As I have already discussed the advantages of outsourcing, I will now address why an organisation might opt to develop their information systems in-house instead.
- Best fit with the company requirements
- Tigher integration
- Have control over software improvement
- Have all of the required features
- Main core competencies and maintain level of quality service
- Make a distinction with other companies
However, according to a paper published by “sports systems” there are many hidden costs associated with in-house development.
- Design & Implementation Time: It can be very time-consuming trying to articulate exactly what the department needs. Also, the development of IS may be diverted as the core business objectives will be the priority instead.
- Available Expertise: Your department must have all the relevant expertise to develop the specific application.
- Opportunity costs: An organisation must address the issue that while their employees are working on IS development they cannot work on other projects benefiting the business
- Maintenance and Support: After the system is installed it may be difficult to get immediate help and support from the employees who developed the system as they are now back working on core business functions, trying to catch-up.
- Updates and Upgrades: Trying to keep up with competitors can be difficult. If after developing the system, the organisation realises it needs a better, faster and more efficient system it must start the process all over again
Here is a debate about whether it is better to develop systems in-house or purchase off-the-shelf software: http://www.youtube.com/watch?v=-EyfonrtTkc
It’s quite long but very interesting. Enjoy!