Build vs. Buy: Why You Should Leverage Third-Party Technology Vendors

November 22, 2017

The transportation and logistics industry is being flooded with new technology. Digitization, automation, and visibility are absolutely necessary for companies looking to compete in this new era. The Amazon Effect is putting added pressure on retailers and shippers to provide outstanding customer experience, and the legacy technology the industry has relied on for so long is inadequate.

Companies need to leverage new technology like APIs in order to compete. The question is, should you build these technologies in-house, or partner with a third-party technology vendor?

One of the main arguments in favor of buying is that companies who specialize in a specific technological function are almost always better at building and integrating that function than a company who specializes in something else. For example, companies building ride sharing apps like Uber or Lyft could build their own mapping program, but it makes a lot more sense to leverage the Google Maps API, which is already built and already extremely effective.

Companies leverage Amazon Web Services because they’re already incredible at what they do. The infrastructure is already in place, and they provide unmatched scalability and security. Best-in-class technology vendors will always be able to create better solutions than a company whose main product or service is something different.

This works for API technology in transportation and logistics as well.

FedEx, for example, instituted an API Integrator Program earlier this year, which is extremely telling. FedEx is clearly large enough and has the resources to develop everything in-house, but they choose to leverage partnerships with modern technology companies like project44.

At EFT’s Logistics CIO Forum in November, FedEx’s own API Specialist Tony Kreager explained that three major things factor into the build vs. buy decision, “Cost, resource time, and integration complexity.”

Cost is obviously going to be a factor in every buying decision your company makes, but buying technology can free up your in-house resources, allowing you to avoid time lost trying to configure integrations, which saves money in the long run. Technology simply moves at too quick of a pace for companies to manage their own auxiliary technologies. Building technology in-house restricts agility.

De Muynck, Research Director at Gartner, stated, “The rate of change is too high to manage [technology] in house, and secondly, to keep up.” Once you build a technology in-house, you’re married to it. Your company is handling updates to manage security and compatibility. Leveraging technology from a third-party vendor, however, means that they’re handling those things.

When you choose to buy rather than build, you’re not just buying a product off the shelf, you’re essentially buying into a partnership. That means you’re working together with your vendor to continually innovate the product, and you’re asking your technology partners to build things that directly benefit your needs. You’re getting continued support and integration assistance.

For example, let’s say a carrier puts up new API and deprecates old one. There’s a good chance they aren’t notifying every stakeholder about this change. project44 has the systems in place to notice the change instantly, get the new documentation, get all partner integrations back up and running so all of our clients are connected and up to date. In most cases, the only reason our customers even know about the change is because we make it a point to update them on it.

Collaboration is making the entire API development and integration process more simple, which is extremely important considering how quickly companies in this industry need to adopt new technology to avoid falling behind. Supply chain visibility relies on companies receiving sharing and receiving normalized information in real-time. That’s a lot harder to do if they all build their own technology instead of all tapping into a third–party vendor that can integrate them to each other—and countless other sources—through one simple integration.

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