Build Versus Buy: Lessons From Peers

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One of the most critical questions talent and learning professionals need to answer to close an identified performance gap is whether to build or to buy the expertise needed to design, develop, and deliver the most effective learning experience. This is not just an either-or decision. There are many variations, ranging from completely outsourcing to partnering with an external source for just some of the components. The decision not only affects the solution, but also the budget, personnel, support efforts, time involved, the results for the employees and ultimately the success of the organization. What do you need to know before the conversations start? What research do you need to do? What questions do you ask? Where do you start?

One of the most critical questions talent and learning professionals need to answer to close an identified performance gap is whether to build or to buy the expertise needed to design, develop, and deliver the most effective learning experience. This is not just an either-or decision. There are many variations, ranging from completely outsourcing to partnering with an external source for just some of the components. The decision not only affects the solution, but also the budget, personnel, support efforts, time involved, the results for the employees and ultimately the success of the organization. What do you need to know before the conversations start? What research do you need to do? What questions do you ask? Where do you start?

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Situations like this are a common part of the talent leader’s portfolio. Your starting point might be different depending on your industry, your size, your market position, the maturity of your learning function, and other factors. However, if you are part of a benchmarking consortium, such as the ATD Forum, there is a known pathway–ask your peers!

Situations like this are a common part of the talent leader’s portfolio. Your starting point might be different depending on your industry, your size, your market position, the maturity of your learning function, and other factors. However, if you are part of a benchmarking consortium, such as the ATD Forum, there is a known pathway–ask your peers!

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Forum members have a variety of methods to gain information from a diverse group of peers, including sending a simple member-to-member survey, asking others at a small group cohort meeting, hosting a virtual roundtable for members to share and ask questions, and holding deep dives at interactive labs.

Forum members have a variety of methods to gain information from a diverse group of peers, including sending a simple member-to-member survey, asking others at a small group cohort meeting, hosting a virtual roundtable for members to share and ask questions, and holding deep dives at interactive labs.

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At the 2023 Spring Lab in San Diego, members focused on the build-or-buy conundrum and took it a step further to collectively develop ideas, checklists, and questions to enable a perfect fit between a provider and customer, regardless of whether the provider is internal or external. Context was provided by a member and its external strategic partner sharing a case study. This included an overview of the challenge, the case they developed for using an external supplier, and the many techniques employed over the years to work together to enable success for the real customers—the employees.

At the 2023 Spring Lab in San Diego, members focused on the build-or-buy conundrum and took it a step further to collectively develop ideas, checklists, and questions to enable a perfect fit between a provider and customer, regardless of whether the provider is internal or external. Context was provided by a member and its external strategic partner sharing a case study. This included an overview of the challenge, the case they developed for using an external supplier, and the many techniques employed over the years to work together to enable success for the real customers—the employees.

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Using this scenario, the collective peer group of talent leaders from 19 companies developed a list of reasons for using external versus internal suppliers, used the Value Proposition Canvas tool to dive deeper into clarifying needs, heard from an expert on using burden rate (the cost to an organization of hiring and maintaining an employee beyond their wages) when cost is a primary factor, and, finally, developed a list of elements to consider when selecting an external provider.

Using this scenario, the collective peer group of talent leaders from 19 companies developed a list of reasons for using external versus internal suppliers, used the Value Proposition Canvas tool to dive deeper into clarifying needs, heard from an expert on using burden rate (the cost to an organization of hiring and maintaining an employee beyond their wages) when cost is a primary factor, and, finally, developed a list of elements to consider when selecting an external provider.

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Reasons for considering an external supplier:

Reasons for considering an external supplier:

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  Diversity of thought and known expertise related to solving the challenge lends credibility on the issue that might be missing internally.

  Diversity of thought and known expertise related to solving the challenge lends credibility on the issue that might be missing internally.

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  A partnership can expand the company’s network for ideas, people, and solutions; this might include mentorships.

  A partnership can expand the company’s network for ideas, people, and solutions; this might include mentorships.

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  Time to market can be much faster.

  Time to market can be much faster.

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  Processes established to easily show metrics and ROI if the supplier has a model or tool designed for that purpose.

  Processes established to easily show metrics and ROI if the supplier has a model or tool designed for that purpose.

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  Content maintenance capability is a huge factor, and the supplier may have a dedicated team.

  Content maintenance capability is a huge factor, and the supplier may have a dedicated team.

