To build or not to build, that is the question — well, it is in the tech world. For some pain points that we experience as commercial real estate professionals, it’s easy to see how technology can help; we’ve been using software to run prepay calculations, to create financial reports, etc. For others, it’s hard to imagine a tech solution because the technology simply doesn’t exist… yet.
Just a few years ago, LoanBoss was just an idea floated around between a few interest rate professionals about how technology could be used to solve a lot of the problems that come with managing a debt portfolio by hand. Could we really take, what was at that point, an artisan approach and turn it into something streamlined and easy to manage?
There wasn’t a good debt management solution out there. We needed to build a platform that could centralize and automate all the data and processes around debt transactions and put them under a single umbrella. We thought we should be able to automate this. So we did.
You might be thinking the same thing. Here are a few lessons we learned along the way.
So is it better to build or to buy?
There’s no straight answer, it depends entirely on your situation. You need to carefully evaluate your needs and then decide if the cost to build is going to provide the value you need to justify the investment or if it makes more sense to buy an off-the-shelf product.
For some, it makes more sense to buy due to restrictions or simply because you don't want to go through with the DIY hassle.
According to a Mckinsey study, most IT projects cost (on average) 45% more than budgeted, take 7% more time than scheduled, and ultimately under deliver by 56% to address the challenges that the project originally set out to solve. While most companies can withstand these unseen expenses, 17% of projects fail so badly they put the company's existence on the line; these are typically with projects that go well over budget. But other reasons the project might fail includes not having the necessary talent, support, or culture.
The question of build vs buy isn’t binary. It can be something in between. Some of the best software solutions are add-ons, integrations, and front-ends built on top of existing platforms. It could be that the best solution for you is to buy a solution that meets 80% of your needs, and then build something to fulfill the last 20%.
We know software adoption in the CRE world has been pretty slow, but it’s picking up!
If you don’t want to fall behind your competitors, your options are to build your own software, buy one, or take a hybrid approach and do both.
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