Build vs Buy / OutsourcingvsProcess Automation

The build vs buy decision determines whether you develop a capability in-house or outsource/purchase it. The core rule: build what's core to your competitive advantage, buy everything else. Building a custom CRM when your business is e-commerce wastes engineering on undifferentiated work. Slack built their messaging infra (core advantage) but bought Stripe for payments (commodity). Companies that misallocate build/buy decisions waste 20-30% of engineering capacity on projects that off-the-shelf tools handle better.

Process automation replaces manual, repetitive tasks with technology-driven workflows. Every hour spent on automatable tasks costs 3-5x more than the automation itself over 12 months. Companies that automate key processes see 30-50% efficiency gains within the first year. McKinsey estimates 60% of all occupations have at least 30% automatable activities — the question isn't IF you'll automate, but WHEN.

The 'Not Invented Here' syndrome is deadly — engineering teams believe they can build a better version of existing tools. Custom-built billing systems, authentication, and analytics almost always cost 5-10x more than buying (SaaS fees for 5 years vs. building + maintaining). Hidden costs include: ongoing maintenance (20% of build cost annually), security patches, onboarding new engineers to custom systems, and opportunity cost of engineers NOT building your core product. Conversely, over-outsourcing core capabilities makes you dependent on vendors who can raise prices or shut down.

The biggest mistake is automating bad processes. If your process is flawed, automating it just means you produce bad outcomes faster. Also, trying to automate everything at once leads to 'automation fatigue' — teams lose trust when automated systems produce errors, and the cleanup work exceeds the original manual effort.

For each build/buy decision, calculate the Total Cost of Ownership (TCO) over 3 years. For build: Development cost + (Annual maintenance × 3) + Opportunity cost of delayed core features. For buy: (Annual license × 3) + Integration cost + Switching cost risk. If the buy TCO is less than 50% of build TCO AND the capability isn't core to your competitive advantage, buy. Review all vendor contracts annually — a $500/month tool that your 5-person team used but your 50-person team outgrew becomes a scaling liability.

Start with a 'Process Audit': list every recurring task your team does weekly. Score each on time spent (hours/week), error rate, and automation feasibility. Automate the top 3 tasks that score highest on all three dimensions. Use a framework like: if it takes > 2 hours/week AND has < 5% decision-making involved, automate it. Measure ROI after 30 days.