by Maryfran Johnson

Why CIOs Still Like DIY Software Development

Aug 29, 20113 mins
ERP SystemsInnovation

Companies from NYSE Euronext to Alcoa are bypassing ready-made software and developing their own programs in-house in hopes of creating competitive advantage

One of my daughter’s first complete sentences was a toddler’s declaration of independence: “I do it self!”

Whatever skill she was honing at the time (using a spoon, tying a shoelace), she knew instinctively that being in control was the best option. Maybe not the fastest way to get it done, but certainly the most rewarding.

That DIY spirit crackles and pops throughout Senior Editor Kim S. Nash’s snappy cover story this month (“The Secret to Successful Software Innovation Projects”). “Not everything in IT is a commodity like a box of 500 picnic forks,” she points out. The story explores the risks and rewards of building your own enterprise software—an idea that sounds almost quaint in these fevered days of everything packaged and everything cloud.

Each of the companies featured in our story—Alcoa, New York Stock Exchange (NYSE) Euronext, private equity firm Kohlberg, Kravis and Roberts (KKR), Owens and Minor, Eurpac—took the DIY route to gain a competitive advantage. “Building is not easy,” as Steve Rubinow, CIO of NYSE Euronext, says. “If it were, everyone would do it and we’d get no edge.”

And what an edge it can be, in the right circumstances. At KKR, for example, the creation of its own business intelligence system gave the firm a competitive weapon so powerful that the company founders praise it publicly and other equity firms wish they could buy it.

“It’s a boost to the staff when KKR has competitors in to look at what the analytics system can do,” says CIO Ed Brandman, who spent $2 million on the development effort. “That’s a big deal.” Brandman notes how far the IT pendulum has swung away from building in-house, so it’s an especially big commitment for companies that do decide to go that route.

Despite their successes, none of the CIOs in our story would sugarcoat the downsides of a DIY enterprise software project. Mapping out the forecasted costs and potential returns is tricky. Uncertainties run high and the risk of failure is even higher.

The biggest wild card of all is your in-house talent, which has to excel at everything, including development and project management, plus be experts in enterprise architecture and business processes. And it doesn’t hurt to have a healthy dose of pioneer spirit.

Today my daughter makes her living as a software developer at Google, the world’s most successful haven for do-it-yourself IT innovators. When it comes to “I do it self!” there are still some believers out there.

Maryfran Johnson is the editor in chief of CIO Magazine & Events. Email her at