Build vs Buy Software in the Age of AI

‘Should we develop our own software or purchase a ready-made solution and adapt it to our needs?’ This fairly standard question is the starting point for virtually any project that plans to use IT solutions. Until recently, the answer was obvious: in-house development required time and resources, but offered personalisation. Ready-made software offered speed and accessibility, but limited possibilities. Now, with the addition of AI, automation and cloud solutions, it is difficult to predict what hidden costs a particular solution will entail.

The economics of solutions
AI is changing the approach to software development, and the debate over whether to buy or build is becoming increasingly heated.

It seemed simple enough:

• When developing software, the client company owns the code and architecture and can make any changes it wants.
• When purchasing software, or more accurately, subscribing to it, as is most often the case today, the business only gains access to the functionality. On the one hand, this means predictable payments, updates, and support without the need for your own servers. On the other hand, it means dependence on the vendor: their prices, restrictions, and priorities.

AI shifts this balance. Some of the ‘expensive’ tasks can now be solved faster and cheaper. Ready-made products often already contain built-in AI modules, but along with convenience, they bring new questions — from algorithm transparency to data security.

At Emat EOOD it company, we are increasingly seeing a situation where customers come to us not with a ready-made request to ‘make us a product,’ but want to carefully calculate the economics: where it makes sense to build ourselves, and where it is wiser to adapt ready-made solutions.

Speed versus control
AI code generation, no-code platforms, and cloud services make it possible to assemble working prototypes in a matter of weeks. But speed does not always mean sustainability. When it comes to customer data or business logic as a competitive advantage, control is important.

Today, this is especially noticeable in companies directly related to data: it is cheaper to maintain your own code and be sure that data will not ‘leak.’ For example, Hewlett Packard Enterprise's (HPE) legal department uses AI agents to automate most tasks and does not purchase ready-made systems. The old system was slow and unsafe for confidential data (contracts, negotiation strategies). TravelPerk's legal department chose a similar path — custom-developed software turned out to be both cheaper and safer.

Hybrid as a strategy
Most companies opt for the third option: they adapt ready-made solutions to their needs or combine both approaches. For example, they use SaaS for internal processes (CRM, communications, document management), but develop their own systems for working with customer data or unique analytics. This reduces the cost of entry and speeds up launch, but leaves the option to move away from the vendor if the rules of the game change.

Today, the choice between buying and developing goes beyond simple economics, according to experts at Emat Development. To maintain stability, companies need to carefully assess their core competencies. It is important to understand which technologies really give a competitive advantage and which are more convenient and cheaper to obtain on the market.

The price of error
For customers, the main question now sounds different: not ‘build or buy?’, but ‘where exactly is control needed, and where is speed more important?’ to keep the business sustainable. Today, the cost of data leakage is around $4.9 million. In the financial sector, this figure is even higher — around $6 million. In Europe, fines imposed by regulatory authorities under the GDPR can reach €20 million or up to 4% of a company's annual turnover. In the US, healthcare organisations risk paying up to $1.5 million per year under HIPAA.

What's next?
For many companies, the help of an experienced software developer is crucial — they can help identify where software provides a competitive advantage and where it is merely an infrastructure service. Emat Ltd analyses business processes, assesses risks and, together with the customer, determines what is worth developing in-house and what is more rational to purchase ready-made.

So, what should you do: buy ready-made software or look for a company that develops custom software?

When to buy ready-made software:

• Ready-made software covers the main business tasks
• You need a quick solution (a ready-made solution speeds up time to market)
• the product does not directly affect competitive advantages
• you do not want to take risks with development and lengthy refinements
• standard solutions cover most tasks

When is it better to develop software from scratch:

• the business has specific requirements that are not met by standard IT products
• proprietary software provides a competitive advantage
• non-standard features and innovations are needed
• the business model requires new ideas and flexibility
• a solution is needed that can be easily scaled in the future
• there are no suitable mature solutions on the market