Build vs Buy Analyzer
Overview
Conduct structured analysis of build vs buy decisions for AI capabilities. Compare total cost, time to value, strategic fit, and risk to make informed technology decisions.
Core principle: The right answer depends on your context. Analyze systematically rather than defaulting to either build or buy.
When to Use
- •Starting new AI initiative
- •Vendor proposing solution you could build
- •Technical team proposing to build commoditized capability
- •Renewing vendor contract with alternative
Output Format
yaml
build_vs_buy_analysis:
capability: "[What we're trying to achieve]"
analysis_date: "[YYYY-MM-DD]"
decision_needed_by: "[Date]"
context:
business_need: "[What problem we're solving]"
urgency: "[Timeline requirements]"
strategic_importance: "[How critical]"
unique_requirements: ["[What's special about our needs]"]
options:
build:
description: "[What building would entail]"
approach: "[High-level approach]"
costs:
development: "[$]"
timeline: "[Months]"
ongoing_operations: "[$/year]"
total_3_year: "[$]"
capabilities:
- capability: "[Capability]"
fit: "[Full | Partial | No]"
notes: "[Details]"
advantages:
- "[Advantage 1]"
disadvantages:
- "[Disadvantage 1]"
risks:
- risk: "[Risk]"
likelihood: "[H/M/L]"
impact: "[H/M/L]"
mitigation: "[If possible]"
buy:
vendor: "[Vendor name]"
product: "[Product]"
costs:
implementation: "[$]"
timeline: "[Months]"
ongoing_subscription: "[$/year]"
total_3_year: "[$]"
capabilities:
- capability: "[Capability]"
fit: "[Full | Partial | No]"
notes: "[Details]"
advantages:
- "[Advantage 1]"
disadvantages:
- "[Disadvantage 1]"
risks:
- risk: "[Risk]"
likelihood: "[H/M/L]"
impact: "[H/M/L]"
mitigation: "[If possible]"
scoring:
criteria:
- criterion: "Total cost of ownership"
weight: "[%]"
build_score: "[1-5]"
buy_score: "[1-5]"
- criterion: "Time to value"
weight: "[%]"
build_score: "[1-5]"
buy_score: "[1-5]"
weighted_total:
build: "[Score]"
buy: "[Score]"
recommendation:
decision: "[Build | Buy | Hybrid]"
rationale: "[Why]"
conditions: ["[Any conditions]"]
next_steps: ["[Actions]"]
Evaluation Criteria
Cost Factors
| Factor | Build | Buy |
|---|---|---|
| Upfront | Development labor, infrastructure | License, implementation |
| Ongoing | Maintenance, operations, upgrades | Subscription, support tiers |
| Hidden | Opportunity cost, technical debt | Customization, integration |
| Exit | N/A | Migration, data extraction |
Time Factors
| Factor | Build | Buy |
|---|---|---|
| To launch | 6-18 months typical | 1-6 months typical |
| To full value | Longer (custom to needs) | Faster (proven solution) |
| To iterate | Flexible | Dependent on vendor |
Strategic Factors
| Factor | Favors Build | Favors Buy |
|---|---|---|
| Differentiation | Core competitive advantage | Commodity capability |
| Control | Need full control | Standard use case |
| Expertise | Have or building capability | Not core competency |
| Scale | Unique scale requirements | Standard scale |
Risk Factors
| Risk | Build | Buy |
|---|---|---|
| Execution | Might not deliver | Vendor might not fit |
| Timeline | Delays common | Implementation delays |
| Quality | Unknown until done | Can evaluate before |
| Dependency | On your team | On vendor |
| Lock-in | Tech debt | Vendor lock-in |
Scoring Framework
Score Scale
| Score | Meaning |
|---|---|
| 5 | Strongly favors this option |
| 4 | Favors this option |
| 3 | Neutral |
| 2 | Disadvantages this option |
| 1 | Strongly disadvantages |
Standard Criteria Weights
yaml
default_weights: total_cost: 25% time_to_value: 20% capability_fit: 20% strategic_alignment: 15% risk: 15% flexibility: 5%
Decision Framework
When to Build
yaml
build_indicators:
strong:
- "Core competitive differentiator"
- "No solution meets requirements"
- "Regulatory/compliance mandates custom"
- "Long-term strategic asset"
moderate:
- "Have strong internal capability"
- "Need deep integration with custom systems"
- "Vendor costs prohibitive at scale"
- "Need full control over roadmap"
When to Buy
yaml
buy_indicators:
strong:
- "Commodity capability (not differentiating)"
- "Proven solutions exist"
- "Speed to market critical"
- "Lack internal expertise"
moderate:
- "Best practices embedded in product"
- "Vendor roadmap aligns with needs"
- "Risk of internal project failure"
- "Focus resources elsewhere"
Hybrid Options
yaml
hybrid_approaches:
buy_and_customize:
when: "Platform fits but needs customization"
example: "LLM API + custom prompts and workflows"
build_on_platform:
when: "Need custom but want accelerators"
example: "ML platform + custom models"
buy_now_build_later:
when: "Speed now, control later"
example: "Start with vendor, migrate when scale justifies"
Total Cost Comparison
yaml
tco_template:
year_1:
build:
development: 400000
infrastructure: 50000
operations: 100000
total: 550000
buy:
license: 200000
implementation: 100000
customization: 50000
total: 350000
year_3_cumulative:
build: 850000 # Operations grows slower
buy: 850000 # Subscription adds up
year_5_cumulative:
build: 1150000
buy: 1450000 # Crossover point
Common Mistakes
| Mistake | Problem | Prevention |
|---|---|---|
| Underestimating build time | 2x+ overruns common | Add 50-100% buffer |
| Ignoring ongoing costs | Build seems cheaper | Model 3-5 year TCO |
| Overestimating customization | Could configure instead | POC before deciding |
| Vendor lock-in ignored | Painful exit later | Evaluate exit costs |
| Opportunity cost | Could build other things | Factor in alternatives |
Checklist
- • Business need clearly defined
- • Unique requirements documented
- • Build option fully scoped
- • Buy options evaluated
- • Costs estimated (3-5 year TCO)
- • Timeline compared
- • Risks assessed
- • Scoring completed
- • Recommendation justified
- • Stakeholders aligned