Generative AI has already been transformational to the world. Many industries, such as banking, healthcare, and retail, have adapted to this fast-paced technology. Before organizations adapt to this technology, the first question raised in boardrooms is whether to build or buy it. It is not as simple a question as it may seem. A business must consider several factors before deciding whether to buy or build a GenAI solution.

For some organizations, the benefits of buying can be the drawbacks for others, and vice versa. In any case, factors such as cost, continuous technological advancements, and the need for a specific skill set should be at the core of the decision. If you are still unsure about making a decision, keep reading, as this article will guide you in choosing what is right for you.

Benefits Of Building GenAI Applications

Here are the benefits of building GenAI applications:

• Meeting Unique Business Requirements: One benefit of building in-house GenAI applications is that they address the unique needs of your business, which off-the-shelf applications in the market often fail to meet.
• Competitive Advantage: Developing in-house GenAI applications can provide a competitive advantage. You can maintain your IP and market differentiation.
• Long-term Stability: Building in-house GenAI applications may avoid the risk of disruption from startup vendors, as they may not survive long-term market consolidation.
• Skill Development: Building an in-house GenAI solution improves learning and expertise in the field. It's especially beneficial if the company features its own customers and develops its own AI products.
• Long-term Cost Efficiency: Although developing in-house applications may be costly upfront, they are cost-effective in the long run if your usage is on a large scale. One thing to note is that even though applications may appear expensive now, their costs are rapidly decreasing, so what may seem costly now may become affordable in a few months.
• Data Security and Privacy: Healthcare and finance are industries where data is particularly sensitive, and they must adhere to strict privacy regulations. In this case, building in-house applications provides control over the data.

Challenges of Building GenAI Applications

Here are the challenges of building GenAI applications:

• Resource-Intensive: Developing and maintaining in-house GenAI applications, including deep expertise of a skilled AI expert team, significant time, and a high setup investment.
• Scattered Data: Building in-house GenAI applications requires integration of the organization’s all internal information sources. A company’s internal data is scattered across departments, team folders, and local drives. There is no straightforward way to connect all the information to external sources, such as company presentations, earnings transcripts, sell-side research, or market research.
• Rapidly Changing Technology: Keeping up with the rapid advancements in AI technology can be a significant challenge. If you have built in-house applications and do not keep up with the advancements, you may end up having outdated solutions.
• Opportunity Cost: Building an AI solution may utilize all the internal resources that would have been allocated to other projects with higher returns.

Benefits of Buying GenAI Applications

The benefits of buying GenAI are:

• Cost-Effective: Off-the-shelf solutions may seem expensive. However, they are cost-effective in the long run. That's because continuous resource investment is required in the in-house production of the solutions. Buying an application is a one-off cost. Subscription-based pricing models also provide a benefit in terms of expense.
• Specialized Expertise: Some vendors specialize in AI applications and can provide more advanced solutions. They use their economies of scale and expertise. They incorporate feedback from thousands of customers, helping them improve their product.
• Focus on Core Priorities: Building AI solutions can be a complex endeavor. Purchasing those applications enables the teams to concentrate on business-specific tasks and core business priorities.
• Keeping Up With Advancements: External vendors are likely to continually improve and update their solutions, ensuring they stay current with technological advancements.

Challenges of Buying GenAI Applications

The challenges of buying GenAI applications are:

• Potential For Vendor Lock-In: Relying on a specific vendor may lead to potential issues and dependency if the vendor leaves the market or changes direction.
• Limited Customization: You may not be able to customize all the features you need. Or they may not perfectly align with the unique needs of the businesses.
• Data security Concerns: Perform due diligence before buying third-party applications. Review the vendor's policies to determine if they utilize foundation LLMs, which are managed by other vendors such as AWS or OpenAI.

What Should Be The Core Of Your Decision?

The decision whether to buy or build a GenAI application should be based on the overall requirements of your enterprise. Companies must assess their opportunity costs, internal capabilities, and long-term strategic goals. When you are taking the final decision, remember that you should:

Buy If The Following Conditions Are Met:

Think of buying GenAI applications if:

• The supplier meets your technical requirements, and their applications align with your needs.
• When you don’t have the team or expertise needed to build the application yourself.
• You are unable to keep up with the advancements in technology
• You want your team to focus on other core business priorities rather than spending time building a complex application.
• You have the expertise, but you don’t have the time to build the application yourself.
• If you are unable to make a significant financial investment in building a GenAI application.
• There are no concerns relating to the security or privacy of your sensitive data or information.

Build If The Following Conditions Are Met

Build your GenAI applications if:

• You have substantial resources for the heavy initial investment.
• You can commit to staying up-to-date with technological advancements and any resources you may need in the process.
• If there are no applications on the market that meet your unique business needs, building one is the only solution.
• Your organization can gain a competitive advantage by developing a GenAI application that utilizes your unique insights and datasets.
• If you have security or privacy concerns in areas such as finance or healthcare, where the information cannot be outsourced to a third party due to the risks of a breach.

Conclusion

Every organization differs from each other based on their strategic goals. It is what helps them decide whether to buy or build a GenAI application. Competitive advantage, skill development, and cost efficiency are all the benefits you get from creating your own GenAI application. Some challenges you may encounter include scattered data and high investment costs. The advantages of buying GenAI applications include cost-effectiveness in the long run, experienced vendors, and more time to focus on other business priorities. Challenges of buying a GenAI application include data security concerns, limited customization options, and others.