Buy or build software? Firms need to look at control, reversibility and risk
Organizations are shifting from buying off-the-shelf software to building custom core systems as AI lowers development costs and vendor lock-in risks rise. According to the CTO and Deputy CEO of GovTech Singapore, software is no longer a support function but the primary operating model that encodes how entities serve customers and comply with regulations.
Why is the “Buy vs. Build” software model changing?
The traditional framework for software procurement relied on efficiency, cost, and relevance. Organizations bought software if a vendor could deliver it faster and cheaper, provided the capability wasn’t core to the mission. If it was central, they built it.
That logic is now insufficient. The CTO of GovTech Singapore states that modern decisions must prioritize control, reversibility, and risk. When software becomes the operating model, a bad vendor choice isn’t just a procurement headache; it’s an operational crisis.
How has AI lowered the cost of building custom software?
Artificial intelligence has drastically reduced the “last mile” cost of development. This includes internal tools, workflow engines, and integration layers that previously required dedicated teams and months of work.
GovTech Singapore reports dramatic productivity gains. One engineer built an Android app and an autonomous AI agent in two weeks—work that previously required two to three engineers a full quarter. Two data scientists delivered over 30 full-stack showcases in four person-months, despite one having no prior web development experience.
These efficiencies are pushing companies to abandon major vendors. Klarna recently dropped Salesforce and Workday after analyzing the cost-benefit of building internally. Similarly, 37signals exited Amazon Web Services (AWS) for its own servers, projecting savings of over US$10 million over five years.
What are the risks of vendor lock-in and “weaponized dependence”?
Dependence on concentrated suppliers has become more expensive and volatile. The CTO of GovTech Singapore cites several examples of vendors changing terms after customers are already committed:
- Broadcom/VMware: European cloud providers reported price increases between 800% and 1,500% following Broadcom’s acquisition of VMware.
- Oracle: The company now licenses Java based on total headcount, charging for employees regardless of whether they use the language.
- Microsoft: Price increases across the 365 portfolio are often absorbed by customers because the cost of switching is too high.
Beyond cost, software dependence can be weaponized for political leverage. In 2022, Western vendors withdrew from Russia, disrupting the software running its airlines and banks. In 2025, the US used chip design software as an export control lever against China.
The International Criminal Court (ICC) experienced this directly when its chief prosecutor was locked out of his Microsoft email following US sanctions. The court is now migrating 1,800 workstations to open-source infrastructure under European jurisdiction to regain autonomy.
How can organizations balance buying commodity tools with building core systems?
The solution isn’t to build everything from scratch. Instead, the CTO of GovTech Singapore advocates for “optionality.” Organizations should buy commodity layers where scale economics are real but build the thin layer that encodes their specific operating model.
For governments, this means owning the platform, the data, and the interfaces while letting vendors compete on top. GovTech’s Singpass operates on this “landlord” model. The government owns the identity layer, consent framework, and API standards.
Because the government owns the foundation, banks and agencies can build services on top of it. If a specific provider leaves, the platform remains intact. The government is no longer a tenant subject to a vendor’s whims; it is the landlord.
Comparison: Old vs. New Software Strategy
| Feature | Old Model (Outsource) | New Model (Optionality) |
|---|---|---|
| Primary Driver | Efficiency & Cost | Control & Risk Mitigation |
| View of Software | Support Function | Operating Model |
| Vendor Relationship | Tenant (Dependent) | Landlord (Owner of Standards) |
Frequently Asked Questions
Should I build all my company’s software?
No. The recommendation is to buy commodity layers where scale is an advantage and build the specific layers that encode your unique operations and policies.
How does AI specifically help in building software?
AI lowers the cost of the “last mile”—the integration layers, internal tools, and workflow engines—allowing smaller teams to produce full-stack applications in weeks rather than quarters.
What is “weaponized dependence”?
It occurs when a critical software provider uses their control over a system as a political or economic lever, such as cutting off access to email or chip design tools due to sanctions.
Are you evaluating your software dependencies for the coming year? Share your thoughts on the “buy vs. build” debate in the comments below or subscribe to our newsletter for more insights on digital transformation.