At Kohl, we occasionally run into institutions who want to build their own profitability system because they think it will be cheaper and better.   After struggling for several years and making little headway, we almost always see these organizations come back to us as clients.

There are numerous reasons for this, with the most common being that the project kept being supplanted by more pressing needs. The second reason is people discover that they really did not have the array of different skills required to build a useful profitability system. Now, some large organizations have the resources to build in-house solutions, but smaller companies seem to think they can do this and are almost always disappointed.

Also, building a poor profitability solution is dangerous as it can lead to very poor business decisions. The poor decisions can cost orders of magnitude more than purchasing a commercial solution that has been checked and verified by hundreds of users.

If you build an in-house expense reporting system and mess it up, you can recover from that. Mess up a profitability solution and you could find yourself in trouble. Poor profitability solutions often result in poor product pricing, misdirected marketing, reduced profitability, and general poor management decisions.

Be prepared to spend hundreds of thousands of dollars to build a system that will be far behind even inexpensive outsourced solutions. And don't think you can release the developers when they are done with this project. This type of work is never really complete. The developers will need to continue to maintain the system they built.

Another disadvantage of internally developed solutions, regardless of the quality, is that you will not have industry benchmarks for understanding if what you are doing is good or bad. These benchmarks are commonly the most powerful aspect of a profitability solution. They can pinpoint at the activity level where to concentrate process re-engineering to focus on high value changes and avoid assigning resources to things that don’t matter.

Furthermore, who is going to write the documentation on how the system was built and how it works? What if key developers resign or move on? We have seen situations where when the developer left the organization, the system fell into disrepair and had to be replaced or rebuilt.

Also, be honest with yourself. Are you the best subject matter expert to do this? Do you really have the same level of knowledge obtained by people who do this every day? Do you really have the time to do your regular job and be the SME too? Does the CEO know you have this much free time?

These points should be enough evidence that building a solution in-house is rarely successful, often more costly and takes longer to implement.  A Kohl Analytics solution addresses all these issues and is the only system that can provide those critical benchmarks.