Build vs. Buy Product Analytics Solution: Which Option to Go For?

Most companies are torn between two options: build vs. buy product analytics. It can be tricky because there’s no right and wrong answer. Everything depends on your unique situation and current business needs.

Today’s article provides a practical guide to help you decide whether to build or buy your product analytics tool.

TL;DR

• The build vs. buy strategy is a decision-making framework organizations use to determine whether to develop a solution in-house (build) or purchase it from an external provider (buy). It involves carefully weighing both the benefits and costs of the two options and then making an informed decision.

Build your own embedded analytics solution when you need:

• A custom analytics platform for internal and customer needs.
• Greater data security.
• Cost efficiency in the long run.
• Integration with existing systems.

Buy an embedded analytics solution when you’re more interested in:

• Freeing up time for your engineering and product teams.
• Reducing short-term costs while accelerating your time to market.
• Ongoing maintenance without your direct involvement, ensuring you can have all internal resources focused on your core product.
• External training resources and technical support to help your team get started immediately.

Factors to consider when deciding between building or buying an embedded analytics solution:

• Your team’s expertise and resources. If you have enough developers, product managers, and financial resources, just build a custom product analytics tool.
• Customizations needed (more customization needs means you may have to build yourself).
• Security and compliance (consider building if your company handles sensitive data).

How Userpilot can take your product analytics to the next level:

• Feature tags and custom events to enable you to understand user behavior and make data-driven decisions.
• Heatmaps to help you visualize user interactions.
• Custom analytics dashboards for tracking your key metrics in one place.
• Analytics reports to track customer data over time.
• User/company profiles to help you get granular with your analysis, observe patterns, and make changes to improve customer satisfaction.

Ready to get started with product analytics? Talk with our team today!

What is the build vs buy strategy?

The build vs. buy strategy is a decision-making framework organizations use to determine whether to develop a solution in-house (build) or purchase it from an external provider (buy).

This decision often involves software, but it can apply to various aspects of business operations, including hardware, services, and other resources.

Why should you build your own analytics solution?

Building your own analytics solution can be a strategic move when seeking to leverage data effectively for decision-making. Here are some reasons why it’s a good idea to build vs. buy product analytics:

Custom-built for your team’s needs

Off-the-shelf embedded analytics tools often come with features that may not align perfectly with your business needs or reporting requirements. By developing a bespoke solution, you can design features and functionalities that directly address your unique workflows, ensuring that the analytics platform is effective and intuitive.

In addition, a custom-built solution makes it easier to adapt and add more analytics capabilities as your business evolves.

Greater data security

If you buy an embedded analytics platform, another company will have access to your (and your customers’) data.

No matter how much you might trust your analytics provider, there’s always the risk of data breaches. So, if you need to protect sensitive information, building your analytics tool from scratch might be the best idea.

Cost efficiency in the long run

While building your own embedded analytics solution requires an initial investment in development, it can lead to long-term cost savings compared to the recurring licensing fees often associated with third-party solutions. You also gain independence from unexpected price hikes or changes in pricing models.

Over time, the savings from eliminating these fees can be substantial, especially for growing businesses.

Integration with existing systems

You can design your custom solution to seamlessly integrate with your existing systems, such as CRM, ERP, or marketing automation platforms.

This ensures smooth data transfer and eliminates the need for manual data exports and imports.

Why should you buy a data analytics solution?

Sometimes, it’s more beneficial to buy vs. build product analytics. Here are some reasons why:

Lesser dependency on engineering teams

Pre-built solutions come with ready-to-use functionalities, eliminating the need for extensive development and testing. This allows your organization to focus on its core competencies and strategic initiatives rather than diverting resources to software development.

The time and resources saved enable you to leverage the engineering team’s expertise to build new features and make product improvements. As a result, you can significantly accelerate your time to market.

Cost-effective compared to building analytics software

Building a custom analytics tool from scratch involves significant upfront investments in development, testing, and infrastructure. In contrast, commercial analytics solutions typically offer a range of pricing options, including subscription-based models that allow you to spread costs over time.

This can make it easier to budget, manage expenses, and demonstrate clear software ROI, especially if you’re a small business or tight on budget. Moreover, the economies of scale that established vendors enjoy mean they can offer advanced features and capabilities at a lower cost than what it would take to develop in-house.

Ongoing maintenance and enhanced analytics functionality over time

Third-party embedded analytics solutions are dedicated to enhancing their products over time. They invest in research and development to add new features, fix bugs, improve the customer experience, and stay ahead of industry trends.

