Make vs. Buy in Enterprise Software: A Digital Strategy Framework

Few decisions carry more long-term consequence for enterprise organisations than whether to build proprietary software or procure a commercial solution. In the digital economy of 2025, this question — historically treated as a procurement matter — has become a defining act of corporate strategy. The consulting profession has long grappled with how to advise clients on this tension, and the answer has grown significantly more complex. Cloud-native infrastructure, AI-assisted development, and an explosion of vertical SaaS platforms have simultaneously lowered the cost of building and raised the quality of buying. Yet boards and executive teams continue to make these decisions reactively, anchored by legacy assumptions rather than forward-looking digital strategy. This article offers a structured framework to help C-suite leaders make better-informed, strategically coherent software decisions for 2025 and the decade ahead.

• Build costs are rising: Engineering talent scarcity and technical debt accumulation are making internally developed software more expensive to maintain than to initially create.
• The binary is obsolete: Composable architecture and low-code platforms mean the real question is now how to blend make, buy, and configure in a coherent digital portfolio.
• Competitive differentiation is the decisive variable: Organisations that anchor their software decisions to strategic differentiation consistently outperform those that default to vendor convenience or IT preference.

This analysis draws on a synthesis of enterprise technology research published between 2021 and 2025, including industry studies from Gartner, McKinsey Global Institute, Forrester Research, and the Harvard Business Review. The consulting frameworks applied include Porter's Value Chain analysis, the Wardley Mapping methodology for technology commoditisation, and total cost of ownership modelling approaches drawn from enterprise architecture practice. We have also incorporated primary observations from advisory engagements across financial services, retail, logistics, and public sector organisations navigating digital portfolio decisions. Statistical data points reflect aggregated findings from multiple research sources and have been contextualised within the current macroeconomic environment, including the impact of rising interest rates on technology capital expenditure, post-pandemic digital investment recalibration, and the accelerating capability maturity of commercial software vendors. Where projections are offered, they represent the considered analytical judgment of the authors based on observable trend trajectories rather than proprietary modelling.

Top 10 key statistics and facts:

1. Global enterprise software spending is projected to exceed $1.1 trillion by 2026, with SaaS accounting for over 45% of total market value — a structural shift that expands the commercial buying landscape considerably.
2. Approximately 62% of large-scale internal software development projects exceed their original budget by more than 30%, according to aggregated project performance data from enterprise IT governance studies.
3. The average enterprise now operates more than 900 cloud-based applications, the majority of which were procured rather than built, reflecting a systemic shift toward buy-dominant digital portfolios.
4. McKinsey research indicates that organisations with clearly defined digital strategies aligned to build vs. buy principles are 2.3 times more likely to report above-median technology ROI compared to those without such frameworks.
5. Technical debt now accounts for an estimated 20–40% of IT budget capacity in large enterprises, with a significant proportion traceable to legacy custom-built systems that have outlived their strategic rationale.
6. The global low-code and no-code platform market is forecast to grow at a compound annual rate of 26% through 2028, fundamentally repositioning the economics of internal software development for non-commodity use cases.
7. Only 34% of C-suite executives report high confidence in their organisation's ability to accurately forecast the total cost of ownership for a custom software build before committing capital, highlighting a persistent decision-quality gap.
8. Vendor lock-in remains the primary concern cited by technology leaders when evaluating commercial software procurement, reported by 58% of CIOs in a recent Forrester survey of enterprise technology decision-makers.
9. Organisations in financial services and healthcare — sectors with the highest regulatory complexity — are 40% more likely to pursue custom builds for core process functions than their counterparts in retail and logistics, where commodity SaaS penetration is far higher.
10. AI-assisted software development tools have reduced estimated development cycle times by 25–35% for organisations that have adopted them at scale, partially resetting the cost calculus in favour of build for high-differentiation use cases.

The make vs. buy question is deceptively simple on the surface. In practice, it collapses into a series of second-order questions that most organisations are poorly equipped to answer rigorously: Where does our competitive advantage actually reside? What is the true cost of ownership — not just development but maintenance, security, and opportunity cost? How quickly is the vendor landscape maturing in this capability area? And what are the strategic risks of ceding architectural control to a third party?

