Buy vs Build? Evaluating the Power, Flexibility and Long-term Value of SaaS

Duck Creek Technologies’ Chief Technology Officer, Nageswaran Vaidyanathan, has a wealth of experience in enterprise-wide technology implementation across several industries, and has seen the buy vs build debate evolve apace in recent years. So where are we now?

From technology for the global personal and commercial banking sector to operational infrastructure at one the largest insurance businesses in the world, Duck Creek Technologies’ CTO, Nageswaran (“Nag”), has built a career implementing major transformational technology programmes.

This insight and experience is invaluable as Duck Creek continues to work with clients across the global insurance sector – and, in particular, as insurers weigh up the ‘buy vs build’ question: namely, should they buy software as a service (SaaS) technology or build their own in-house systems?

What has been your experience in other industries when it comes to the buy vs build debate?

“The debate around buy vs build decisions in the different industries I have worked has always been based on issues of the core competency of the software provider or the in-house team, together with questions around ownership of intellectual property – what is your ‘secret sauce’ and what is a generic product? 

Other key issues that are discussed include repeatable functionality – the ability to replicate at scale, and whether you are delivering generic services or just needing more people to complete pieces of a bigger picture. In many cases, companies opt to invest in generic products and then customise for their specific needs – they felt that strategy helped retain what is unique for their specific work practices.”

How have attitudes changed in the last 10 years?

“The last decade has seen a maturing of the architecture behind SaaS systems into true enterprise-wide functionality, allowing for a better perspective of the options for customers to choose from and try out. This evolution has gone hand in hand with the rapid maturation of the way data is handled, as the database models and unstructured data approaches have also helped to simplify rigid models and structures for storage and use of data as a customer transitions to a new system. 

All of this has allowed companies to be more confident about transitioning away from ‘build’ options and, instead, buy their enterprise software via subscription services. The evolution and development of SaaS platforms also gives buyers the option of trying out specific components to determine use cases prior to implementing, as well as allowing traditional functions to be extended via SaaS layers to provide greater flexibility and value. 

Attitudes towards where the responsibility lies for keeping technology up to date, interoperability, security and downtime have changed in hand with this evolution – with more businesses realising that their in-house technology teams should not have to manage these competencies alone, and large software companies have the core expertise to take on these fundamental architectural challenges, while the business can redirect time and resources towards innovating their products and services instead. This adds further weight to the ‘buy’ side of the debate.”

What do you think the insurance sector can learn from other industries when it comes to buy vs build?

“I think the pace of change and the speed that other financial services companies can adapt to the changes happening around them is a big lesson for the insurance sector to recognise and learn from. To remain competitive and relevant in a changing world, leading insurers are becoming more agile and cutting unnecessary costs. This includes unifying and simplifying their technology architecture.

However, insurance is, by nature, very regulated and rules and regulations are driven at a micro level. Here again the sector can learn from other industries such as banking in the way they harness technology to respond across a business incorporating regional variations in regulation, product options, currencies and more.

And as more insurtechs emerge and mature, the conventional setup for insurers is being continually challenged. From an operational perspective, insurers can also see how other sectors have enhanced their work-flows and decision-making processes using technology. For the insurance sector, learning these lessons will ultimately result in more profitable operations that harness truly data-driven underwriting.

The insurance sector is also harnessing real-time data usage in a way that other industries such as retail have pioneered – the internet of things and immersive technologies are providing a crucible for innovation in insurance and resulting in the development of new, more relevant products and services. In turn, his flows through to a more relevant and successful customer journey, including faster claims processing and payments.”

So is it better to buy or to build?

“The answer to this question and the reasons for reaching that conclusion are unique to each company. However, the ‘buy’ option has become significantly easier to reach with confidence in recent years. Maturing SaaS propositions have turned the tide in favour of directing IT spend towards OnDemand propositions – placing the advantage significantly in favour of open platforms developed with the ability to adapt to rapid changes and to scale with confidence, all built directly into their architecture. 

In the case of Duck Creek, we can support both propositions of course. Our architectural and design philosophy harness low-code configuration tools, integrations with the insurtech ecosystem, open APIs, and a commitment to keep our software code separate from our customers’ IP, which creates future-ready solutions that put them in control of change.”