ROI of Using Platforms for Software Development instead of Investing in Individual Services

Abstract

Each step in the Software Development Life Cycle (SDLC) is a crucial tool for achieving a successful outcome. Internal Developer Platforms (IDPs) serve as the comprehensive toolkit that integrates these tools. However, an IDP is more than just a collection of resources. It’s a fully integrated system that centralizes all necessary tools, frameworks, and processes into a single platform. This consolidation enhances collaboration among team members, streamlining workflows and enabling teams to move more efficiently through the development cycle.

The benefits of an IDP extend beyond mere technical convenience. They improve workflow efficiency, reduce redundancies, minimize errors, and enhance the overall output quality. By facilitating faster iterations and reliable deployments, IDPs enable development teams to respond more to market demands and user needs. IDPs can also enhance the security aspects of the SDLC as well.

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Investing in an IDP isn’t just up to the software development team. It requires careful consideration from company decision-makers. They must evaluate how an IDP aligns with the organization’s strategic goals, existing infrastructure, and long-term vision. Adopting an IDP can catalyze broader digital transformation initiatives. Ultimately, it can make the company more agile and competitive.

This whitepaper digs deeper into available market research and aims to answer the question: To buy or to build? And at what cost?

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Introduction

Companies typically start by thoroughly evaluating their budget when deciding whether to build or buy software. They might look further into the investment aspect. And if the capital cost of buying a service daunts them, they might jump straight to the conclusion that “Hey, maybe we don’t really need an external platform. Why don’t we just build it? We’re software engineers, after all!” 

They will most definitely consider both short—and long-term time constraints. As the company's big brains, one must also anticipate future needs. Scalability, adaptability, and the potential for integration with other systems—to name a few concerns—would be important, too.

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Additionally, this decision-making process goes beyond just financial considerations and timelines. It requires a deep understanding of existing literature and best practices within the industry. Have other organizations navigated this decision in some other way? If they did, what challenges did they face, and what outcomes did they achieve? Were their technical capabilities compromised by either building or buying such a platform?

Understanding this body of knowledge is crucial for stakeholders. It informs them about the potential risks and benefits associated with each option. This leads them to make much more informed decisions. Stakeholders must consider how this choice aligns with the company’s strategic goals, the capabilities of its existing teams, and its long-term vision.

In this context, literature review is not just an academic exercise. But a practical tool that empowers decision-makers. It allows them to anticipate potential pitfalls, benchmark against industry standards, and align their software strategy with broader business objectives. Ultimately, this ensures that the chosen path—whether building or buying—supports sustainable growth, enhances operational efficiency, and delivers value to customers and the organization as a whole.

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Theory 

The Build v/s Buy Debate

Software engineers and developers are experts at…well, engineering and developing software. Of course. So, manpower-wise, one can argue that building a platform shouldn’t be that big of a deal. And it really isn’t, according to a lot of companies. In fact, one of the pros of building your in-house cloud development environment is the customisability of the solution. After all, developers enjoy creating and refining their own tools. A homegrown solution even allows teams to own the specs and control releases to meet their unique requirements. It also prevents the potential bloat of third-party solutions with unnecessary features.

On the other hand, IDPs combine the various systems developers use into a unified experience. Be it the necessary architecture, support, or even maintenance and debugging resources. If you can think of the tool, it’s probably already there. All put together in one place. They provide engineers with everything they need to build products and services more efficiently. 

A simple Google search clearly shows that the capital costs are much higher in this case. It’s similar to how we often prefer to get the ingredients ourselves and cook our daily meals. Instead of, say, paying a food outlet to get regular deliveries. Or maybe employing a helper for chores in the house. But we know that becomes not just an option but a necessity when we have to set aside some energy for such mundane chores regularly. Especially after a hectic day at work. 

We realise that time and effort have a financial value attached to them, too. The energy we were willing to devote to the kitchen could perhaps be better utilised to either work more or recharge ourselves for the next day. Just like that, what one might fail to calculate at this point is that the efficiency and ROI of using a bought platform significantly lower many operational costs. It also saves the software development team’s bandwidth for other productive tasks. This enables them to innovate and come up with newer products that benefit the entire company in the long run. This is one of the most crucial points relevant to decision-making. We will be exploring it further in the following sections.

