Data management tech: when to outsource, when to buy and when to build
The affiliate industry, by its very nature, is built on a foundation of data. One of the reasons that the industry shows significant growth on an annual basis (up 15% from 2016 to 2017 according to the latest IAB research) is the level of data and insight available on each customer journey, coupled with the assurance to brands that money is only being invested where it is most effective.
One upshot from all of this is that publishers, agencies networks and brands are all sitting on a vast amount of information that potentially has the power to improve our performance.
Big data has long been a hot topic within the wider marketing landscape, and a key principle that sits alongside this is how companies manage and report their data to generate insights that matter. For affiliate publishers, this is more essential than for most. Publishers’ businesses are literally made or broken based on how successful data can be translated into insight that drive sales. Understanding which channels are working and which aren’t is absolutely key.
In order to solve this challenge, a lot of affiliate businesses look internally to their technical teams. As businesses born in the digital age, we all have a wealth of technical knowledge and expertise in-house. As a result, it can be extremely tempting to tackle all data management needs by building bespoke tech internally. However, is this always the right approach?
I would argue that any business, but particularly one in the affiliate space, needs to ‘think smart’ around the question of ‘build’ versus ‘buy’ when it comes to tech solutions.
Speaking from experience
Decision Tech has built a successful business around developing innovative technology that helps makes consumers’ lives easier. As part of this approach to providing an excellent user experience, we regularly choose the path of building technology from scratch to solve problems for the business, as opposed to buying off-the-shelf packages and services.
This ‘DIY’ approach has undoubtedly reaped rewards but, despite there being no external spend, it has not been cost free. We have had to manage a growing library of code to support across multiple products and all the costs associated with this – not to mention the potential detriment to business focus with our resources spread across multiple project and products.
Ultimately, this has led to a need to redefine our approach to these decisions. There was no additional value to be had from reinventing the wheel. It was decided that before embarking on a product build, it would have to meet a minimum criteria: we had to have the ability, it had to be core to our strategy, and, finally, not available elsewhere. This fresh, open-minded approach has allowed us to focus on prioritising technology that adds value and solves problems that are unique, while plugging-in third party tech to solve those that aren’t.
When to outsource
When you are facing a business problem that requires a technical solution it’s worth asking a few questions:
- Are your sure there aren’t already solutions that exist in the market that do what you want to a standard you need?
- Do you have knowledge and expertise to build it in-house?
- Are you sure that building it in-house won’t take resources from other projects that are more important?
- Are you willing and able to commit to supporting the technology on an ongoing basis?
To build or to buy
Building everything in-house can be tempting with the promise of hugely valuable IP and the benefit of having your data and reporting in exactly the right format for you. It is important, however, to recognise that this can come at the cost of limiting the expansion of your business more lucratively elsewhere. Building and maintaining solutions takes time.
A recent case in point: 24 months ago we chose to build our bespoke affiliate reporting tool, Fullsight, in-house, to help tracking across Broadbandchoices.co.uk. This decision was taken after carrying out a full review of what existed in the market and a thorough analysis of the cost to build against the forecasted benefits (allowing us to instantly see revenue in GA and elsewhere from all our programmes was a major strategic priority).
After those checks and balances, it took over a year and a team of talented developers to reach a point where we were ready to share it with other partners, a course we were able to commit to as we knew it was the only course of action. Doubtlessly, where you get it right, it’s priceless, but for every project like this, there will be countless others that end up on the cutting room floor.
Where the technology already exists, make sure to properly weigh-up the cost of buying it in against the significant cost and manpower required when investing time and money to do it yourself. Where it does not exist, make sure it supports a major strategic focus for your business as opposed to being just nice to have. Increasingly businesses are realising that they can grow their corporate value by focusing on doing what they do well and using best-in-market solutions to help them do other things.
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