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Key Takeaways

• Build-or-buy decisions should begin with clearly defining the business problem, desired outcomes, and user needs rather than focusing on the tool itself.
• Buying an existing solution works best when the business challenge is common and available products already meet most operational requirements.
• Building a custom tool can provide greater flexibility and control when workflows, data requirements, or competitive advantages are highly specialized.
• Total cost analysis should include development, maintenance, training, support, upgrades, and long-term ownership expenses.
• Successful tool decisions require measurable KPIs, cross-functional review, and ongoing evaluation after implementation.

Ranjan Mendonsa has spent nearly four decades in business and finance, most recently serving as vice president of finance at Visa in Foster City, California. Based in San Ramon, California, Ranjan Mendonsa has overseen global technology and corporate services operating expenses exceeding $1.6 billion annually, along with capital budgets for real estate, aviation, and technology infrastructure. He joined Visa in 2013 as senior director of technology finance before advancing to his current role, where he partners with the company’s C-suite and cross-functional teams in finance, technology, and investor relations. His work has included integrating the newly acquired Visa Europe business and tracking multi-million-dollar cost-savings commitments for the board of directors. Mendonsa has also led recruitment efforts through Visa’s Finance Leadership Program.

As a finance executive familiar with large-scale technology investment decisions, he brings relevant context to the recurring corporate question of whether to build or buy a business tool.

A company may need a new business tool when routine work becomes too slow, costly, hard to track, or difficult to support. A business tool can mean software, a reporting dashboard, a workflow system, or another resource employees use to complete work. The main decision is whether the company should build the tool internally or buy an existing option from a provider.

Build-or-buy means choosing between two paths. Building means the company creates the tool with internal staff, contractors, or a custom development team. Buying means the company uses an existing product or outside service that already performs much of the needed work.

The decision should start with the business problem, not with the tool itself. Business leaders should define what work needs to improve, who uses the tool, and what results the company needs.

That result may involve faster reporting, fewer manual steps, better service tracking, lower support burden, or more reliable information. Business, technology, operations, procurement, and finance teams should first review the market for existing options.

Buying may work well when the problem is common, the product already supports most required tasks, and the provider can help with setup and use. Teams should test fit against daily work instead of relying only on a sales description. This review helps the company avoid building something that a reliable product already does well.

A company may still need to build when the tool supports a specialized workflow, unusual data requirement, or process the business wants to control closely. Existing products may not support how the company needs to work now or how it expects the work to change later. In that case, ownership, flexibility, and maintenance planning may matter more than a faster purchase.

Neither option removes the need for internal capacity. A build decision requires people who can design, test, maintain, and improve the tool after launch. A buy decision still requires employees who can manage setup, training, data access, vendor questions, and future updates. The company should name those responsibilities before approval.

Finance leaders should compare the full cost over time. The first price or first project estimate may not include staff time, support, maintenance, training, upgrades, added users, or later changes. Total cost means the full cost of owning and using a tool, not only the amount the company pays at the start.

The project team should review timing separately. Buying may help when an urgent reporting need, service issue, or operating delay requires a usable tool quickly. Building may make sense when the business can accept a longer timeline because available products would not support the required work. The team should make schedule assumptions realistic enough for leaders to compare both paths fairly.

Decision-makers should choose useful measures before the company gives final approval. A KPI is a number a business tracks to see whether an important result improves. For a business tool, useful KPIs may include turnaround time, error rate, cost per task, employee usage, report accuracy, backlog size, or service reliability. Those measures should connect to the business problem that started the decision.

Technology, security, procurement, finance, and other qualified reviewers should review data protection, compliance requirements, vendor access, system dependence, and contract exposure before the company commits.

After the company chooses a path, the work should not stop at approval. The company should keep a decision record that names the main assumptions, the expected result, the review owner, and the first measures to check after launch.

FAQs

What does build-or-buy mean in business decision-making?

Build-or-buy refers to the choice between creating a business tool internally or purchasing an existing solution from an outside provider. Companies use this framework when deciding how to improve workflows, reporting, operations, or employee productivity.

The decision involves comparing factors such as cost, speed, customization, maintenance requirements, and long-term business value.

When should a company buy an existing business tool?

A company should consider buying when the business need is common, reliable solutions already exist, and the available products can support most required workflows. Purchasing can often reduce implementation time and provide access to vendor expertise, updates, and support.

However, companies should test whether the solution fits their actual processes instead of relying only on vendor demonstrations or marketing claims.

When does building a custom tool make more sense?

Building may be the better choice when a company has unique workflows, specialized data requirements, or operational processes that existing products cannot support effectively. Custom solutions can provide greater flexibility and control over how the system works.

However, companies must consider the ongoing responsibility of maintaining, improving, and supporting the tool after launch.

How should companies compare the costs of building versus buying?

Businesses should evaluate total cost of ownership rather than only the initial investment. This includes development expenses, software fees, employee time, training, maintenance, upgrades, support, and future scalability requirements.

A solution with a lower upfront cost may become more expensive over time if it requires significant ongoing resources or customization.

What factors should leaders review before approving a new business tool?

Decision-makers should consider business goals, implementation timelines, security requirements, compliance needs, vendor risks, system integration, and expected return on investment.

Establishing clear KPIs before approval also helps measure whether the chosen solution improves important outcomes such as efficiency, accuracy, cost reduction, or customer service quality.

About Ranjan Mendonsa

Ranjan Mendonsa is a business and finance executive based in San Ramon, California, with nearly four decades of experience across technology, payments, retail, and consumer packaged goods. He currently serves as vice president of finance at Visa in Foster City, California, where he oversees global technology and corporate services budgets exceeding $1.6 billion annually. Mendonsa has led financial integration efforts for Visa Europe and has been recognized for his work recruiting talent through Visa’s Finance Leadership Program.