Product Management

Buy vs. Build: The Real Costs

The Dude has been fighting with a bad vendor for a third party technology all week.  It really is going to cause him to lose some sleep this weekend, and do far more work next week than a Lazy man ought to.

This vendor, call them X, has been in our product for a LONG time.  7 years to be exact.  They provided a crucial piece of the puzzle as we were becoming a .Net shop.  Solid code, worked well, and really has been low issues since we deployed it.

About 6 months ago, they were bought by a quasi competitor (i.e. a company that has a similar product offering, but targeted at a different segment).  Then they decided that our sweetheart licensing deal was too good to continue.  They sent a notice to terminate, with the intent that if we were going to continue to use their product, we would need a new agreement.  Nearly 6 weeks into the 12 week termination period, they come back with pricing.  The cost per server would become 8 times what we had customarily been paying.

After I woke up from the fainting spell, I politely implied to them that there was no way I was going to increase my annual spend from ~ $50K for royalties to ~$650K for the simple use we have of their product.

Lots of haggling (and three weeks later), we were still far apart.  I made it abundantly clear that we had other technology in house to do this, and that I was willing to pay near my old rate to prevent my dev team from having to waste time with a solved problem.  I.e. why we chose the license (or “Buy”) route back in 2004.  I made it clear that while it was great that his product had all these wonderful, new capabilities, I didn’t intend to use any of them, hence they had no value to me.

We finally get nearly close enough on price.  I bring in my 3rd party team.  Then the screws really get cranked down.  They are sharp cookies, but, their first instinct is to minimize the use of 3rd party technology.  While the last few weeks was transpiring, I had my dev team doing some prototyping of a solution.  Got it pretty close to done too. All in case of a contingency need.  Glad I did too.

Today, the discussions broke down.  I was able to buy myself a week.  But I will be spending most of the week preparing to strip this module from the product, and prodding the dev team to finish and QA the substitute.  Looks like I will get away with a low demand option not being available for 3-4 weeks.  Not great, but not end of the world.

The 3rd party?  They will be gonzo.  Christ, I need a Caucasian.