It’s no secret that organizations must constantly innovate in order to remain competitive in today’s market. However, each one ultimately reaches a point where they’re faced with tough choices — choices that determine whether they’ll be able to continue innovating at a competitive velocity.
Often, there are three choices are presented:
- Build: Do we continue investing organically to fund innovation?
- Partner: Do we partner with a third-party to share responsibility?
- Buy: Do we acquire the additional technologies needed?
To help decide which is best for your organization, whether it be one or a combination, let’s begin by breaking down the pros and cons of each.
Build vs Partner vs Buy
1. Invest organically to fund innovation
When building your own solution/technology, the pros are rather obvious. Since you have full control over development, you’re able to achieve:
- Clean integration and common design themes with existing solutions
- Cost efficiency that comes with development decisions along the way
- Full integration across all platforms
That being said, this option does come with one rather hefty con:
- Slower to market
Full control over process and development often comes with a strain on existing resources. While the pros for organic investment are strong, it can hinder your ability to reach the desired velocity of innovation.
2. Share the responsibility with a partner
Organic investment may sound ideal, but the option simply isn’t possible for many organizations, due to limited resources or funds. This is where a strategic partnership begins to sound more beneficial.
The pros of partnering with another organization include:
- Quicker time to market
- Lower costs than starting from scratch
- Customers benefit in only having one vendor to transact
At the same time, you may run the risk of:
- Partnership ending due to the partner changing priorities or their own M&A interests
- Disparate support organizations creating a disjointed experience for the customer
3. Acquire the technologies needed
Acquiring the additional technology your organization needs carries similar benefits to that of entering a partnership:
- Quicker time to market
- One vendor to transact
However, this option does come with many potential cons:
- Higher costs are common with acquisitions
- Integration challenges between solutions
- Cultural challenges between two organizations
- Potential for poor customer experience when dealing with disparate support organizations, disjointed look and feel, code compatibility issues, etc.
After reviewing the pros and cons of each — build, partner, buy — you may find that one or a combination of the three is the right strategy for your organization.
Once the decision is made, it’s time to enter the integration phase, where the rubber really meets the road when it comes to customer value.
Integration Requirements to Consider for Build, Partner, Buy
If you choose to build, you then enter the integration phase through engineering sprints and overall go-to-market processes. This can become somewhat of a waiting game before you’re able to bring the new capability to customers and prospects.
If you partner, you then must work through contracts and figure out fulfillment before you can put that capability in market. Oftentimes, deals may come out looking somewhat different once passing through the legal department for each company.
If you buy, then you have choices to make on how you do integration, going one of the three below routes:
- Pure marketing
- Engineering light
- True integration
This integration is limited to the website, collateral, and other marketing material. As a result, there is a higher cost associated with deployment and support, because the products often don’t work well together. Rather than integration the processes technologically, they are tied to human resources and manual fixes.
A pure marketing approach frequently happens when the acquiring company wants to run the target company more efficiently. This results in a poor customer experience, as there are usually deep cuts to non-essential functions, resulting in the loss of tribal knowledge. The integration typically falls short of the point where the customer would truly receive value.
With this integration approach, logos and colors are changed in the software, and there is often a “manager of managers” layer added to conceal any back-end chaos. This is typical when you’re trying to integrate two products that are already in the market, each with established customer bases.
When an acquisition has strong potential for synergy, this integration most always appears to some degree, but it falls on marketing to lead the product integration. Unfortunately, once the real price tag of the integration becomes clear, either significantly more investment will be required, or the marketing team will have to take a different approach.
True integration, as the name implies, yields a seamless look and feel — the implementation, policies, APIs, SDKs, etc., are all uniform. When the customer interacts with sales or support, it feels like one company, absent of the series of hand-offs before you reach the right department or queue.
This level of integration is most common with pre-revenue/early-stage startups, where they’re buying intellectual property. It is rarely possible when a bigger company buys a smaller company that already has a strong presence and customer base in the market.
Putting it all in perspective
As an example, let’s look at how Alert Logic has been able to continuously innovate through the years.
In 2018, we launched our container security focus and have since expanded it to cover ECS, EKS, and most recently, Fargate. We did this because we saw that our customers were not only moving to the cloud but also embracing forms of serverless computing. This innovation was required in order to meet their needs.
Our focus on organic innovation never let up, even throughout 2020 and into 2021, in the midst of the pandemic. We launched a new console user experience, simplified log ingests with the application registry, and added free file application monitoring to aid in compliance, covering a common attack vector with web application threat detection and moving towards enabling automated response.
Rather than acquiring these capabilities from outside sources, we have been able to keep our innovation in-house, all thanks to our incredible team of security experts. All these new features were built on a common toolset, by a common engineering team, with a common goal, all of which help to ensure the best customer experience.
Why does this matter?
As you look to the security vendor landscape, be sure to do your due diligence. It’s important to look past the marketing to really see how a vendor delivers all the things they claim and how they will in the future.
Demonstration of past success is a good indicator of future direction. Is it a series of acquisitions that bolt-on capabilities or have the services truly been integrated? It really is a small thing to consider up front, but one that can pay serious dividends after things get deployed.