The Build Vs. Buy Debate

by Catherine Stagg-Macey, August 23, 2007

Abstract

London, United Kingdom 23 August 2007

Key points of consideration for any insurer undertaking include assessing the uniqueness of need and IT software maturity.

The business case for new core systems is clear to many insurers who are laden with antiquated systems. What is less apparent is the approach they should take in addressing this problem. In a new Celent report, , the advantages and disadvantages of building versus buying packaged software are considered.

"There are undoubtedly pros and cons to each approach," notes Catherine Stagg-Macey, senior analyst and one of the authors of the report. "These need to be carefully considered when choosing one approach over the other."

This report examines some of the rationales, advantages, and disadvantages of each path. While there is no single option that is universally best, Celent recommends that insurers carefully consider immediate and long-term needs and costs, project risk, and organizational capabilities as part of the build vs. buy decision process.

The 15 page report contains two figures. A table of contents is available online.

of Celent's Life/Health Insurance and Property/Casualty Insurance research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

London, United Kingdom 23 August 2007

Build vs. Buy Debate

Executive Summary 03
Introduction 04
The Case for Building 06
The Case for Buying 08
The Single Decision vs. Best-of-Breed Approach 10
Making the Decision 12
Final Thoughts 14

 

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