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Build vs buy software: the rebate management dilemma

Posted by Phillip How on December 11, 2019 14:30:00

You need a better way to manage rebate agreements—but should you build a software solution, or buy software one out of the box? Philip How, Business Analyst at Enable, reviews the options.

I’m constantly talking to organizations about their rebate management needs. And there’s one question that comes up time and time again. Should we build a software solution that’s tailored exactly to our current processes? Or buy an out-of-the-box software solution?

The answer—as so often in business—is it depends.

I’m writing this blog post to explain the potential advantages and drawbacks of each build vs buy software approach, in the hope it’ll help you to make an informed decision—based on your own organization, and its resources, priorities, and requirements.

To make the build vs buy software comparison as clear as possible, I’ll compare building a bespoke system from scratch, versus investing in a SaaS solution like Enable. Though, as I’ll explain, many organizations seek out a middle way.

First, let’s look at the costs of build vs buy software.

Build vs buy software: upfront costs

There’s no getting away from it. To build your own software solution, you’ll require software development resources. If you engage a software development partner, the upfront cost to your business will be considerable—and if you’ve an in-house dev team, so will be their time commitment.

Choose a SaaS solution, and the upfront cost will be much lower. You will, however, have to budget for ongoing licensing costs. You’ll still be paying these when a bespoke system might have paid for itself.

On the plus side, that ongoing licensing cost will be predictable and easy to budget for, and it’ll include the cost of your vendor maintaining, supporting, and investing in the software system.

Build vs buy software: speed of deployment

If you really need to get started fast, there’s no contest. Deploying a SaaS rebate management solution can take as little as six weeks. Designing and developing your own software solution will take at least six months—and that’s assuming your dev resources are ready to go.

Many of the businesses I speak to already have a one or two-year dev backlog, composed of higher priority projects relating to core ERP or Point of Sale systems.

Build vs buy software: risk mitigation

You can expect your SaaS software vendor to know the world of rebates inside out, including how to represent even the most complex agreements in their own rebate management system. A good vendor will also have a seasoned onboarding and customer success team, who’ve solved every issue you might face literally hundreds of times before.

Develop your own rebate management software, and there’s a lot more you’ll have to figure out for yourself. Unless you engage a software development partner with deep rebate management expertise, you’re likely to have a much bumpier ride.

Build vs buy software: performance optimization

Performance optimization is an iterative process. Even with the best will in the world, any rebate management software you build yourself isn’t going to be fully optimized at go-live.

With a well-established SaaS solution, the vendor may well have already invested millions in ensuring the best possible user experience. In short, you’ll have a massive head start in the race to peak performance.

Build vs buy software: system integration

You can expect out-of-the-box rebate management software to offer integration points straight, well, out-of-the-box. Any good solution will integrate with the leading ERP and CRM systems (e.g. Oracle, SAP, Salesforce), and have its own API, allowing you to link it to any bespoke systems your business depends on.

If you build your software yourself, you’ll also have to build the integrations you need.

Build vs buy software: ongoing management

Build your own rebate management software system, and you’re responsible for making sure it meets your needs, even as your needs evolve. If you outsourced development, you may have a support contract that covers bugs and issues with the software delivered—but it likely won’t cover critical updates or new functionality.

Even ensuring your rebate management software supports the latest browsers could mean going back to your dev team or development partner.

Choose the SaaS, out-of-the-box route, and none of this is your problem. A reputable vendor will constant work to roll out critical updates, and continually invest in their software to add the new features and capabilities their customers demand.

Build vs buy software: vendor ‘lock-in’

Want to choose who hosts and supports your software? Build it yourself, and it’s naturally your call. Commit to a SaaS rebate management solution, and you’ll be ‘locked-in’ to your vendor – though at Enable, we’ve working to change that, by helping to establish standards for our industry.

These standards could make it easier to export your data from one rebate management system to another. Keep an eye on this blog for future developments.

Build vs buy software: support for collaboration

Here’s one you might not have considered. Choose the same out-of-the-box solution as a key supplier or distributor, and there may be benefits for both your businesses.

At Enable, we’ve created a collaboration platform within our rebate management software – a place where both parties can author and agree rebate deals and review their performance, accelerating rebate deal management, and minimizing disputes.

Build vs buy software: ability to meet your specific needs

This seems like it should be an easy win for ‘build’, and in many ways, it is. Create your own software and you can map it as closely to your current (or ideal) rebate management processes as you want. A SaaS solution, meanwhile, has to be broad enough to meet the needs of multiple companies.

But here’s where things get less clear-cut. When I sit down with businesses to discuss what, in an ideal world, they want their rebate management processes and software to look like, starting with that completely blank sheet of paper isn’t always helpful. The truth is, when any solution is possible, the task of finding the best solution can be almost overwhelming.

When you’re starting from scratch, you also have to answer a lot of fundamental functionality and design questions, which—unless you’re working with a software development partner who really understands rebate management—you’re not necessarily going to get right first time.

With an off-the-shelf solution, the challenge is much better defined. You’ve a box that’s been designed to successfully accommodate the rebate management needs of nine out of ten organizations. You just need to look at your needs, look at the box, and figure out how to fit the one into the other.

Build vs buy software: the third way

‘OK,’ I hear you ask, ‘What if we’re that one in every ten organizations that simply can’t make the out-of-the-box solution work?’

This is where we have to admit the limitations of such a binary ‘buy vs build’ comparison, and recognize there’s a third way: customizing an out-of-the-box rebate management solution to meet your needs.

It’s a very popular compromise. If you’re willing to accept a little of the worst of both worlds, you can get the best of them too.

Build vs buy software: the quick round-up

Buy software benefits

Build software benefits

Lower upfront costs

Higher upfront costs

Ongoing licensing costs

No ongoing licensing costs

<6 weeks to go-live

>6 months to go-live

You can tap into the expertise of an experienced vendor and their customer success team

You’ll need to source this expertise in a software development partner, or risk hitting a lot of difficulties

Software performance will be optimized from the start

You’ll need to optimize performance over time

You’ll have ready-made integration points

You’ll have to tackle system integration yourself

Your vendor will update and improve the software

You’ll have to update and improve the software yourself

You’re locked-in to a vendor

You’re not locked-in to a vendor

You can align with supplier/vendor software to collaborate on the same platform

You can’t easily collaborate with supplier/vendors through your system

You may need to shape your existing processes to fit the software

Your software will be exactly tailored to your processes and needs

All the groundwork has been done for you

You’ll have to regularly reinvent a wheel or two

Should I build or buy my software?

I hope you’ve found this blog post on build vs buy software useful. In my experience, buying—or buying, then customizing—tends to be the best fit for most companies, simply because the benefits outweigh the drawbacks.

But… there are always exceptions. If you need help evaluating your own buy vs build software approach, don’t hesitate to get in touch.

At Enable, we provide trusted, out-of-the-box rebate management software. Whatever’s the right path forward for your organization, we’ll find it.

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Topics: Rebate Management, Rebate Management System