Buy-side firms use many tools and processes to manage their clients’ investments. When firms grow, the complexity of their support infrastructure only compounds. As firms struggle to meet growing demands, a question emerges: when new or updated software is needed, is it better to build or to buy?
This is not a simple decision. There are important challenges all buy-side firms must overcome during the “build or buy?” decision-making process. Here are six common challenges and best practices to keep in mind if your organization is looking for a new software solution.
As with many complex decisions, key stakeholders sometimes weigh their options and decide that the answer is obvious based on their intuition. This type of decision-making can be risky. Intuition is often wrong, especially when the true company needs and system requirements aren’t fully known or understood at the outset.
Often, core users of a current system are not key decision makers and do not have the authority to provide their perspective in the build or buy decision. Key stakeholders, who have a very different perspective than core users, must understand the totality of the value, integration, and functionality of the current and potential systems.
Another important consideration is your IT and data security infrastructure. This should be explored no matter what type of system you choose. Security—and who is in charge of that security—is critical for your systems and data.
Does your firm already employ a team of developers? If so, is your team large and skilled enough to build out the new system you envision? These are crucial questions your firm needs to consider early in the decision-making process.
How complex is the system you envision? In general, the smaller the scale and level of complexity, the easier it is to build. Conversely, systems that are complex and require highly specialized software are usually more cost-effective to purchase.
Are your peers facing the same challenges as you, and does a similar solution work for many in your industry? If so, buying an industry-leading software solution is likely the choice with the most return on investment.
Want to learn more? Click here to download Clearwater’s To Build or Buy? A Decision Making Framework for Buy-Side Firms to help your firm through the build or buy decision and to see the decision making process in practice.