IDPs and their Importance

As we touched upon the topic in the previous paragraph, building a platform implies that your team is now responsible for additional tasks. Future development investments, ongoing research, maintenance, bug fixes, expanding the platform to incorporate the latest needs and the list goes on. From the developer team’s perspective, it means that a lot of effort and mind space has to be set aside to accommodate these extra duties.

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Engineers are practical people. They like to tinker with their knowledge and focus on more high-value, innovative work. Repetitive tasks and friction points in the development process are very likely to irk developers daily. And sometimes even hold them back from pursuing innovative ideas they might have. 

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IDPs can be considered as the house help one often needs to run a household in this situation. They help by fostering collaboration, sharing knowledge, and adopting best practices across engineering teams. All of this ultimately translates to faster delivery of high-quality software. 

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Faith, Trust, and Investing

Given the current market scenario, there’s, of course, no shortage of new developer tools promising to reduce toil and improve productivity. However, investing in the latest technology can require a leap of faith that organizations can no longer afford. After all, we do think more than twice before letting a stranger help around our house. 

Leaders need assurance that the investment they’re making will pay off quickly. So, what metrics should such a person focus on? Based on our own expertise and experience in the industry, we recommend considering the following “Business Metrics” impacted by IDPs:

As convincing as simple facts may be, at the end of the day, these are just words. And anyone in the field of technology is bound to believe more in numbers over mere words. So, in the next section, we’ll go over some real-life data to analyse the ROI impact of ready-to-use software development platforms like initializ. 

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Analysis

Forrester’s Total Economic Impact study for one such IDP, called Cortex, has brought forth many insights on this topic. There were at least 3 quantifiable areas of return:

1. Improvement in Productivity: Cortex successfully boosted productivity by up to 20% through operational improvements like reduced context switching, reduced “time-to-find,” and higher velocity in deploying new services and resources.
2. Manager time savings on strategic tasks: It has successfully cut the time required for team leads to gather metrics, monitor migrations, and compile reports by 75%, freeing them to focus on strategic initiatives.
3. Faster time to market for increased revenue capture: Cortex IDP reduces the overall time required to deploy new software, system upgrades, or new features by 25%, significantly improving the ability to drive new revenue.

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Yet another study sought to determine the statistical impact in 3 main areas of concern: App Development, Delivery, and Operations. Forrester Consulting conducted it on behalf of Humanitec in January 2023.  This study revealed the following insights:

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Conclusion

Finally, after all those percentages and analyses, we can say that IDPs help many organizations. Particularly those with advanced engineering teams. Today, we have enough market players to validate the need and quality of such solutions. 

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Software development is as technically involved as it sounds. And people in tech intuitively want a platform made by developers, for developers. Thus, one may still wish to opt for a self-made platform. And that’s precisely where initializ comes to the rescue. 

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We at initializ firmly believe that no one understands developers' needs better than the developers themselves. Hence, we urge our users to keep in mind that IDPs should not be seen merely as cost centers; rather, they are strategic investments with the potential to significantly enhance ROI in various ways:

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• Accelerating the time-to-market for new products and features
• Enabling faster iteration and experimentation
• Reducing costs by eliminating redundancy and duplication
• Boosting developer productivity and efficiency
• Enhancing the developer experience, leading to improved talent retention
• Providing valuable data insights for informed product decisions
• Acting as catalysts for broader digital transformation initiatives

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IDPs serve as force multipliers for engineering teams by optimizing the software development lifecycle. The cost savings and increased output they enable create ripple effects that ultimately drive higher revenues, reduce costs, and maximize ROI. 

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So, without a doubt, buying is often a much better option than building when it comes to developer platforms.

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Resources: 

1. https://www.cncf.io/blog/2023/12/21/the-business-impact-of-internal-developer-platforms-for-improved-roi/
2. https://www.cortex.io/post/an-overview-of-forresters-total-economic-impact-study-for-cortex-idp
3. https://www.okteto.com/blog/the-build-vs-buy-software-debate-includes-developm

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