Should You Build or Buy Your Next HR Tech Solution? (Oops Did I Think That Out Loud #38)

Build vs. Buy (vs. Rent vs. Wait) decisions are age-old debates for enterprise technology purchases. This is especially true in HR Tech, where the general assumption is that all we need are Word documents and Excel spreadsheets, with a touch of Tableau, and the entire HR function is in business.

I have seen an increase in the build vs. buy debates recently. Given the economic conditions we have been experiencing since 2023, this shouldn't surprise anyone. The silver lining to this debate is that it indicates more cross-functional collaboration between HR and IT teams in trying to reduce spending during challenging economic times.

So, if you need an HR tech solution in the next six months, should you build it or buy it?

Here's my take: approach the decision as if you will try building it first because it will make you 10x smarter about what you need to buy and the selection criteria for your purchase.

Specifically, do these five things to ensure you are making the best choice for your organization, remain fiscally responsible, and have a solid business case to back up your decision:

1. Outline your needs and chat with your IT (or other functional) partners.

This will give you an opportunity to practice succinctly describing the business challenge, your proposed solution, and why that solution works to address the challenge. Regardless of whether you end up building or buying the solution in the end, you need to be able to describe these things to whomever (internal partner or vendor) is creating the solution for you.

Also, you might be told that the solution you are looking for is not a priority for your partner organization at the moment, in which case, congratulations. You can skip the rest of this article because you took the time to have that one conversation.

2. Understand what parts of the solution you need can and cannot be done internally via build.

This will give you an in-depth understanding of the organization's internal capabilities, your non-negotiable solution needs, and any limitations on the build solution. Also, it allows you to finetune the details of the solution you are looking for. For example, if you ask for a People Analytics solution to store data and create dashboards, 95%+ of enterprise IT organizations will tell you that they can build it in-house. However,? if you ask for a People Analytics solution that can warehouse people data from 8+ data sources with 10+ years of history, is trained to predict future workforce needs based on historical seasonal labor trends, and is capable of allowing you to create and finetune appealing data visualizations with a few mouse clicks, then you'll likely end up with a few blank stares from your IT team and possibly their silent permission for you to buy a solution.

The same can be said about AI intelligent assistants. If you ask solely for an AI-based solution to help direct your workforce to documents on SharePoint, then most IT organizations will tell you they can build it themselves or get you on to MS Co-Pilot. However, if you need an intelligent assistant built on a model that is solely designed for HR, trained by 100+ HR resources globally over the past six years, is versed in HR policies across 50 countries, can be used in multiple languages, can be independently audited for compliance, and meets the latest EU AI regulations, then once again, you are likely going to be told to see what's available in the market for purchase.

3. Know how much time you have to solve and deploy your challenge.

Depending on the urgency of your challenge, you may not have the time to build a solution quickly. Solution vendors have spent years obsessing over the business problem they are looking to solve, fine-tuning their solutions, and actively incorporating customer and prospect feedback from many organizations. They have spent time, effort, and investments to ensure that solutions can be deployed quickly in any organization.

Any in-house-built solution will need time to be tested, verified, and fine-tuned, which takes time. In-house solutions could be great because they are customized to fit your specific needs, but also remember the time you and your team might spend communicating and testing for all the customized requirements.

4. Remember that all tech solutions require maintenance and updates.

Most people forget to include the resources required to maintain and sustain the solution in their build vs. buy business cases. All bug fixes, software releases, product support, and mandatory compliance configurations are typically included in a SaaS licensing agreement. As a business user, you would pay the licensing fee and never have to think about these things besides having a super admin resource staffed internally to own the tech product.

When you build a solution in-house, someone internal to the organization (HR or IT or somewhere else) is responsible for supporting, debugging, and monitoring the performance of your tool. You are also responsible for ensuring your tool is up to spec with the latest regulatory requirements. All of that costs money. "Build" doesn't always mean "build it once and run it forever"; sometimes it ends up being "build it once and regret it forever because now you are stuck with a solution that costs more to maintain and it was to build."

5. Decide if you are solving for the now or the future.

When you buy a solution, in addition to the actual technology solution, you buy into a partnership and a vision for the future. You trust that your solution provider has the vision and strategic alignment with your organization's growth trajectory and will be a helpful and supportive partner in catapulting your organization in the direction it wants to go. Because of the way the HR Tech market works, you know that your solution provider will constantly innovate and deploy new product features that can be useful to you.

When you build a solution in-house, you are solving for the now. Your IT team may or may need more resources to iterate the product. Your enhancement requests may or may not be your partners' strategic and budgetary priorities. You may or may not have to pay for a third-party vendor to support your solution because internal resources are limited.

It's about what works best for you. We've all duct-taped and super-glued things around our house that really should not be super-glued together, and sometimes, you have to do what you have to do to get through the next quarter. Whatever decision you make, make sure you do it with your eyes wide open and that your stakeholders are well aware of the pros and cons of that decision (just in case convenience-amnesia ever strikes a few years down the road).

Out of curiosity, are you team Build or Buy?