At least once in their history every cloud distribution and reseller company has to decide what would be their preferred way of optimizing their business: by buying or by building their cloud platform.
Although cloud commerce platforms are becoming crucial for the future of the XaaS business, they are not a system you want to exchange often. The decision to select one is thought often done pragmatic or hasty.
Here is our view on the topic to help to see the bigger picture:
PROs of building your own cloud platform
Often the number one reason behind developing a platform in-house is the opportunity to have the freedom and control over its look, feel, and capabilities.
Building your own platform ensures that it would fit perfectly within your existing tech stack and will seamlessly interact with your ERP, CRM, ITSM, marketing automation tools, etc. Cloud platforms are adopted with the main argument of providing increased business efficiency, hence the attractiveness to have the power over these integrations.
When building your home-grown platform, no external parties have access to your business-critical data. That and all of your customer and partner information are being protected in-house.
CONs of building your own cloud platform
The disadvantages are (most of the time) the other side of the same coin.
As the sole owner and maintainer of the platform, you bear the responsibility to ensure the security, data protection, and regulatory compliance of the platform and its users.
The global average cost of a data breach is $3.92M
(2019, Ponemon Institute research)
Many platform developing projects experience delays due to the lack of consensus between the different stakeholders of the project. The utilization of a cloud platform has a cross-company impact, therefore, everyone from finance to operations and development must align on a unified strategy. An additional delay can be experienced if the engineering team is not 100% dedicated to the cloud platform development and is engaged in other projects.
Building from the ground up your own cloud commerce environment comes with a steep price tag. As opposite to purchasing, you are not sharing the cost with someone else. Your own developers' team is responsible for every line of code, partner integrations, product onboarding, customer migration, etc. in an industry that is constantly changing its requirements.
The main reason many home-grown platform projects are abandoned after some time is their maintenance. Once your platform is usable, it demands constant maintenance and updates. Many companies discover that the development cost is just the tip of the iceberg and is nothing in comparison to the technical and supports budgets after the launch. That is only in addition to the business implications of the evolving customer requirements for more features and transparency, vendor programs, and the deathful APIs.
But building an in-house platform is not a stretch for some companies as they even manage to build and scale theirs. Under what sacrifices, is sometimes hard to say.
PROs of buying your cloud platform
By purchasing a platform you rely on the years of experience of a platform provider whose main business is the development and the maintenance of the infrastructure; who is well versed in the existing vendor programs and any upcoming changes. By purchasing a platform, you not only eliminate the time to build but also the time needed for your developers to understand the requirements (e.g. billing plans and invoicing) for transacting as-a-service products and services.
The daily maintenance activities on your side are minimal with your purchased platform as the major changes and work is done by your provider. By offloading the engineering work, maintenance, and update to a different company, it opens time for your team to focus on a business scale instead of support.
By purchasing a platform from a platform provider, you essentially share the cost for every update and maintenance with the other customer of the same provider. At the end of the day, this yields to an overall lower platform budget in comparison to any home-grown platform project.
CONs of buying your cloud platform
In many cases, the advantages of building your own infrastructure are preserved as the CONs of buying one. Some companies want to be unique with their Go-To-Market and develop something totally different for their market. Or they have unparallel expectations, an uncommon approach to the business, etc., and feel like nothing that is not custom developed for them, can't relieve their pains. The truth of the matter is that the new generation platforms are flexible enough to align with most business requirements. Because at the end of the day, your business can be different but it still follows the main rules established by the vendors you transact with.
Each company is different and read these advantages and disadvantages from their unique business prism. And while for some the decision is straightforward, there is never a 100% guarantee that the strategy you decide on today will be the correct one for the business 3 years from now.
The AppXite Platform is a cloud commerce platform for as-a-service businesses. We support distributors, sellers, and vendors with their go-to-market and scale. The platform is multi-tier, multi-vendor, and multi-cloud with deep integrations with the largest vendor ecosystem in the world and many independent software vendors. Sell, bill and manage XaaS solutions and services with us.