Should you buy software for your fuel retail business or build it inhouse?

March 1, 2021

Written by: Mark Truman

4 min

Should you buy software for your fuel retail business or build it inhouse?

The fuel market is facing key industry challenges. Reducing fuel volumes, aggressive competition and market consolidation is presenting station owners with difficult decisions around how to optimise business profitability. 

Now for the good news. There is technology available to help you combat these challenges. There are now hundreds of software options available to retailers. Sometimes it can be a challenge in itself to make the right buying decisions.

So, the question many retailers we speak to are asking themselves is “do I buy software or build it myself?”

Typically, you should build if...

  1. The solution to your problem doesn’t exist.
  2. Cost and time to market are of minimal importance.
  3. Solution capabilities and control of future development is of utmost importance.
  4. You have the in-house expertise to either build in-house or guide an external company to build the solution for you.
  5. You have the funds (usually 6 figures initially, plus ongoing costs) to pay a team to build, and keep up with the maintenance. 

Typically, you should buy if...

  1. Products that solve your problem already exist, making it cheaper, faster and more efficient to buy.
  2. Your resources and capital are better used by being placed into other opportunities.
  3. You lack the expertise in-house to solve your problems.
  4. You are not afraid of being overtaken by competitors.

But, of course it is not as simple as that.

So what else should you consider before deciding whether to build yourself or buy an off-the-shelf product?

Need:

It’s imperative to understand what your business needs are and why you are making this investment in the first place. This will help you answer the question as the other elements come into play. Ask yourself:

  • What is the business problem you are trying to solve?
  • How quickly do you need to solve the problem?
  • How does this stack up against other problems you are trying to solve?

Size is an important aspect here too. If you are a smaller company, buying may be a great option as you can lean on the way larger companies are solving their problems without having to make the same capital investment.

Capabilities:

Especially in the retail market, building typically means bringing in outside help to develop software. It is unlikely (although not impossible) that within your business sits a team of engineers waiting to develop software products specific to your goals. Consider:

  • Who in your organization can run this project and how capable are they of delivery?
  • Are they able to outline what is needed to solve the problem or will they need external help?

Cost:

Whilst sometimes it can be more expensive to buy than to build yourself, typically the cost is likely to be higher. You are building something for one company, whereas when you buy software you are effectively pooling your resources with other businesses to share the cost of the build. This has a caveat; what you buy may also be used by some of your competitors. When thinking about cost it is important to assess:

  • Is the juice worth the squeeze or can the capital be put into more important projects?
  • Is there a personnel cost involved (both if you are building and buying).
  • The cost of maintaining versus the cost of build. If keeping the platform running is going to be more expensive than building it, buy is the way forward as 70% of software costs occur after implementation.
  • Is the purchase subscription based? If so, this could further reduce the cost as you are spreading it over a number of years. You also have the option of moving on if it does not keep up with the market.

Control:

Whether you need control of your project depends on how common your problem is. 

For common problems (wetstock management software or pricing tools for example) the chances are that there are solutions out there that fit the bill. However, for more specific problems (enterprise cloud infrastructure) it may be better to build or have this built for you.

Of course, without capability, control could just spell disaster!

Risk:

This is a very important comparison to make as typically when you buy software these days it is a subscription model. As mentioned above the risk is lower as you can likely exit that contract within a couple of years or less.

The biggest risk of building is being left with legacy software that is expensive to maintain, outdated and behind the market, leading it to a place that doesn’t suit your needs

Sometimes (but not always) risk can come with bigger rewards. If your problem is super-specific or a ‘buy’ solution does not exist it’s worth taking the punt, but remember there is always a chance that a ‘buy’ solution will appear down the road.

The final decision:

Make sure you pitch the product to yourself as if it was a ‘buy’ product. Think about all the things a salesperson would have to do to convince you to make a purchase. Cover those bases and you can avoid a lot of the risk that comes with this type of decision.

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