Should you build or buy software? This Wall Street firm has a new tool to decide.

Should you build or buy software? This Wall Street firm has a new tool to decide. A bricklayer builds a wall at a construction site in Kuala Lumpur Reuters The build-versus-buy debate around business software has a new calculator.Last year, I wrote about how AI coding tools were making it easier for companies to create their own internal apps instead of paying an outside software provider. That shift raised a tempting question: Why keep buying expensive software when employees can now vibe code a custom version themselves?The enterprising analysts at RBC Capital Markets recently built an interactive tool to test that idea. Companies and investors can plug in the cost of a software subscription, then compare it with the full cost of building and running an in-house alternative. The tool goes beyond the initial coding bill. It also includes maintenance, security risks, repairs, and the cost of employees using a tool that may be less reliable or capable.RBC's conclusion is sobering: Building your own version of business software is usually more expensive than buying it. The math can work for simpler, less important tools, but rarely for core systems such as payroll, customer records, or office software.The biggest hidden cost may be talent. Even when a custom app is possible, companies must ask whether their best AI workers should rebuild existing software or create something genuinely new.Sign up for BI's Tech Memo newsletter here. Reach out to me via email at abarr@businessinsider.com. Read next Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on abarr@businessinsider.com.ExpertiseAlistair oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular StoriesArtificial Intelligence:It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads Software Vibe Mode