NIH syndrome is an acronym for not-invented-here syndrome. In software NIH is commonly referred to as reinventing the wheel (i.e. reimplementing something that is already available).
NIH syndrome is based on the in-house belief that in-house developments are inherently better suited, more secure, more controlled, quicker to develop, and incur lower overall cost (including maintenance cost) than using existing implementations.
In software the mantra is:
It’s more expensive to own than rent
The above is due to the high, all-encompassing costs (TCO) to build and maintain enterprise level software. Like in-house owners of software, specialists sellers of software for rent bear this big capex up front. Unlike in-house owners of software, they are able to charge a lower price point per user. Why? Because the expense pain can be spread over many users in an industry, instead of a few users in a company.
A good first step in evaluating this (sometimes emotional) rent or own decision is to categorise a business’s software needs and solutions into two:
- Tools that need to be customised, and
- Tools that support industry-wide or generic use cases (“engine room” software)
Building software tools inhouse (sometimes, but not always, in conjunction with specialist developers) makes sense where customised solutions are a pre-requisite for that business’s success.
Example of such customised tools for the CRE industry:
- Customer marketing “shop fronts” such as websites or brochures, or
- Low tech solutions requiring unique intellectual property (such as Excel spreadsheets to analyse lead source and deal conversion data)
In many cases, custom tools are not required to provide a competitive advantage. Sometimes the difference can be the unique application of generic tools. For example, the implementation of unique SEO strategies, or use of auto-mailer engines with your data assets.
“Engine room” software
It makes financial and operational sense to rent “engine room” software.
Good “engine room” systems will generally allow for some form of customisation, and are built with stable and well documented APIs. This make it possible for customers to extract additional value to their competition by adding their custom “cherries on the top”. These customers are simultaneously able to sidestep the capex and maintenance issues that come with “reinventing the wheel”.