When it comes to utilizing technology in your business, is it better to build your own solution or to buy one already developed and ready to use?
Well, that depends what you’re looking for, according to experts.
A panel of multifamily and commercial real estate experts at the Mortgage Bankers Association’s 2019 Technology Solutions Conference in Dallas discussed the pros and cons of developing technology versus buying a solution or tool from a vendor.
“There’s a lot of things to consider when you think about buying versus build,” Robert Orkis, principal at RKO Technical Services, explained during the session. “Everything from the size of the staff you want to manage – a lot of companies, when they look at building, don’t realize how many people they need to add to their organization to both build it out and support it.”
So, what should real estate and lending companies consider when evaluating technology?
“Having a roadmap is super important, so you can say ‘this is what we we want to be in a couple years and how does this application fit into that?’,” Aaron Perlis, EVP and chief technology officer at Walker & Dunlop, said. “The business side, particularly in our world, expects a 30- to 60-day turnaround because that’s how long it takes a loan transaction to work and that’s not the way it works for us when you’re building or buying.”
And what about some of the criteria to consider when buying?
Orkis said its best to focus on the vendor when evaluating a tech solution your company may use.
“Is the vendor solid financially? Do they have a good, strong customer base? Talk to references, how do they feel about releases? Some vendors are much better at QC-ing their product before they roll it out than others,” he said.
Perlis also said that it’s important to consider the company you’re purchasing the software or solutions from.
“Who owns the company that you’re buying the software from? Because there’s a lot of startups out there, this landscape is very big. In the commercial space, a lot of companies have begun incubators for them to test. As we talk about data and how important data is, it’s really important for us when we’re looking at who we’re partnering with, that we’re somewhat protected from having that company be bought by a competitor.”
The other piece is cost, according to Perlis.
“It’s my belief that generally, when we’ve done side-by-side [comparisons], a lot of the costs wash out,” Perlis said, adding that there are costs to consider when buying, such as implementation costs. Also, there may be hidden costs that show up later that a team may not have considered before, like security or storage or integrations with other software and solutions.
“Buying does seem to be the quickest and you know what you’re getting but you need to understand these costs in the SaaS world, it’s phenomenal, go up every year or when you get a new contract,” he added.