Building vs buying digital technologies in agribusiness
Dan Covill
When keeping up with growers and maintaining a competitive edge is more important than ever, one central question faces agribusinesses that are investing in the digital space:
Do we build it or buy it?
Should your internal engineering teams spend time becoming experts in that space, and spend hours and resources building digital capabilities your organization needs to grow and serve your customers? Or, do you partner with an external company who’s already built those digital tools?
Agribusinesses wrestle with this question when it comes to:
APIs for data integration
ERP systems for accounting or sales
Sales tools and CRM platforms
In an age of inflationary pressure, unpredictable labor costs, and more, it’s no wonder organizations hesitate at the up-front and ongoing costs of buying a digital solution. So they lean internally and try to build it on their own – but often, fail to see the long-term cost of that choice.
If you’re mulling whether to partner with a provider, or build a solution yourself, there are a few important pieces to consider.
The Upside of Building
Allows the ability to quickly change and re-allocate resources
Engage underutilized IT staff resources
Avoid time and resources used to find a vendor partner
Inherent understanding of the business to build requirements that replicate current processes
The Downside of Building
Key person risk, and concerns of operational continuity
Ongoing cost of labor, recruitment, and skills training
Increased stress to “build the plane” as it’s being flown
Vendors can bring in best practices to help improve underlying processes
The cost associated with taking on all maintenance work
The Upside of Buying
Contractual responsibility shifts to another organization
Reduction of project risk
Faster timeline to implementation and ROI
Experienced change management guidance to improve user adoption
The right talent and engineering expertise already exists with your vendor
The Downside of Buying
Perceived higher up-front costs (However, the lifetime costs of building is typically higher than organizations realize)
“Outsourcing” can feel like a loss of control (Choosing the right partner who values customer service and communication is critical)
Potential misaligned incentives (Vendors should be verified and illustrate examples of success. Ensure that incentives are aligned)
Zoom out: Why building isn’t a catch-all solution
Recruiting, hiring and retaining engineers and developers has become increasingly difficult given today’s demand for critical programming skill sets. Then add in salary, training, and costs needed to maintain and upgrade the system over its lifetime.
According to Gallup, one in six IT projects exceed their estimated timeline, and exceed costs by up to 200%. Add that to the fact that you’re diverting internal resources away from product development, customer service, or innovation – and you can see how in the long-term, building isn’t always the most cost-effective option.
In fact, IT failures equal out to a loss of $50B to $150B per year in the U.S. That’s a price tag that doesn’t come due immediately. But it’s one that no agribusiness can afford to be a part of in the long run.
The cost of building your own solutions can often be expensive and frustrating long-term: the extended timelines and cost of labor, time, and resources you dedicate to ongoing maintenance and evolution. Those are all obvious line items.
What many agribusinesses fail to account for, though, is the value to customers that’s lost when you divert resources away from your core competence.
Assessing the buying opportunities
Meanwhile, the cost of buying a digital tool will often be an exact dollar amount. But the long-term costsof that choice depends on which buying path you take: purchasing an ag-specific solution or an industry-agnostic one.
The more generalized platforms might work well for non-ag brands. But agribusinesses need very specific functionality and data around rebates, crop inputs, POS transactions, and more. So when this is the “buying” path you take, it’ll often require customization on top — which can add months (if not years) to your rollout.
Keep your eyes peeled for Part 2 of this blog series, where we dive more into the “buy + customize” path, coming soon.
Ultimately, any solution needs to drive better performance, improve productivity, and let you – the agribusinesses – do what they do best.
That’s where Smartwyre can help.
Whether your agribusiness needs help with calculating low nets, tracking rebate earnings, or collecting and consolidating EDI/POS transaction data, Smartwyre has tools that are already built out, tested, and ready to go from day one.
