9/18/2007 DRAFT Make/Buy Decision Support Tool

1. Why would we consider buying instead of building?”

• To enable CIS and CTC staff to focus on *Core competencies/skills/abilities that differentiates or otherwise adds unique value. In other words, custom develop the functionality that really uniquely gives us more bang for the buck.
• To lower the overall recurring cost of developing, supporting and managing CTC applications.
• To facilitate more cost predictability with respect to application development and support. (i.e. spend our development and ongoing support & maintenance dollars wisely and more consistently).
• To manage an application portfolio that scales for the CTC System as we grow, without proportional growth in employee headcount.
• To allow the CTC System to leverage substantial technology innovations without more-costly start-up costs than if we were to do it ourselves.
• To insulate the CIS and the CTC in general from increasing shortages of key IT personnel in the marketplace.
• Another way to look at the reason Why. Refer to the following diagram for a graphical representation. Portions of the diagram were taken from Gartner:

* CORE refers to whether or not the product is viewed by the CTC as a product that is strategic to its business or competitive advantage. Core products would inherently default to an approach of “Insource.” Conversely, non-core products would be viewed as a distraction to the CTC’s primary delivery model. However, these considerations are not absolute and require reasonable and prudent judgment. Possible examples of core products would be those that aligned with:

• Systems supporting the CTC’s  knowledge capital.
• Systems which are not readily available in the marketplace.
• Systems that largely support unique information needs.
• Systems that have a limited window of opportunity that can only be reasonably satisfied with CTC talent.

2. “Core” functionality is likely not the only considerations. Other considerations that could weigh in on either the purchase or the custom develop sides may include:

• Risk/reward – risk may include resilience/responsiveness to change; disaster recovery (may be outsourced in an ASP model – could be a good thing); public relations; legal/regulatory. Reward may include satisfying an opportunity. Generally, these considerations fall into 3 categories:
  • Utility – Usual and customary business functionality. The minimum functionality necessary to support the business in general.
• Growth – These applications directly support expanding the business both in terms of increased market share and/or penetrating new markets.
• Venture – Applications that support relatively higher risk areas of business expansion, validation, and/or exploration.
• Business outlook – how does this support (or not) the strategic vision)?
• Business impact – what is the fundamental value proposition?
• Application Modification Demand - A subjective assessment (by the currently assigned support resources) of the relative volume and impact of application modifications (excluding true support requests). Application modifications may influence our approach while support requests will likely only affect the amount of support resources regardless of the approach.
• Integration Complexity - A subjective assessment of the relative complexity of associated interfaces and dependencies with other systems. Those “other systems” can include systems both internal and external to the CTC System. The impact of dependent interfaces and data feeds can influence physical placement and application bundling.
• Implementability - A subjective evaluation of the relative ease of implementing the solution.

3. Short and long term costs are a major factor to consider when making a “Make/Buy Decision.” To get a true cost comparison between a Vendored Solution and a Development Solution, we need to know short and long term costs associated with each option. To ascertain costs of a Buy decision, we need to go through an RFP Process. To ascertain costs of a Developed Solution, we need to draft a Solution Specific Business Plan.

Cost is not the only issue to consider – and may not even be the first thing we should consider. There are at least 5 other factors which should be considered when making a Make/Buy Decision:

There are many caveats to the following, but in general:

Development is the Preferred Option in a market niche where the Functionality is Core to Teaching and Learning; the Functionality could help strongly differentiate CTC in the Marketplace; the Level of Maturity is Low; Time Sensitivity is Low and desire for a Custom Solution is High. (In Terms of Development – remember the general rule: “Quality, Speed, Low Cost – Pick Any Two.”)

Purchasing is the Preferred Option in a market niche where the Functionality is NOT Core to Teaching and Learning; the Functionality would NOT strongly differentiate CTC in the Marketplace; the Level of Maturity is High; Time Sensitivity is High and the desire for a Custom Solution is Low.

Given your present understanding of these variables – how would you rate your potential solution on the following continua? Circle the number that most accurately reflects you assessment of where the Proposed Solution falls on the following continua. Remember this is just a tool. It is intended solely to spur discussion and aid, but not take the place of decision making.

Make/Buy Decision Support Tool Continua

(NOTE: Continua #3 and #4 are reversed)

1. How Core is functionality to teaching and learning?

1	2	3	4	5
NOT CORE				CORE

2. To what degree could the Functionality differentiate CTC in the Marketplace?

1	2	3	4	5
LOW Degree of Differentiation			HIGH Degree of Differentiation

3. Level of Maturity of the Market?

1	2	3	4	5
HIGH			LOW

4. Time Sensitivity?

1	2	3	4	5
HIGH			LOW

5. Degree of Customization Required?

1	2	3	4	5
LOW			HIGH

Scoring:

The following “killer criteria” scale was developed to assess internally developed products, in the event a “Make” Decision is favored:

Rate this Application on the Following Scale: