Analytics: build vs. buy — the pros and cons

Pros of buying

• Reduced and predictable cost
  An analytics platform can make a big difference in keeping your long-term profit margin in check. Much like any forecasting, it’s not so much about initial deployment costs, but about building ROI and sustainably building profits in line with your customer base. And when you work with an embedded analytics vendor, you’ll only pay for what you use. You can choose from à-la-carte, prebuilt platform components based on current and future needs, including how much you need in terms of data computation power, data volume, and the number and size of user groups (i.e. customers, teams).

• A partnership with specialized experts — who are always on call
  You won’t need to go through the hassle of recruiting and onboarding hard-to-find specialized talent. Employing a vendor with long-term industry knowledge and experience is usually more beneficial and efficient for your company. Embedded analytics platforms are complex solutions requiring the development of a full-blown engine as well as multiple tools to support them. Your provider will have a dedicated team ready to quickly deploy solutions, troubleshoot any issues or discuss what new features you would like to see developed in the platform.
• Decreased time-to-market
  Buying an advanced analytics platform means a much quicker deployment than building. You can launch in as few as eight weeks and drive instant customer growth and retention. And the benefits will continue throughout the life of the partnership. An inherently scalable and agile platform will give you a strong competitive advantage as you expand.

• Increased flexible scalability
  Scaling is not as easy as it sounds from a technical perspective. The architecture, infrastructure, and related environments are complex to build effectively. It requires expertise to achieve an outstanding level of automated and flexible scalability (across data volume, number of users, cost) without affecting performance. With the right embedded analytics platform, you will have this valuable ability on demand.

• Maximum security guarantee
  Working with data and running an analytics solution requires that you meet various security requirements and regulatory standards. These requirements evolve, with new regulatory standards for different regions or industries being introduced over time. Moreover, you might consider entering a market that requires a higher set of standards than you originally planned. Some embedded analytics providers offer the full cover of data security and privacy from GDPR-S to HIPAA — so you don’t need to hire more cybersecurity specialists or go through the lengthy process of deciphering and fulfilling the toughest security standards.

Cons of buying

• Reliance on the capabilities of an external vendor
  When you go with a third-party analytics platform, you’re paying for a complex solution created by the vendor. You could potentially be limited by the roadmap, technologies, and integrations they offer. And depending on the vendor you partner with, you may end up needing to make adjustments to your infrastructure and data storage in order to get the most out of the advanced analytics platform and its automated features and processes.
• Loss of complete control over your data
  Regardless of whether you use a private or public cloud, using a third-party analytics platform means that your data will have to go through another vendor. Therefore, you need to be sure that the analytics platform you choose and its back-end, data transformation processes fulfill the highest privacy and security standards.

Key questions to consider in the build vs. buy debate

Developing analytics features in-house gives companies more flexibility and control over the end product. The original application developer is the most intimately familiar with its product and customers, and so will be able to tailor a solution more precisely. Building analytics features in-house, however, requires a significant investment and often yields subpar results due to the level of investment required and the need for specialized skills.

Buying an out-of-the-box solution enables a company to leverage the massive investments already made by the analytics provider and gives access to state-of-the-art analytics capabilities.

Beyond figuring out the problem you’re trying to solve when deciding whether to build or buy, start asking yourself the following critical questions:

Facing the expectation vs. the reality

Building projects often go wrong because of the long-term risks and hidden costs.

For example, building in-house means all of the support, maintenance, enhancements, scale, and upgrade responsibility for the application falls on your internal team. If the application becomes successful and starts to scale up, that will lead to more demand for features and capabilities — which could create a development backlog and technical debt.

Even with the best business leaders and product managers, building in-house technology solutions almost always goes over budget. One study has shown that 53% of projects cost 189% of their original estimate and usually become more time-consuming than planned. As a result, organizations cancel 31% of build-it-yourself projects.

This is why taking the time to make sure you have addressed key business requirements outside of basic features and functionality is critical for building a successful product and business.

A different scenario: Buying, then building

Ultimately, buying an analytics platform and then building your data products around it may give you the best of both worlds. With the right vendor by your side, you will be able to deliver customizable, real-time, self-service analytics to your customers and business users with a short time to market while fully controlling your costs. And your analytics will never stop scaling.

Continue to our more technical “Go-to Guide to Launching Branded & Embedded Analytics” where you will find more details and deeper explanations about the technical options and aspects you should be looking into when launching (embedded) analytics solutions (no matter whether it is built in-house or bought). We highly recommend it.