The commoditisation curve is the most important analytical lens. Simon Wardley's mapping methodology provides a powerful diagnostic: capabilities evolve from genesis to custom-built to product to commodity. The strategic error most enterprises make is applying build-oriented thinking to capabilities that have already commoditised, or conversely, buying commercial solutions for capabilities that represent genuine sources of competitive differentiation. A logistics company that builds a bespoke warehouse management system when three enterprise-grade commercial platforms exist is destroying shareholder value. A financial services firm that outsources its core risk scoring engine to a vendor is potentially surrendering its most valuable proprietary asset.

The digital strategy function — increasingly housed within the CDO or CTO office — must own this categorisation exercise. And it must be done continuously, not episodically. The pace of vendor capability development means that a function that warranted a custom build in 2020 may now be fully served by a commercial product. Static build-or-buy decisions, made at project inception and never revisited, are a structural governance failure.

The consulting industry's contribution to this problem has not always been constructive. System integrators and large advisory firms have historically had incentive structures that favoured large custom implementation programmes over pragmatic procurement recommendations. The consulting profession is, however, undergoing its own recalibration — driven by client demand for outcome-based engagements and the emergence of independent digital advisory practices that carry no software revenue incentive. Guldstreet and firms of its orientation represent this shift: the premium on genuinely independent strategic counsel has never been higher.

The total cost of ownership calculation deserves particular scrutiny. Organisations systematically underestimate build costs and overestimate vendor costs. Development cost estimates routinely exclude the ongoing engineering capacity required to maintain, secure, and evolve proprietary systems. A three-year TCO model that excludes post-launch maintenance — typically 15–25% of original build cost annually — will always make building appear more attractive than it is. Equally, vendor assessments that fixate on licence fees while ignoring integration complexity, customisation limitations, and exit costs systematically underestimate the total cost of commercial procurement. Rigorous, fully-loaded TCO modelling is a prerequisite for sound decision-making, not a post-rationalisation exercise.

The emergence of composable architecture — the ability to assemble enterprise capability from modular, interoperable components — is perhaps the most important structural development reshaping this decision. The Gartner-coined concept of composable enterprise design posits that organisations should build a core of proprietary capability atop a layer of best-of-breed commercial components, connected via open APIs. This dissolves the binary. The question is no longer make or buy, but rather: which layer are we operating in, and what is the right sourcing model for each component? This architectural philosophy demands a level of technology strategy sophistication that many enterprises have yet to develop internally.

1. Competitive differentiation value: The foundational question — does this capability directly enable or protect a source of competitive advantage? If yes, build or heavily configure. If no, buy and standardise.
2. Vendor market maturity: The more mature and competitive the commercial vendor landscape in a given capability area, the stronger the case for procurement. Immature markets with few credible vendors increase build risk reduction rationale.
3. Total cost of ownership over five years: A rigorous, fully-loaded TCO model — including development, maintenance, security, talent, and exit costs — must replace point-in-time cost comparisons as the standard decision input.
4. Engineering talent availability and retention: In a constrained talent market, building proprietary software creates ongoing dependency on scarce specialist skills. Organisations with weak engineering employer brands should weight this risk heavily in build assessments.
5. Data sovereignty and regulatory requirements: Sectors with stringent data residency, audit trail, or regulatory customisation requirements often face genuine constraints on what can be safely procured from third-party vendors, particularly hyperscale cloud providers operating across jurisdictions.
6. Integration complexity and architectural coherence: Commercial solutions that require extensive customisation to integrate with existing enterprise architecture often erode their cost advantage. Integration debt is a frequently underestimated variable in procurement decisions.
7. Speed to capability: Where time-to-market is the dominant competitive variable, procurement almost always wins. Building a commercially available capability from scratch to gain a marginal proprietary advantage is rarely justifiable when competitive windows are measured in months.
8. Vendor lock-in and exit risk: Organisations must assess the strategic cost of dependency on a single vendor, particularly for mission-critical systems. Data portability, contract flexibility, and ecosystem openness are material decision factors, not procurement afterthoughts.
9. AI and automation leverage: AI-assisted development tools are compressing build timelines. For organisations with strong engineering cultures, the productivity uplift from AI tooling partially resets the cost equation — particularly for high-differentiation, moderate-complexity development initiatives.
10. Organisational change capacity: Large commercial software implementations carry significant change management burden. Organisations with limited change capacity or recent implementation fatigue must account for execution risk as a real cost in any procurement assessment.

