I have been in the data and SaaS industry for over 6 years now, in several different companies. Each one faces this specific conundrum eventually: should we build or buy a reporting platform?
Every once in a while I will hear the customer success side mention a customer who is going to churn and build a reporting and dashboard solution in-house.
What does it mean to do this for the company? What are the steps, costs, requirements to actually build this in-house?
There are some very big costs associated with building and maintaining your own proprietary reporting platform. Only you will be able to decide if the ROI is worth it or not. That being said, there are several amazing companies out there that have gone to great lengths to help digital agencies with their data and client reporting needs. In short, the cost savings can be tremendous when you stack it up against the cost to build a solution yourself.
Let's take a look at this question in a bit more detail. You can also download our free Build vs. Buy eBook below:
Managing Data Integrations
Did you know that 43% of marketers identify integrated data across platforms as a top marketing objective?
At AgencyAnalytics we have over 50 integrations and that list is growing as we release new integrations on a weekly basis. For us, this is a balancing act between the popularity of a logo vs. the demand from our customer base. But what if you are a digital agency who wants to build a reporting platform? How would this be managed?
The fact is...it is expensive to create an integration. You need to hire developers who will connect with the API and maintain that connection as it changes. Also, API connections change often, and the ones that don’t are usually poorly crafted or too basic.
This is not a one-time investment at this stage—the developer will continually update the API as needed. When the API breaks and your reports are no longer pulling in data automatically you better hope you have a relationship with the data provider to get some of your burning questions answered. And just think of it, all of this time energy and money could potentially be spent on one single client who threw a tantrum for the integration to a data source no one on Earth has ever heard of!
We have a team of integration developers, our focus is to bring you all the integrations you and your clients need. It is easier for us to spread the cost across several clients who may need the integration. Our team also ensures that when there is something broken we address it immediately on our end. Managing a growing list of new integrations and maintaining current integrations is time-consuming. And once you start down this road, you can’t stop...or else the data stops. That being said, be prepared to bring in 1-2 people just to focus on growing and maintaining integrations.
Obstacles with Building A Reporting Solution
What are some of the obstacles you might encounter when building a reporting solution?
So you want to build a solution from the start. In theory, this sounds like a solid idea. However, have you considered that your engineering department might still have a separate need for a BI tool that affords visualization capabilities?
Does this really become a solution or more of a patchwork of bandaids to cover a problem? And even if you are successful, are you interested in also being a reporting and data analytics company? How much flexibility you think you'll have and how much you can actually manage often turn out to be as different as night and day.
Next, you will also need to hire knowledgeable staff members that specialize in data analytics, reporting, and visualization. You could rely on hiring software developers, although they are expensive and you will need to keep them on permanently to build out new features and address any core issues as you build out more integrations and functionality that one or two clients are asking for (and may never use).
Lack of Incentive
Consider how cost-effective you are when you have to build out a team just for reporting and data flow as a digital agency. It is more likely that it will be a financial drain to hire and hold a team just to build out integrations and troubleshoot bugs. In reality, you should expect that each one of those engineers will also have a list of higher priority tasks and their attention will be elsewhere.
As you grow and add more clients to your agency you will have to hire more and more data experts and engineers to ensure the reporting platform is keeping up with your growth. To start you will at least need a team of 3 developers. At this stage, you are already looking to spend more per month than even the most expensive solution would cost. What is the ROI? Is this move really valuable or is it more of a knee jerk reaction?
Quite often, companies don't entirely consider the cost of ongoing labor. Where will you house this new team? Are you ready to bring on new technology to aid the developers in building your reporting solution? Do you have $500,000 - $1,000,000 over the next year to invest in this mini startup? You will also need to bring in technology leaders to guide you through the process and develop the teams. The reality is that you could be looking at another $150,000 a year or more just for leadership.
Consider your time and energy as a unit that must be measured. Everything you do has an associated cost to it. What will suffer from existing operations because of your pivot to this? How will it affect you or potentially your job? The human cost (or human capital plus the technology cost) translates into additional overhead costs and technological requirements. Do you think you could get a better ROI if you focused that energy elsewhere? When you resolve to purchase a reporting platform you immediately are valuing the most important resource you have: your people.
What does this mean for monthly costs?
By now you are crunching some numbers to tell me how wrong I am. Even the most expensive reporting platform running $10,000 a month is a drop in the bucket when you realize the thousands of dollars you are going to need to spend to build, maintain, hire leadership, hire developers and buy software to support the platform. Not only that, but it will waste time, suck energy and resources and drag you down with it. It makes much more sense to shop for a reporting solution and data company that meets your standards, and that understands how valuable your time is.
\tIf you still are on the fence and want more research, which I encourage you to do when you are considering spending this much time and energy on a task, consider what Forbes magazine contributor, Chuck Cohn wrote on the topic:
While building custom software is expensive, the return on investment can be well worth it. Remember, however, that significant energy, resources, and time must be dedicated to its development.
Finally, consider this easy-to-read comparison chart that we put together on the pros and cons of building vs. buying a reporting platform:
Now that you have an idea of some of the cost expectations you can really dive into the value your company will see if you pursue this option. You are looking for an integrated approach to your data and your client's data. Look for a tool that is flexible to meet your business needs. Make sure your solution can actually target and visualize the KPIs that are important to your business in an intuitive way. And finally, use reporting and visualization to tell good data stories to your clients!
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