Every now and then, FinTech service providers approach Product Managers seemingly insulted by the question “have you considered amplifying your DevOps team or optimizing your Cloud Strategy with outside help to scale faster and cheaper?”.
Convincing these naysayers can sometimes make you feel like you are assuming a “bad cop” parental role – i.e. becoming someone who knows what’s good for you based on extensive experience, even when you may not see it or believe them at first. So let’s jump right into the spiel.
There are three imperative considerations to implementing a “Buy, Build, Partner” strategy that rest on the premise (which Silicon Valley seemingly forgets from time to time) that time and material resources are finite: Leverage Open-source, Protect your Mindshare and Trust Inorganic Growth.
Steve Jobs once said, “it doesn’t make sense to hire smart people and tell them what to do; we hire smart people so that they can tell us what to do” – Even for Apple, a maximum-security IP fortress, this did not mean augmenting payroll. In 2012, Apple revealed its 15-year association with the likes of Infosys and Wipro, implying Apple’s journey to a market cap of 1 trillion dollars was not achieved by internal hiring alone. The good news is, this is only getting easier to achieve, the bad news is too few emerging names are following best practices to accelerate ahead. Instead, the C-Suite is often at the mercy of the apprehension and fear of internal (usually technical) “gatekeepers”. Let’s take a look at 3 key components of a “Buy, Build, Partner” strategy in 2020, which assumes your partners and service providers aren’t seeking multi-year/million-dollar engagements, that they adapt to your servicing time zone with suitable SLAs and that they will not compromise on quality.
1.The ubiquitous existing Open- source tech stacks today do not require you to reinvent the wheel
- The famous four (Apple, Google, Microsoft, and Linux) have now been replaced with robust community-driven Open-source code that is not dependent on cyclical patches, provides real-time bug fixes and new enhancements, and can deliver results in T-0 vulnerabilities as opposed to proprietary solutions. Embracing the world of Open-source and applying your domain knowledge is how you get the biggest bang for your buck.
- For instance, Rasa: Open- source Conversational AI, has given multiple verticals (Airline, Retail, Healthcare, Financial Services, and counting...) the opportunity to create enterprise-grade intelligent virtual assistants that are well versed in the context of their industry.
Extrapolate this tangible product approach to AI/ML solutions, data visualization, testing, cloud strategy and platform engineering with a range of emerging tech stacks such as Kubernetes, ELK, Kibana and Terraform. Take your pick and get in touch with me if you are looking to explore!
2. Protect your mindshare, build responsibly, keep costs low and hire for what you don’t know
- Keep your team the right size and working on exciting stuff such as product development and feature building. A service provider with domain experts can easily handle manual QA, DevOps and migration projects that can be executed without the overhead (read: large fixed costs such as offices, servers, inventory) of doing it on your own. Note again for anxious readers: IP is not at risk, especially if your contract specifies that source code is to be handled and maintained by your firm. Decide on an outcome-based model that establishes clear deliverables.
- Burn rates should not make investors or leadership teams uncomfortable. As Venture Capitalist, Mark Suster warns, “a company’s runway should not fall below 6-7 months of cash on hand” and reminds us “high fixed costs and high debt rates killed many great companies in Dot Com 1.0”. Figure out a “Buy” strategy to keep sticky situations and rainy days to a minimum by increasing variable costs. This in turn, generates momentum for speed to market and allows you to maintain a position well ahead of your peers.
- Even though we are inundated with “self-help” advice on how to manage our personal lives and relationships, institutional introspection is underrated. It is equally just as important to identify and diagnose weak areas in your company from the outset. Then buy or hire those services from a vendor that spends day and night perfecting that exact skillset.
3.The Butterfly Effect of Partnering on Business Development
- Do not underestimate the “Butterfly Effect” of your outsourcing partner’s ability to drive inorganic growth in unique ways. Unsuspecting partnerships have helped drive:
- Geographical scale
- Customer acquisition and adoption
- IP augmentation
- Insights & analytics
- Choose the domain experts that can connect you to peers and establish these relationships. Just how Wipro and Infosys were able to leverage its internal IT projects with Apple to amplify adoption. Sewing a web of interconnectivity of Apple products with other clients’ business applications and adapting best practices continue to be a win-win for the iPhone/iPad maker as well as their outsourcing providers.
Finally, the skeptics are not wrong to be wary of anything except “Build”. It has become the dominant fall back approach for many emerging technology companies across Retail, Healthcare, FinTech and Blockchain after “outsourcing” earned a bad reputation over the last decade (read: overcharging, “landing and expanding”, and poor results). However, with the right governance, acknowledging that most engagements can leverage free open-source solutions with effective domain-specific frameworks, and creating equitable partnerships, a little bit more of “Buy” and “Partner” can get you where you want to go exponentially faster.
Scale up and deliver top line year-on-year growth for investors and stakeholders, in a sustained manner.