Buy Vs. Build: Custom May Be The Only Legacy ReplacementBuy Vs. Build: Custom May Be The Only Legacy Replacement

Companies migrating off legacy systems face a timeless choice: build or buy? Supermarket chain Giant Eagle Inc. and shipping and logistics company Menlo Worldwide, unable to find what they needed in off-the-shelf applications, opted to develop their own. Utility company Pacific Gas & Electric Co. and Unilever Home and Personal Care North America chose packaged software, citing advantages such as compatibility with other applications and the freedom of letting a vendor worry about keeping the software current.

Giant Eagle's philosophy is to rely on packaged software whenever possible. But no off-the-shelf application provided the specific price- and promotion-management capabilities the company needed, says CIO and VP of IS Russ Ross. The same held true for Menlo Worldwide, which couldn't find a commercial freight-forwarding application that met the company's needs for scope, scalability, and functionality. "We had to build it ourselves," senior VP Edward Feitzinger says.

Twenty-five percent of companies say they used packaged applications such as enterprise resource planning to replace their legacy systems, in a recent survey of 115 business-technology professionals for Optimize magazine. That was Unilever's decision, based in large part on the fact that SAP applications are a standard in the global company's infrastructure. So, replacing a legacy order-management system with an SAP app means the consumer-goods maker can sync up order management with the company's sales, distribution, finished-goods-inventory, and financial SAP applications, says supply-chain integration director Al Marshall. And the company was able to leverage the knowledge employees gained in past SAP projects.

Despite the scale and complexity of the customer-information-management system at PG&E, the utility company believes it found what it needs in SPL WorldGroup Inc.'s CorDaptix application. But PG&E won't know for sure until SPL WorldGroup delivers on the promise of a stream of product updates and new features that were a big part of PG&E's decision. If the vendor delivers, it will relieve PG&E staff from having to revise a custom-built system.

And then there's speed. Tracy Harizal, customer information systems director, estimates that building the application in-house would have added two years to the three-year implementation project.

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Illustration by David Plunkert