Flevy Management Insights Q&A
How are emerging technologies like AI and blockchain influencing the Build vs. Buy decision-making process?
     Joseph Robinson    |    Build vs. Buy


This article provides a detailed response to: How are emerging technologies like AI and blockchain influencing the Build vs. Buy decision-making process? For a comprehensive understanding of Build vs. Buy, we also include relevant case studies for further reading and links to Build vs. Buy best practice resources.

TLDR Emerging technologies like AI and blockchain are reshaping the Build vs. Buy decision in Strategic Planning, influencing efficiency, customer experience, and innovation, with considerations for cost, time-to-market, and business strategy alignment.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Build vs. Buy Decision-Making mean?
What does Strategic Planning mean?
What does Digital Transformation mean?
What does Operational Excellence mean?


Emerging technologies such as Artificial Intelligence (AI) and blockchain are significantly influencing the Build vs. Buy decision-making process in organizations. This decision is critical in Strategic Planning, Digital Transformation, and Operational Excellence initiatives. The integration of these technologies into business operations can lead to enhanced efficiency, improved customer experiences, and innovative service offerings. However, the decision to develop these technologies in-house (Build) or to acquire them from external providers (Buy) requires a nuanced understanding of their implications on cost, time-to-market, competitive advantage, and alignment with business strategy.

Impact of AI on Build vs. Buy Decisions

AI technology has evolved from a nascent innovation to a core component of business strategy and operations. The decision to build or buy AI solutions hinges on several factors, including the specific use case, the organization's technical expertise, and the strategic importance of AI to the business. Building AI solutions in-house allows for customization and integration with existing systems, offering a competitive edge through proprietary technology. However, this approach requires significant investment in talent, technology, and time. According to McKinsey, companies that excel in their AI initiatives often have a strong base of in-house AI capabilities, supported by a culture of innovation and a willingness to invest in long-term projects.

On the other hand, buying AI solutions can accelerate time-to-market, reduce initial costs, and leverage the expertise of specialized vendors. This approach is particularly appealing for non-core activities or when the technology is rapidly evolving, making in-house development risky and potentially obsolete. Gartner highlights that the global AI software market is expected to grow significantly, indicating a robust ecosystem of AI solutions available for purchase. This growth suggests that for many businesses, especially small to medium-sized enterprises (SMEs), buying AI solutions may be the most viable and cost-effective approach.

Real-world examples include large corporations like IBM and Google offering AI and machine learning platforms that businesses can integrate into their operations without the need for extensive in-house development. These platforms provide powerful AI capabilities, including natural language processing, image recognition, and predictive analytics, which can be customized to some extent to meet specific business needs.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Influence of Blockchain on Decision Making

Blockchain technology presents a unique set of considerations in the Build vs. Buy debate. Known for its ability to ensure transparency, security, and efficiency in transactions, blockchain has applications across various industries, from finance to supply chain management. Building a blockchain solution in-house offers the advantage of tailored solutions that can provide a strategic competitive advantage. However, blockchain development requires specialized knowledge and can be resource-intensive. A report by Deloitte suggests that the complexity and the nascent stage of blockchain technology make it challenging for companies to build in-house without significant investment in skills and technology.

Buying blockchain solutions or partnering with blockchain-as-a-service (BaaS) providers can mitigate these challenges. BaaS offerings allow companies to utilize blockchain technology without the need to develop and maintain the infrastructure themselves. This approach not only reduces upfront costs and complexity but also provides scalability and flexibility. Forrester's research indicates that the adoption of BaaS is on the rise, as it allows businesses to experiment with blockchain applications with lower risk and investment.

Examples of companies leveraging BaaS include Walmart's use of IBM's blockchain technology to enhance supply chain transparency and efficiency. This collaboration has allowed Walmart to track the origin of food products in real-time, significantly improving food safety and reducing waste. Such partnerships demonstrate the benefits of buying or partnering for blockchain technology, especially when speed and reliability are critical.

Strategic Considerations for Emerging Technologies

The decision to build or buy AI and blockchain technologies should be guided by strategic considerations. These include the alignment with business goals, the potential for competitive differentiation, cost implications, and the ability to adapt to future technological advancements. Companies must also consider their internal capabilities and whether they have the resources and expertise to successfully build and integrate these technologies.

Furthermore, the decision should factor in the potential risks associated with each approach. Building in-house can lead to higher upfront costs and longer time-to-market but offers customization and competitive advantage. Buying, while potentially faster and less costly initially, may lead to dependency on external vendors and limitations in customization. Accenture's research emphasizes the importance of a balanced approach, suggesting that companies often benefit from a hybrid model that combines in-house development with strategic partnerships and acquisitions.

In conclusion, as AI and blockchain technologies continue to evolve, businesses must carefully evaluate their Build vs. Buy decisions. By considering strategic objectives, internal capabilities, and the dynamic technological landscape, companies can make informed decisions that support their long-term success and innovation goals.

Best Practices in Build vs. Buy

Here are best practices relevant to Build vs. Buy from the Flevy Marketplace. View all our Build vs. Buy materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Build vs. Buy

Build vs. Buy Case Studies

For a practical understanding of Build vs. Buy, take a look at these case studies.

Telecom Infrastructure Outsourcing Strategy

Scenario: The organization is a regional telecom operator facing increased pressure to modernize its infrastructure while managing costs.

Read Full Case Study

Defense Procurement Strategy for Aerospace Components

Scenario: The organization is a major player in the aerospace defense sector, grappling with the decision to make or buy critical components.

Read Full Case Study

Build vs. Buy Decision Framework for Semiconductor Manufacturer

Scenario: A semiconductor firm in the highly competitive technology sector is grappling with the strategic decision of building in-house capabilities versus buying or licensing from external sources.

Read Full Case Study

Luxury Brand E-commerce Platform Decision

Scenario: A luxury fashion house is grappling with the decision to develop an in-house e-commerce platform or to leverage an existing third-party solution.

Read Full Case Study

Customer Loyalty Program Development in the Cosmetics Industry

Scenario: The organization is a multinational cosmetics enterprise seeking to enhance its competitive edge by establishing a customer loyalty program.

Read Full Case Study

Make or Buy Decision Analysis for a Global Electronics Manufacturer

Scenario: A global electronics manufacturer is grappling with escalating operational costs and supply chain complexities.

Read Full Case Study




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials

  •  
    "The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."

    – Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
  •  
    "I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."

    – Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
  •  
    "I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."

    – Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
  •  
    "As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor "

    – Michael Duff, Managing Director at Change Strategy (UK)
  •  
    "FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."

    – David Harris, Managing Director at Futures Strategy
  •  
    "My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me "

    – Bill Branson, Founder at Strategic Business Architects
  •  
    "Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I "

    – M. E., Chief Commercial Officer, International Logistics Service Provider
  •  
    "As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for "

    – Jim Schoen, Principal at FRC Group



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.