Introduction
It's time to move beyond the traditional binary question of build or buy. The technology landscape we operate in demands a more nuanced and holistic approach to decision-making. This is a landscape defined by products that must seamlessly integrate into a complex ecosystem, delivering experiences that not only meet but exceed the expectations of both customers and employees.
The result is that organizations need to evolve beyond binary thinking towards a more holistic product deployment approach that considers the totality of the user experience and is supported by cross-functional teams working in concert to enable that experience. Expanding beyond the current build vs. buy fallacy is essential for organizations to establish a more product-led customer (CX) and employee (EX) experience.
While critical in every industry, it's especially true in high-touch environments such as healthcare and health insurance, where the experiences are heavily fragmented but the stakes are high.
The Fallacy of Build vs. Buy Mindset
In a traditional technology organization, the build vs. buy mindset produces a strict dichotomy between vented applications and developed products.
Vendor Applications
Vendor-provided software serves a set of applications that are managed and maintained in one methodology—often more waterfall-based projects that are transactionally implemented and operationally supported. Teams tend to lack cross-functionality and are heavily focused on vendor relationship management, traditional analysis/requirements definition, and project management.
Product Development
Developed products are managed and maintained using a different methodology. They are often more agile-based products that are relationally driven and supported by long-lived teams. Teams are more cross-functional, relying heavily on product management, user research, product design, and engineering.
Drawbacks
The unfortunate reality with the approach is it creates a disjointed experience for end users - consumers and employees alike. The reason? It fails to bring together applications and products in support of end-user outcomes (problems to solve or business capabilities)
Such a dichotomy is fraught with issues:
Vendor-managed "applications" generate long-term operational costs, which often result in "big bang" replacements and variable investment.
Talent tends to become domain or vendor-centric instead of T-shaped.
Integration between systems becomes a middle layer that lives outside the control or context of either project or product teams.
Brand inconsistency is prevalent, and the experience is fragmented.
Business agility is unachievable as teams lock themselves into heavy dependencies and vendor applications
A Path Forward
An alternative approach enables a more integrative and strategic technology strategy that orients end-user needs and better supports long-term organizational goals. In such a model, the technology organization defines the product based on the problem it solves for the end user and/or the business capability it enables.
The forward-facing model results in most teams being cross-functional, long-lived, with clear accountability for a problem space; this means a team has a shared outcome and the tools and technology under their purview (build or buy) to enable that shared outcome. The team is fully empowered, with accountability included in all build or buy aspects of the problem space. This means they are accountable for the holistic lifecycle management, evolution, and maintenance/support for the product. Integration within and between products in the problem space is also the accountability of the team, leveraging common platforms or tools to create modular and de-couplable dependencies.
In this model, the product is the experience. It's not simply a tool or an application but instead a comprehensive experience in support of an explicit user base and business stakeholder.This results in better outcomes, creating precise alignment between the team and their business stakeholders and end users. It also reduces the duplication of work, ensures continuous rationalization of the solution set, and enables teams to manage and maintain technical debt more comprehensively. The result is greater user satisfaction, better business engagement, and business agility.
So what gets built vs. what gets bought? The answer is not so black and white, and such decisions can be the accountability of the product or platform team. Taking that decision away risks disempowering the team, though strong organizational guidance is always helpful. Generally, the goal is to buy the engine (core platforms, complex business logic) and build the car (the differentiated experience that enables a more coherent and consistent user experience). This enables organizations to avoid duplicate expenditures while enabling integrated experiences.
The Indispensable Role of Product Management and Design
Product management, user research, and product design are equally critical in a build-heavy, buy-heavy, or hybrid teams.
Product managers are critical in aligning the product vision with user needs and business goals. They act as a bridge between various departments, ensuring all stakeholders work towards a common objective. This alignment is crucial in the build vs. buy scenario, as it helps make informed decisions based on customer needs and business value rather than just cost considerations. Effective product management involves:
Defining clear customer personas.
Articulating must-have features.
Assessing the value created by the product.
In partnership with product, design focuses on creating intuitive and user-friendly products that meet the specific needs of the end-users. The role of design in creating user-friendly products is not just important but crucial. Good design goes beyond aesthetics; it encompasses:
Usability
Accessibility
Overall user experience.