This means you can benefit from cutting-edge analytics capabilities without the hassle of managing updates yourself. Additionally, vendors often provide robust customer support to ensure the solution runs smoothly and efficiently.

Availability of training resources and technical support

When you make a purchase, you gain access to a wealth of customer education resources and technical support from the embedded analytics vendor. These resources can include detailed user documentation, online tutorials, webinars, and customer support services, all designed to help business users get the most out of the solution.

This support is particularly valuable for organizations that lack extensive technical expertise, as it ensures that users can effectively leverage the embedded analytics solution to its full potential. Furthermore, vendors typically offer customer support to address any issues that arise, providing peace of mind and reducing downtime.

Userpilot can help you provide in-app support through a robust resource center. Get started now.

How to decide between building or buying an analytics solution?

Deciding whether to build vs. buy product analytics is a critical decision that depends on several factors. Here’s a detailed look at the key considerations to help you make an informed choice, along with guidance on when it would be appropriate to build or buy.

Expertise and resources

When evaluating expertise and resources, consider the technical skills and financial resources available within your organization.

• Build: If your organization has a team of skilled product managers, developers, and data scientists and can allocate significant resources to the project, building your own embedded analytics tool may be feasible.
• Buy: If you lack the in-house skills or do not have the financial capacity for a large upfront investment, purchasing an existing product analytics tool is a more practical choice. This option allows you to quickly leverage advanced analytics capabilities without straining your resources.

Customizations needed

The level of customization you need can heavily influence your decision.

• Build: If your business processes are highly unique and require extensive customization that off-the-shelf solutions cannot provide, building your own product analytics tool is likely the best option.
• Buy: If your needs are more standard and align with the capabilities of existing analytics tools, buying a solution can be more efficient. Many third-party solutions offer a range of customization options and integrations that can meet common business needs.

Security and compliance

Security and compliance are critical factors, especially for industries dealing with sensitive information.

• Build: If your industry has strict regulatory requirements or if the data you handle is particularly sensitive, building an in-house solution can offer greater control over security measures and compliance protocols.
• Buy: Many third-party software come with robust security features. For instance, Userpilot is SOC 2 Type 2 certified. If a commercial solution meets your security and compliance needs, it can save you the effort and cost of developing and maintaining these features yourself.

Userpilot — the best user analytics tool for product teams

Userpilot is a powerful analytics tool designed to help you understand and optimize your user experience. It offers a comprehensive suite of features for tracking user behavior, creating personalized experiences, and driving product adoption.

If you’re looking to buy an analytics solution, we encourage you to consider Userpilot and explore how it can benefit your business:

• Feature tagging and custom events: Feature tagging allows you to mark specific UI elements and track user interactions like clicks, hovers, or text inputs without any coding. This no-code approach makes it easy to monitor feature usage and user engagement. In addition, you can set custom events to track more complex user interactions that combine multiple actions or specific user behaviors, providing valuable data for optimizing user experience and driving feature adoption.

Creating custom events in Userpilot.

• Heatmaps: Heatmaps in Userpilot visually represent the areas of your application that receive the most user interactions. By generating heatmaps, you can see which features or elements users engage with the most. This visual data helps identify popular features and where users might need improvement or additional guidance.

Track feature heatmaps code-free with Userpilot.

• Custom analytics dashboards: Userpilot offers customizable analytics dashboards that provide a comprehensive view of key product performance metrics and user behavior. These dashboards include various pre-built reports such as product usage, new user activation, core feature engagement, and user retention metrics. You can also create custom analytics dashboards to reflect only the metrics you need. Userpilot’s integration with other popular analytics tools like Amplitude, Mixpanel, and Google Analytics further enhances the capability to sync and compare data across platforms, making it easier to maintain a holistic view of user interactions.

Track all your key metrics in one place with Userpilot.

• Advanced analytics reports: You can generate funnels, trends, retention, and path analysis reports to gain detailed insights into user behavior and feature performance:

Funnel analysis report generated with Userpilot.

• User/company profiles: Userpilot allows you to create detailed user and company profiles that aggregate data from various interactions within your application. These profiles can include information such as user attributes, behavior patterns, and event history. By segmenting users and companies based on specific criteria like demographics, in-app actions, or custom events, you can tailor user experiences more effectively.

Track and segment your customers easily with Userpilot.

Conclusion

Product analytics help you better understand your customers and make the right decisions to improve their experience and drive long-term decisions. Hopefully, this article has helped you choose between creating an in-house solution and paying for third-party tools.

So, what’s your conclusion — build vs buy product analytics? Userpilot can help if you find it more beneficial to buy. Book a demo with our team to discuss your analytics needs and get tailored solutions!