Buy vs build and the rise of open source are driving digital transformation

One of the defining characteristics of digital transformation for most organisations is the realisation that software development is a core business activity. For much of the 1990s and 2000s, building your own software was something to be outsourced – often to low-cost offshore providers. “We’re not a software company,” boardrooms would cry; “Why would we spend money employing programmers?”

Now, software is increasingly central to customer engagement and so, for many organisations, that means ongoing iteration and enhancement of that software is a key process. As such, the question for many IT and digital leaders is changing, from insource or outsource, to buy or build.

With an IT infrastructure that is agile, increasingly using cloud services, built on service-oriented architecture, there is an increasing element of commoditisation working its way through the application stack.

Where requirements are unique – perhaps even central to the competitive advantage of your company – you’d be inclined to build. Where it’s a commodity function, you’re likely to buy. But the debate about where you draw that line is yet to be resolved.

The Government Digital Service, for example, recently revealed a project to develop a standard platform as a service (PaaS) capability across Whitehall. Critics immediately jumped on this and asked, with many PaaS solutions available on the market, why build when they could buy?

IT leaders need to have a firm understanding of how software differentiates their business, and so where to draw the blurred line between what to build and what to buy. One of the most interesting facets of this distinction has come in the dramatic rise of open source.

Once upon a time in IT, using open source simply meant Linux instead of Windows, or maybe MySQL instead of Oracle. Now, there is such a huge diversity of open source tools, and almost every leading digital business and tech startup is making extensive use of them. Open source is driving the further commoditisation of software capabilities, and as such is driving the move to greater in-house software development resource and more collaborative approaches.

It’s been a remarkable turnaround for open source over the last 10 years, placing the trend firmly at the heart of the digital revolution. And it’s another indicator of the enormous changes that will continue to challenge traditional software suppliers whose licensing models will find it ever harder to fit with the emerging digital strategies of their customers.