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Make-Buy decision process

The make-buy decision is an important management prerogative. I am supposed to be a manager of a software organization that has an average software development cost of $20.00/LOC. I am supposed to be considering the purchase of a 5000-LOC software package that will cost $50,000. Initially, my technical staff indicates that no modifications will be required for the package to meet your specifications. However, my software development group wants to develop similar software in-house. Should I make or buy? After further study, my technical group now finds that at least 1000 LOC will have to be modified or added to make the package viable. Should I now make or buy? I am required to carefully state any assumptions I have made in making my decisions. The solution needs to contain elaborative description along with reference details please.

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It is good that you have performed some estimation on the cost savings. But while the cost of developing the application in-house versus the purchase price is one of the valid reasons to decide whether you will make or buy the software, we must put more consideration before arriving at the final decision.

The first and foremost factor is whether the quality and performance criteria of the package product are satisfied, if not, can it be improved and what are the cost of the improvement. Having the source code is a great way to improve it, ...

Solution Summary

Should I now make or buy?