Introduction: What You’ll Learn
In this simulation, you'll practice making the decision between building an in-house solution and purchasing a third-party product. This scenario will help you evaluate costs, benefits, risks, and strategic impacts of each option.
You’ll practice:
- Structuring a decision-making framework
- Weighing pros and cons systematically
- Considering strategic alignment and long-term implications
- Communicating the final decision effectively
Step-by-Step Simulation
Scene 1: Setting the Stage
Facilitator: "Hey team, we've got a decision to make. Do we build our own customer support tool, or do we go with a third-party solution? Let’s break this down together. Our main criteria are cost, time to market, feature customizability, integration with what we already have, and long-term maintenance."
Facilitator: "Let's kick things off with some initial thoughts. Priya, where do you stand on this?"
Priya: "Building in-house gives us control over features and keeps our data secure, but it could be a time and resource sink."
Facilitator: "Right, that’s definitely something to weigh. Alex, what have you found on the cost and timeline?"
Scene 2: Cost and Time Analysis
Alex: "Okay, so if we build it ourselves, we’re looking at roughly $250k in engineering hours over six months. If we buy, it's about $50k a year, and we can hit the ground running."
Facilitator: "Good to know. Leo, what about customizability and how these options fit with our current systems?"
Leo: "Building means we can tailor it exactly to our needs and it'll integrate smoothly with what we have. But, we’ll also be on the hook for maintenance. With a third-party tool, customization might be limited, and integration could be tricky depending on their API."
Facilitator: "Got it. Sara, how do these options fit with our strategic goals?"
Scene 3: Strategic Alignment and Risks
Sara: "Building in-house supports our long-term strategy for differentiation and control over our data. Buying aligns with our short-term goal to boost customer support quickly, but we need to be aware of any security and compliance risks with an external vendor."
Facilitator: "Great, thanks for that perspective. Priya, can you talk about any risks or dependencies we should consider?"
Priya: "Sure. Going with a third-party means we’re tied to their roadmap and possible price changes. Building in-house means we might have to pull resources from other projects."
Facilitator: "Excellent points. Let’s wrap this up and make a call."
Scene 4: Decision and Communication
Facilitator: "Alright, here's a quick summary:"
-
Building In-House:
- Higher upfront cost and longer development timeline
- Full control, customization, and data security
- Could divert resources from other projects
-
Buying Third-Party:
- Lower immediate cost and fast deployment
- Limited customization, possible integration hurdles
- Potential vendor dependency and compliance concerns
Facilitator: "Given our focus on quick deployment and current resource limits, I suggest we go with the third-party tool. We’ll do a detailed vendor risk assessment and plan for quarterly reviews to see how it’s working out."
Facilitator: "Any final thoughts or concerns before we lock this in? I want to make sure everyone’s on board."
(The team agrees, ready to proceed with the third-party solution.)
Mini Roleplay Challenges
Challenge 1: A team member strongly prefers building in-house for future-proofing.
- Best Response: “Let’s see if we can align our current priorities with the resources needed for in-house development.”
Challenge 2: Concerns arise about vendor dependency and potential lock-in.
- Best Response: “We’ll negotiate for periodic evaluations and flexible exit strategies in our contract.”
Challenge 3: Disparate opinions on urgency vs. customization.
- Best Response: “Let’s balance the need for quick deployment with the longer-term benefits of customization.”
Optional Curveball Mode
- The budget is suddenly cut, affecting the decision.
- A new third-party competitor enters the market with a compelling offer.
- An upcoming company initiative changes the strategic focus.
Reflection Checklist
Decision Framework
- Did I clearly outline criteria and gather relevant data?
- Was the decision aligned with our strategic goals?
Communication and Alignment
- Did I ensure all team members were heard and concerns addressed?
- Was the final decision communicated clearly and confidently?
Risk and Contingency Planning
- Were potential risks identified and mitigated?
- Did we plan for future evaluations and adjustments?
Common Mistakes to Avoid
- Focusing solely on cost without considering strategic fit
- Overlooking long-term implications of vendor dependency
- Failing to involve key stakeholders in the decision process
- Not setting up review points to reassess the decision