COTS vs Custom Build vs Hybrid Approach

Why do we need this assessment ?

Retailers or any business in general should conduct an assessment of COTS, Custom Build and Hybrid solutions during key moments such as planning a digital transformation, addressing scalability issues, or when facing integration and security challenges. It’s also essential when enhancing customer experience, dealing with cost-of-delay problems, adopting MACH architecture, or re-evaluating costly legacy systems. This assessment ensures the right approach is chosen based on business needs, future growth, and technology alignment.

Prioritization Formula:

Score =
{(U×WU) + (F×WF) + (C×WC) + (R×WR) + (CoD ×WCoD) + (Cus × WCus) + (MACH × WMACH) + (Sec×WSec)} divided by E

Where:

• U = Urgency

• F = Feasibility

• C = Confidence

• R = Reach

• CoD = Cost of Delay

• Cus = Customization (degree to which solution can be tailored)

• MACH = MACH compliance (Microservices, API-first, Cloud-native, Headless)

• Sec = Security (ability to ensure data privacy and protect against threats)

• E = Effort (time, resources, complexity)

• WU, WF, WC, WR, WCoD, WCus, WMACH, WSec = Weights assigned to the importance of each factor

Steps:

1. Assign Weights: Determine the importance of each factor. For instance, if security and customization are top priorities, give them higher weights.

2. Rate Each Approach: Rate COTS, Custom Build, and Hybrid for each factor on a scale of 1-10.

3. Estimate Effort: Assign a value for the effort required for each approach.

4. Calculate Score: Use the formula to compute a score for each approach.

Example Calculation:

Let's assume the following weights based on the retailer’s priorities:

• Urgency (WU) = 0.2

• Feasibility (WF) = 0.1

• Confidence (WC) = 0.1

• Reach (WR) = 0.1

• Cost of Delay (WCoD) = 0.1

• Customization (WCus) = 0.2 (Customization is very important)

• MACH compliance (WMACH) = 0.1

• Security (WSec) = 0.1 (Security is critical)
  

You rate each approach for these factors on a scale of 1 to 10:

Score Calculation for Each Approach:

COTS Score = 2.17

Custom Build Score= 0.84s

Hybrid Score= 1.23

Conclusion for the retailer ABC:

1. COTS scores the highest, indicating that it's the best option when speed, low effort, and proven reliability are crucial, and customization and MACH compliance are not as important.

2. Hybrid offers a balanced solution, where customization is important but also leverages pre-built solutions for faster deployment and moderate effort.

3. Custom Build ranks lowest due to the high effort and time required, though it offers the highest degree of customization, MACH compliance, and security. It is best when full control and long-term flexibility are critical.
   
   

This formula helps you make data-driven decisions based on the importance of each factor to the business and how well each approach fits those needs.

A sample case on how to assess Buy Vs Build

Here's the prioritization formula that includes our retailer ABC Inc. can use to decide among the 3 approaches