Wednesday, December 12, 2007

Reflections on Build Vs. Buy in eCommerce

I spent years preaching the benefits of technology outsourcing and as good as I am sitting here, I still stick by every recommendation to "buy" (outsource) I made during my career in eCommerce Business Development.

For the clients that I worked with it completely made sense. I can not even think of a seasoned brand that I pitched at any time who could have built out an internal team of technologists and managers capable of building an enterprise level system in a reasonable timeframe without incurring significant cost. When I say “significant”, I literally mean the difference between hundreds of thousands vs. millions of dollars.

I would however through different circumstance, occasionally be introduced to brand managers and business owners who had taken on the "build" approach. Whether they knew it or not, they had most likely bitten off more than they could chew, and by a stroke of managerial genius, pure luck or rockstar developers, had pulled off their feats without breaking the bank.

Most times we would talk about the pros and cons, but I never really was swayed in my position that as a rule of thumb the barriers to even start considering the "build" approach are usually great enough to stifle any musings of internal system construction. There was even one memorable instance in which I got in a full-on debate, which was partly tequila fueled, with the CEO of FansEdge.com over dinner at Rosa's Mexican Restaurant in uptown Manhattan last fall during Shop.org. Looking back, it was hilarious (not sure how hilarious the other 8 people at the table thought it was), but I would be much more likely to end up in the middle of that debate than on one side or the other given my position right now.

My current business runs on a homegrown platform built in newer technology. It’s lean, scalable and stable and built 100% to internal specifications. It was nice to even be lucky enough to have the option to do that, which as I stated earlier, gets torpedoed pretty early for most companies for a slew of reasons (cost, time, inexperience, technology, talent, etc).

With regard to my venture, the biggest opponent to outsourcing (all upfront costs aside) would be the loss of agility. Since launch, one of our biggest weapons against the more established brands in our vertical has been the rollout and modification of features and functionality in direct and immediate response to customer and competitor information we have collected.

I decided to jot my thoughts on this down as I took a break from setting up a new product tagging and brand family supplemental navigation which was conceived yesterday morning, built in the afternoon, tested and implemented today. It has also been tweaked twice since its implementation at 5pm today. Now it just purrs, sweet!

Being a smaller company with a smaller budget to spend on marketing, our ability to adapt in minutes and hours vs days and weeks during this stage of growth is one of our biggest weapons against the big guys which would not be possible if we outsourced.

I rank the agility factor right now as one of the most important, if not most important, attribute of our brand. Without it there is no way we could have made the kind of impact out of the gates that we have.

They say that the average founder of a start-up's time is worth about $100 an hour. I'll gladly invest $600 to have a new feature in under 48 hours where I know I would have paid $1000's and waited weeks to modify someone else's system.

Come to think of it, if I had the chance to redo that tipsy Mexican dinner debate tomorrow, I think I would be sitting on the other side of the table tag-teaming with FansEdge against the Biz Dev guy preaching from his outsource soapbox.

I'm not saying that it doesn't make sense to outsource niche technology most of the time, but if you have the means and experitise to do it yourself, I say go for it. I would make the same decisions all over again without hesitation.

It’s funny what they say about walking a mile in another entrepreneur's shoes isn’t it.

Anthony Bucci

p.s. I know the picture is unrelated to the article, but I found it amusing for some odd reason and I hate long posts without a picture to take a break on... so :-p

2 comments:

jodyferry said...

Great post. Your thoughts really apply to other markets outside ecommerce as well. The tables are indeed turning.

ILADELPHIA said...

Tony I must say I enjoyed your blog today. Great marketing strategy to promote your product. The blog is certianly different from your old blog but it keeps your edge and thats a good thing. I think showing clients how this process can streamline their strategy will help them see your value to them. Hope to be seeing you soon.

FTC
Frank Capriotti