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Reasons for not using an external supplier:

Reasons for not using an external supplier:

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  An external person or group not understanding the context of the organization, the need, or similar factors

  An external person or group not understanding the context of the organization, the need, or similar factors

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  Challenge of getting executive buy-in

  Challenge of getting executive buy-in

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  Cost, especially when burden rate is considered a sunk cost

  Cost, especially when burden rate is considered a sunk cost

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  Risk factors if internal leadership changes, the vendor gets acquired by another company, or other unforeseen circumstances

  Risk factors if internal leadership changes, the vendor gets acquired by another company, or other unforeseen circumstances

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  Initial time investment to set up the contract, especially if it involves legal, compliance, contracts, IT, or other departments

  Initial time investment to set up the contract, especially if it involves legal, compliance, contracts, IT, or other departments

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  Lack of specificity based on industry—for example, experience from banking not applicable to construction

  Lack of specificity based on industry—for example, experience from banking not applicable to construction

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The group then developed a list of elements to consider when selecting an external supplier. As the small groups reported their ideas, there was large group discussion and experiences shared from the rest of the peer group. The host team with the case study, along with the strategic partner, supplemented the conversation by providing real-life examples.

The group then developed a list of elements to consider when selecting an external supplier. As the small groups reported their ideas, there was large group discussion and experiences shared from the rest of the peer group. The host team with the case study, along with the strategic partner, supplemented the conversation by providing real-life examples.

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With this list of elements clarified and expanded, the teams brainstormed how to determine whether these elements were present. A sampling of the elements and response includes:

With this list of elements clarified and expanded, the teams brainstormed how to determine whether these elements were present. A sampling of the elements and response includes:

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Element: How might we know if the supplier’s offering will really meet our need?

Element: How might we know if the supplier’s offering will really meet our need?

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Suggestions generated:

Suggestions generated:

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  Ensuring internal clarity on the problem and need by using a tool like the Value Proposition Canvas or Cathy Moore's action mapping prior to engaging with them

  Ensuring internal clarity on the problem and need by using a tool like the Value Proposition Canvas or Cathy Moore's action mapping prior to engaging with them

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  Requesting demos and asking for a pilot or examples

  Requesting demos and asking for a pilot or examples

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  Asking what they would change from their standard format for your organization

  Asking what they would change from their standard format for your organization

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  Assessing how they engage and ask questions of you as a client (Do they probe to dive deeper?)

  Assessing how they engage and ask questions of you as a client (Do they probe to dive deeper?)

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Element: How do you know if the external supplier can serve as a thought partner within your context?

Element: How do you know if the external supplier can serve as a thought partner within your context?

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Suggestions generated:

Suggestions generated:

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  Asking for a list of other clients the supplier has worked with and interviewing them

  Asking for a list of other clients the supplier has worked with and interviewing them

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  Working through a scenario you provide and seeing how the supplier responds

  Working through a scenario you provide and seeing how the supplier responds

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  Asking broad, open-ended, what-if type questions and focusing on what is referenced, especially noting other thought leaders and research

  Asking broad, open-ended, what-if type questions and focusing on what is referenced, especially noting other thought leaders and research

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  Asking, “What in our relationship, as you understand it now, might incur extra work and therefore additional fees?”

  Asking, “What in our relationship, as you understand it now, might incur extra work and therefore additional fees?”

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  Asking for examples of times when the supplier has provided thought leadership and the results garnered (Is there a regular cadence for sharing experience and current thought leadership? For example, does the supplier have a regular web conference or blog or gathering of clients to share forward-thinking ideas?)

  Asking for examples of times when the supplier has provided thought leadership and the results garnered (Is there a regular cadence for sharing experience and current thought leadership? For example, does the supplier have a regular web conference or blog or gathering of clients to share forward-thinking ideas?)

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  Asking for a list of the books, articles, whitepapers, or blogs the supplier has published for the industry at large and a list of conferences or other venues where they have shared experiences

  Asking for a list of the books, articles, whitepapers, or blogs the supplier has published for the industry at large and a list of conferences or other venues where they have shared experiences

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The build-or-buy decision is huge. However, if the decision is to buy, it takes continued effort from both parties—the customer and the supplier—to build an ongoing strategic partnership that results in a perfect fit which in turn makes an impact on the organization. Connecting, collaborating, and sharing with industry peers is an excellent start.

The build-or-buy decision is huge. However, if the decision is to buy, it takes continued effort from both parties—the customer and the supplier—to build an ongoing strategic partnership that results in a perfect fit which in turn makes an impact on the organization. Connecting, collaborating, and sharing with industry peers is an excellent start.