Looking ahead to 2027 and beyond, several structural forces will continue to reshape the make vs. buy calculus in enterprise software. The ongoing maturation of vertical SaaS — highly specialised commercial platforms built for specific industry subsegments — will continue to erode the build case across an expanding range of functions. Simultaneously, the cost trajectory for cloud infrastructure and AI-assisted development will progressively favour organisations with the engineering capability to exploit them for genuinely differentiated use cases.

For C-suite executives, the following recommendations represent the highest-leverage interventions available today:

First, invest in digital strategy capability before making software decisions. Organisations that lack a coherent, board-endorsed digital strategy — one that clearly maps capabilities to competitive importance and identifies where technology creates versus supports value — will continue to make reactive, poorly-framed software decisions. The strategy function must precede the procurement function.

Second, retire the binary and adopt a portfolio approach. Every enterprise should operate a dynamic capability map that categorises technology functions across a build-configure-buy spectrum, reviewed at minimum annually. This is not a theoretical exercise — it has direct budget and governance implications.

Third, mandate fully-loaded TCO as the decision standard. CFOs and technology finance functions should refuse to approve software investment cases that do not include a five-year, fully-loaded total cost of ownership model covering all sourcing options. This single governance change would eliminate the majority of poor build decisions made in enterprise organisations today.

Fourth, take vendor lock-in seriously at the board level. As enterprise software consolidation continues — with large platforms absorbing adjacent capabilities — concentration risk in vendor relationships is a material strategic and financial risk. Boards should require technology leadership to report on vendor concentration as part of standard technology risk governance.

Fifth, position digital advisory as a strategic function. The organisations that consistently make better software decisions are those that have access to genuinely independent, senior-level digital advisory counsel — advisors who carry no implementation revenue incentive and are accountable only to the quality of strategic outcome. This is precisely the role that professional services firms like Guldstreet are designed to fulfil.

The make vs. buy decision in enterprise software is no longer a technical or procurement question — it is a strategic one, and it belongs on the executive agenda. In a digital economy where technology architecture is increasingly synonymous with competitive architecture, getting this decision wrong has compounding consequences: stranded capital, accumulated technical debt, engineering talent drain, and missed competitive windows. The framework offered in this article — anchored in competitive differentiation, total cost of ownership, commoditisation mapping, and portfolio governance — is designed to give C-suite leaders the analytical scaffolding to make these decisions with rigour and confidence. The consulting profession's highest-value contribution in 2025 is not delivering implementations — it is delivering the clarity of strategic thinking that prevents organisations from building what they should buy, and buying what they should own. Guldstreet Consulting works with executive teams to navigate precisely these decisions, bringing independent digital strategy expertise without the conflict of interest that comes from implementation incentives. Contact Guldstreet Consulting to discuss how we can support your organisation's digital portfolio strategy.

This article represents the independent analytical views of Guldstreet Consulting and does not constitute financial, legal, or procurement advice. Statistical figures cited are drawn from reputable third-party research and are presented as indicative benchmarks rather than precise empirical claims. Readers are encouraged to validate market data against current primary sources before applying findings to specific investment decisions. The framework presented is designed to be directionally useful across a range of enterprise contexts; its application should be calibrated to the specific competitive, regulatory, and operational circumstances of individual organisations. References to professional services norms and consulting industry practices reflect broad sector observations and do not constitute representations about any specific firm or engagement.

All sources consulted in the preparation of this article:

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3. Forrester Research. (2024). The State of Enterprise Software Procurement: CIO Survey. Forrester. https://www.forrester.com
4. Harvard Business Review. (2023). When to Build and When to Buy. Harvard Business Publishing. https://hbr.org
5. Wardley, S. (2016). Wardley Maps: The Art of Strategy. Medium / Wardley Maps Community. https://medium.com/wardleymaps
6. Gartner, Inc. (2023). Forecast: Enterprise Software, Worldwide, 2021–2027. Gartner Research. https://www.gartner.com
7. Standish Group. (2023). CHAOS Report 2023: Decision Latency Theory. Standish Group International.
8. McKinsey & Company. (2024). Digital Strategy in the Age of Composable Enterprise. McKinsey Technology Council. https://www.mckinsey.com
9. Forrester Research. (2023). Low-Code Platforms: Market Overview and Growth Projections. Forrester. https://www.forrester.com
10. Deloitte Insights. (2024). 2024 Global Technology Leadership Study. Deloitte Touche Tohmatsu Limited. https://www2.deloitte.com