Simple put - developing software which will be using strictly inside your company is just big waste of money. Why?
Image two companies, one wanted to improve their logistic procedures and another software company which wants to earn money on developing logistic software. Both companies hire 20 talented developers starting to build logistic solution. First company’s development team builds beautiful product which helps to reduce 10% of storage expenses for the company. Second company’s development team also builds pretty product and launches it, and since their market was much more that one company – they saved 10% storage expenses of each company which buys their software. If solution was good enough – they earn times more money that first team. Easy math shows that spending resources to second project is much more profitable that to the first. Now since it’s all about money, if you are going to invest money and have to options to invest whereas risks are equal but dividends are 1 to 100, where do you invest?
Another thing is that after the end of project in case in-house development we have 20 employees, which have nothing to do. And of course this burden will affect our decision to whether or not to implement another project (which might be even less valuable that first one).
So, what to do if you have non software business and want to create software product for your business? Explore options available on the market. If there is a product which suits 90% of your needs – buy it, and you will save huge amount of money J Only if there is no such product – start thinking about implementing it. If you truly believe that there is available market niche, then hire best people, create start up, funded by your company and start developing. In case of success – it’s WIN-WIN situation.
PS This idea has some exceptions. It’s ERP and reporting frameworks. Usually every organization has unique set of data and unique set of ERP system configurations. So after creating some reporting solution or ERP module customization – it’s not possible to sell it worldwide, it won’t feat other organizations.
PPS Intentionally outsorcing is out of scope. Maybe I will talk about it latter :)
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