Software—should you build it or buy it?

In a free open-source world, why buy a commercial software package? In fact, investing in software is not so different from investing in anything—from a safety razor or ink-jet printer to a turnkey ATE system. The initial cost, or lack thereof in the case of free software or a razor, may end up being a fraction of your total life-cycle cost.

National Instruments explores the costs related to software in a recent news item. Total cost, the item points out, is equal to initial purchase price plus training cost, implementation cost, maintenance cost, opportunity cost, and risk. It cites as examples software implementations ranging from Firefox (free) to mission-critical Oracle systems that can cost hundreds of thousands of dollars per installation.

The item in particular cites opportunity costs: “Many people reinvent their own wheels over and over because they mistakenly think engineering time is cheaper than purchasing ready-made components.” It also cites risk: “Risk is often unbounded and hard to measure and plan for. Risk can’t be avoided, but it can be mitigated.”

Read the complete item here.

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