Cost Implications of developing in-house

20 Feb

I have previously discussed the benifits/disadvantages of in-house and purchasing information systems. Therfore today I want to continue on and develop the factor of cost in making these decisions.

Cost is a major factor when deciding whether to outsource and purchase your Information Systems or to develop in-house.

Due to the fact that the companies who make software are able to allocate their developmental costs across a broad range of products(being able to develop packages that could suite a wide audience and then just tayloring them down to specific requests) and are able to charge fees for these services that they would be able cover these developmental costs.

Rather than a firm developing in-house, finding it difficut to initially fund the start up costs of in-house software. When developing in-house the organisation does not have the luxury of being able to charge for their own software. Generally, software developed in-house can cost up to 10 times more than purchased software!! They’re also maintence costs a firm would have to consider in all this.

Although firms may find it difficult to find a package to suite their exact criteria, it is important to remember that by purchasing a “standardised” package you are gaining the benefit of practices that have already been tried and tested in other firms and they may have thought of ways to speed up operations that you would not have. A sort-of second opinion? So while it is not their exact match, it could be benifit the firm in a broader context.

Source: Google books: “Accounting Information Systems, Ulric J. Gelinas, Jr., Dr. Richard B. Dull

4 Responses to “Cost Implications of developing in-house”

  1. sad111411762 February 20, 2013 at 9:15 pm #

    Very clear and informative blog!

  2. sad111415478 February 20, 2013 at 9:48 pm #

    Something I hadn’t really thought of. Useful info🙂

  3. sad112759089 February 21, 2013 at 12:27 am #

    If it cost so much to in-house, would you think more firms would switch to outsourcing??

    • sad111417672 February 21, 2013 at 7:29 pm #

      I think it depends on the firms size for smaller firms I think outsourcing would be suitable in certain cases to cut costs, but larger firms may have the funding and resources to in-house.

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