Engineering

Preparing for your Build vs Buy assessment

Adam Toth-Fejel
Adam Toth-Fejel Sales Engineer
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Deciding between building chat or purchasing an API service is often left to intuition or, even, the excitement about taking on a new project like chat. Since software budgets don’t commonly -weigh engineering resource costs against an initial sticker price, a product or engineering manager—not to mention other stakeholders—could easily wonder why his or her team shouldn’t build chat in-house. 

Enter an analysis like total cost of ownership (TCO), which not only helps you estimate obvious costs like server use but also helps you estimate engineering costs, maintenance, feature creep, and other hidden costs. Based on a thorough consultation of your team’s actual circumstances, the TCO calculation arrives at a good approximation of the annual cost to build chat internally.

The assessment itself, however, is no easy task. Assessing your internal resources for a build vs. buy analysis not only requires previous familiarity with chat projects, but it also requires significant planning to determine how you will prioritize and allocate resources. For most companies, this can feel like shooting in the dark. 

Leveraging your build vs. buy assessment in direct collaboration with SendBird, however, can net you both a total cost of ownership calculation for your company and an inside look at industry standards for chat projects in different verticals like online communities, marketplaces, on-demand, healthcare, or live-streaming. During your build vs. buy consultation, SendBird tailors these calculations according to your specs and offers industry benchmarks to help you plan.

Whether you want to jump into an assessment or complete some due diligence, the following sections focus on questions important to understanding your own build vs. buy analysis. 

 

Estimating your total annual cost to build chat

This is the central number. It estimates the annual cost of building chat internally, based on your industry vertical, region, MAU, development costs (both client and server engineers), annual server costs, maintenance and more. 

In order to estimate your annual costs to build chat, you need to determine two primary variables for your company:

  1. Personnel cost, which depends on your team size, region and development time
  2. Estimated MAU, which affects your monthly server costs and will help project future annual costs according to your growth rate

Personnel Cost

Teams vary, of course, but companies usually propose one product manager and sometimes a product designer working with at least 2 server engineers and 1 engineer per client platform (iOS, Android, and Web) working for about 6 months for basic chat and 1 year for more advanced chat. It’s important that these numbers reflect your actual plan and team composition, so the assessment accurately reflects your potential plan to build. So bringing your team composition to the assessment will afford you a more accurate picture of a possible build analysis.

Estimated MAU

MAU, on the other hand, is directly proportional to your monthly server costs. While this represents a smaller expense relative to personnel cost, it can have indirect effects on work required by server engineers or for internal operations.

Total Annual Cost to Build Chat

Determining the best guess for your team composition and estimated MAU, in consultation with your personal assessment, will reflect your total annual cost well. 

In the rest of the assessment, this will help determine constraints for your application priorities and projected annual costs if you decide to build.

 

Your Product Priorities

During your assessment, SendBird will bring its chat expertise to bear on your individual use-case, using the best practices for your industry. This part is exciting.

This section will lay out the product areas of interest in a chat implementation and prepare you for this part of the assessment.

What is your industry and app use-case?

Although this question is basic, it has a meaningful impact on your priorities for chat. For example, if you’re an online community, you’ll have to prioritize moderation and decide how you can best moderate conversations based on your community model. If, on the other hand, you’re a marketplace or on-demand app, you may need to prioritize layering advanced features into the chat interface like accepting payments, including maps or product carousels in card views, etc. 

After consulting companies about their chat implementation, we’ve identified 6 product areas that help organize and prioritize chat projects:

  • Group Channel Messaging
  • Open Channel Messaging
  • Moderation
  • Analytics
  • Extensible Chat Function
  • Internal Operations

Group and Open Channel Messaging

Different companies place different weights on Group or Open channel messaging, depending on their business logic and how they want their users to communicate. 

Whatever your industry and use-case, it’s important to think about how you want your users to chat:

  • 1-on-1 conversations
  • Group chats
  • Large scale members-only group chats
  • Open public chats

Moderation

How much you invest in moderation largely depends on your user community, how they communicate, and whether they share user content. For example, a healthcare concierge service will not invest heavily in moderation because service providers and customers are highly qualified before conversations ever start. 

For other use-cases, some moderation or advanced moderation features are required:

  • User-drive moderation – adding friends or blocking users and associated options for push notifications or invitations
  • Content moderation – if users share content, you may want some content moderation
  • Automatic moderation – auto-moderation features like SPAM, profanity, and Regex filters can go a long way to protect users

Analytics

Analytics can provide a new dimension of user insight by seeing what users talk about at different parts of the communication journey or lifecycle. If a segment of users churn at a certain part of the journey, what do they talk about at that moment? This insight could give more depth to a purely quantitative analysis. Other quantitative analytics are also available.

This tends to become more important later in development and can evolve depending on your use case. If this is important to your road map, share that information during your assessment. 

Extensible Chat Functionality

Extensible chat functionality includes the chatbot interface or using webhooks to link API services to make features like integrating payments into the chat interface or sending messages as email or SMS and vice versa.

Like analytics and internal operations, this takes greater priority in an advanced build.

Internal Operations

This product area includes everything your engineers need to do in order to elastically scale all your features to all your users, and manage bursting and recovery. 

 

Projecting maintenance and ongoing upgrade costs

Unfortunately, once you build chat internally costs only continue as you maintain or upgrade features or versions. 

Stripe research shares a compelling statistic here:

  • Developers spend 42% of their mean 41.1 hour work week on maintenance

That amounts to a lot of inefficiencies. 

That aside, during this part of the assessment, your consultant will estimate additional server and maintenance costs as you grow or maintain your chat service. 

 

You’re prepared to get the most from your assessment

After considering the total annual cost to build, the key product priority areas, and ongoing maintenance costs, you’re more than prepared to get the most from your personal assessment. Whether build vs. buy is a serious consideration for your company or not, a consultation with SendBird engineers can give you, your team, and other stakeholders a clear picture of the build-side of the analysis.

Tags: Engineering