Build vs. Buy in CRE: A Strategic Framework for Smarter Decisions

The "build vs. buy" debate is a perennial challenge for CRE professionals navigating the complexities of technology adoption. While the initial decision may seem straightforward (buy for speed and cost-efficiency, build for customization and competitive advantage) the reality is far more nuanced. To make the right choice, organizations must evaluate their unique needs, resources, and long-term goals.

Here's a strategic framework to guide your decision-making process.

1. Define Core vs. Edge: What Truly Sets You Apart?

The first step in the decision-making process is to distinguish between core functions and edge innovations:

• Core Functions: These are foundational capabilities that keep your business running—think ERP systems, data pipelines, and authentication tools. For these, buying off-the-shelf solutions is often the smarter choice. Established vendors bring expertise, reliability, and ongoing updates, allowing you to focus on your core business.
  
  
• Edge Innovations: These are the unique features or workflows that differentiate your business in the market. If a feature directly impacts why customers choose you (like a proprietary acquisition model or a unique data analysis tool) it may be worth building in-house to maintain control and exclusivity.

Key Question: Would your customers choose you because of this feature? If yes, consider building it.

2. Evaluate the Market: Is There a Mature Solution?

Before committing to build, assess the maturity of the market:

• Mature Markets: If established vendors offer proven solutions with robust integrations, buying is often the best route. These solutions are typically faster to implement, lower risk, and more cost-effective in the long run.
  
  
• Emerging or Blind Spots: If the market lacks solutions tailored to your needs, or if existing options fail to integrate with your systems, building may be necessary. However, this comes with higher risks and costs.

Key Consideration: Even in mature markets, explore whether vendors can customize their solutions to meet your needs. Collaborating with vendors can often bridge gaps without the need for a full in-house build.

3. Assess Your Internal Capabilities and Resources

Building in-house requires more than just a good idea; it demands a skilled team, ongoing resources, and a clear plan for maintenance and updates. Ask yourself:

• Do we have the technical expertise to build and maintain this solution at scale?
• Can we afford the upfront development costs and the ongoing maintenance burden?
• Will this project divert resources from other critical initiatives?

Pro Tip: Avoid turning your IT department into a bottleneck. Overcommitting to in-house builds can lead to a backlog of maintenance tasks, stifling innovation and agility.

4. Plan for the Long Term: Avoid the "Lock-In" Trap

One of the biggest risks of building in-house is becoming locked into a solution that quickly becomes outdated. Market dynamics can shift, and what was once a unique edge may become a common problem solved by multiple vendors. In such cases, your in-house solution could become inferior, leaving you with sunk costs and limited options.

Mitigation Strategy: Regularly reevaluate your in-house solutions against market offerings. If a better, more cost-effective solution emerges, be prepared to pivot.

5. Focus on the End User: Build for Impact, Not Vanity

The ultimate goal of any technology decision is to empower your users and drive business outcomes. Whether you build or buy, ensure the solution aligns with user needs and delivers tangible value.

• Avoid Vanity Projects: IT teams may be tempted to over-engineer solutions that impress technically but fail to resonate with end users.
• Iterate and Adapt: If you choose to build, start with a minimal viable product (MVP) that addresses the most critical needs. Gather user feedback and iterate to improve.

Worst-Case Scenario: Building a solution that users dislike or refuse to adopt. This not only wastes resources but also undermines trust in future initiatives. 

6. The Guiding Principle: Buy Reliability, Build Advantage

At its core, the "build vs. buy" decision boils down to this principle:

• Buy Reliability: Leverage proven solutions for foundational needs. Let vendors handle the heavy lifting of maintenance, updates, and compliance.
• Build Advantage: Invest in custom solutions that deliver unique value and set you apart in the market.

A Balanced Approach to the Build vs. Buy Debate

The "build vs. buy" dilemma is not a one-time decision; it’s an ongoing process that requires regular evaluation. By defining core vs. edge, assessing market maturity, and aligning with user needs, CRE professionals can make smarter, more strategic choices. Remember, the goal is not just to solve today’s problems but to position your business for long-term success.

Interested in learning more? Don't miss the panel "Hybrid Done Right: Buy the Core, Build the Edge" at CRETech, presented by PredictAP, Overlay Capital, Forty5Park, and Connexus.