fit for purpose. However, unless there are some very specific circumstances or unique business requirements then the case for COTS is generally overwhelming, as demonstrated in the diagram below, plotting the relative strengths against 4 key benefits:

Benefits of building or buying eProcurement solutionsDeep Domain Expertise

Procurement software has evolved in recent years as vendors work closely with leading procurement professionals, taking advantage of their knowledge and experience. That expertise is helping the procurement systems to be consistently refined and updated in order to improve features, process enablement, time savings and usability.
Does your IT team have the expertise and knowledge to fully understand what a successful procurement and/or finance system should look like?

Known Unknowns

Developing any system without the experience or user knowledge will always be a challenge and often your team will not know what they have missed until the project ends. Furthermore, any future development, refinement or improvement is subject to a whole new project which limits the capabilities, updates and necessary changes needed to keep up with the ever-changing procurement function.

Solution Fit

If your procurement or finance team has specific and strict requirements, it may seem like it will be difficult to find a COTS system that will fit your needs and budget. However, before making any decisions your business should check what is out there first. The procurement and supply chain software market offers exceptional functionality and flexibility across a variety of solutions at competitive market rates.
Market analysis from major industry analysts such as Gartner can help narrow down the options and identify the solutions applicable to your firm’s needs and requirements.

Time to Market

Even the most motivated, experienced and well run IT development teams with clear and comprehensive specifications can run into delays as they are usually very busy with many other on-going projects. Whereas many best in class procurement software providers have many years of experience in delivering both the software and the change management necessary in delivering a successful project.

Risk, Cost and Savings

When developing any solutions, there is a high risk of the project taking longer and therefore costing more than buying a COTS solution. Any delay of the implementation and go-live process will decrease the project returns, with lost opportunities for savings, controls and process enhancements.

Additionally, often it may be difficult to secure the needed development resource for the whole length of the project, including planning, designing, development and implementation, due to high demand within the business and other high priority projects.

However, some would argue that building a solution will minimise the issues and costs when it comes to integration with the necessary systems and data sources already used within the business. That said, technology integration has advanced rapidly in the recent years and solutions such as web3 Connect platform now allow businesses to integrate with existing finance and any other third party systems.

So, which one is it?

There is no one answer that fits all when it comes to procurement and finance software. Building and buying any solution will always involve different risks and benefits, the key is to find the right option for your business. So, if you would like to learn more about evaluating the decision, download our white paper or contact us and we’ll be delighted to talk through the options with you.