The Renaissance of "Make"
How do developments around AI impact the "Make-or-Buy" decisions for software in large enterprises? In the recent past, three major trends have dominated:
1) Onshoring / Offshoring / Shared Service Centers (SSC) to reduce internal costs through scaling and labor cost arbitrage.
2) Rampant tool proliferation, as more and more SaaS tools are purchased directly by the business because no complex system integration is required.
3) Growing dependence on "Systems of Record" (ERP, CRM, etc.), where the company's most critical data is stored.
Here are our first observations on how these trends are currently shifting:
re 1) From Labor Arbitrage to Productivity Arbitrage
AI-based automation is increasingly becoming a relevant alternative to relocating processes to structures with greater economies of scale or lower wage costs. For instance, IBM has replaced more than 90% of its HR functions—previously handled by up to 8,000 employees in SSCs or offshore—with AI agents.
Walmart goes a step further, having built its own AI factory called "Element." Here, AI applications are no longer viewed as individual projects but as products rolling off a standardized production line. The focus is no longer on relocation, but on increasing employee productivity.
re 2) Consolidation and the Renaissance of In-House Development
The decentralized procurement of SaaS tools has led to fragmented data, a lack of control, and high costs. While there have been consolidations within cost-cutting initiatives, most companies still have hundreds of tools in use, and studies estimate 30% to 50% of licenses go unused.
AI offers two levers here: First, it helps make the existing landscape transparent and uncovers consolidation potential. Second, in-house development ("Make") is becoming more attractive for advanced engineering organizations. With every productivity leap in developer tools, the make-or-buy calculation shifts further toward "Make."
re 3) Decoupling instead of Replacing "Systems of Record"
Klarna received a lot of attention in August last year when the CEO's statements were interpreted as if the fintech would replace Salesforce and Workday—at least in large parts—with its own AI solutions. A strategically wise path is often not the complete replacement of "Systems of Record," but decoupling through intelligent abstraction layers. This allows companies to regain a degree of independence by controlling the user interface and application logic themselves.