In both build and buy situations, designers must work closely with product managers to ensure that the solutions provided are practical and effective. This collaboration is crucial for delivering products that meet technical specifications and resonate with users, enhancing satisfaction and adoption rates. Together, robust product management and design ensure that the final product is well-aligned with market demands and delivers significant value to the business and its customers.
Integrating Talent and Objectives Across Departments
Different axes of change drive the healthcare ecosystem. Innovation in technology and scientific changes are positive changes happening on one spectrum. Then you have other changes, which are just as complex on the legal and compliance side, which are more of a mixed bag of positive and negative changes. The cluster of chaos and scientific breakthroughs makes a highly challenging environment. Hence, aligning multi-disciplinary teams around shared goals, whether the product is built or bought, is essential for fostering innovation and achieving success. Cross-functional collaboration in product development accelerates the process by allowing different departments to share information, resources, and expertise, leading to faster and more efficient development cycles. The approach also improves product quality and fosters innovation by integrating diverse perspectives and skills, ensuring that the product aligns with business goals and customer needs, resulting in better communication, teamwork, and overall success.
Managing cross-functional teams requires a combination of clear communication, role definition, and fostering a collaborative culture. The importance of this collaborative culture cannot be overstated. Initially, it's crucial to establish clear goals and roles to ensure that every team member understands their responsibilities and how their expertise contributes to the project. As a leader, it is essential to facilitate discussions about each team member's skills and how they align with the project tasks. These tough conversations prevent inefficiencies and leverage the full potential of the team's diverse skill sets. Additionally, setting up regular communication channels and project management tools can help keep everyone on the same page, ensuring smooth collaboration and progress tracking.
Building a collaborative environment also involves addressing barriers such as territorial tensions and differing work styles. Creating psychological safety within the team encourages openness and honesty, allowing team members to share ideas freely without fear of criticism. A positive environment can be achieved by modeling openness as a leader and demonstrating respect for differing opinions. Furthermore, setting milestones and celebrating small wins can motivate the team and provide a sense of achievement. Regularly tracking progress and making necessary adjustments ensures the team stays aligned with the project goals and can pivot when needed. Overall, these strategies help manage cross-functional teams effectively, drive project success, and foster a culture of innovation and cooperation.
(https://hbr.org/2024/04/how-to-manage-a-cross-functional-team)
Examples in Healthcare and Insurance
Hospital Healthcare System: Example of a Well-Integrated Product
One recent example is an extensive healthcare system that leveraged its scheduling platform to create a custom solution that effectively enables its nurses to pick up shifts via their mobile phones. The hospital system aligned its IT strategy with its business objectives (reducing nurse vacancy and agency spending), oriented its focus to a core user group (front-line nurses), and established a cross-functional team aligned with the business's objective of reducing agency spending and nurse shift vacancy. The outcome: a custom application built on a vendor platform that improved the nursing experience, leading to 1m+ hours of shift
Pitfalls of Poor Implementation
A significant example of poor implementation can be seen in a company that invested $20-30 million in building a product but allocated only peanuts for marketing. The project was riddled with issues stemming from numerous third-party integrations, leading to tangled API connections and problematic data sharing. Constantly switching vendors and consultants exacerbated the situation, with blame frequently shifting to others. The reliance on cheap overseas labor resulted in subpar outcomes and a fixed mindset, thinking 120 inexperienced junior engineers could get the job done because of quantity and cheap unit costs. But for complex healthcare projects that cannot match the efficiency and quality of a few squads of highly talented local engineers, whose individual price tag may be higher but would have saved millions in time and resource costs.
This lack of coherent strategy led to duplicate work and poor inter-departmental communication, severely hampering the project's success. Reed Hastings, CEO of Netflix, has also criticized such approaches, emphasizing the importance of having a cohesive, skilled engineering team to avoid these pitfalls. Ultimately, misallocating resources and inadequate coordination resulted in wasted investment and diminished returns.
(https://www.rwaconsultants.com/news/rock-star-software-engineers-worth-their-weight-gold)
The build vs. buy debate oversimplifies the complexity of modern technology strategy. Instead of focusing on this binary choice, organizations should create cohesive, user-centered experiences that integrate the strengths of both approaches. By aligning cross-functional teams around shared goals and empowering them to manage the entire product lifecycle, companies can build systems that not only function well but also resonate with end-users. In high-stakes environments like healthcare, this integrated approach is crucial for delivering real value and achieving sustainable success.