Should you build or buy your CDP?
Last updated: July 19, 2023
Customer data is the currency of modern business. The companies that can unify, resolve, clean and activate that data most effectively are the ones that are going to stand out this decade and beyond.
One of the best ways to achieve this is by using a customer data platform (CDP). These tools collect your customer data from every touchpoint, standardize it, and make it available to everyone across your organization (and best of all, it’s almost entirely automated.)
However, with the growing number of CDP solutions available in the market, businesses are faced with a critical decision – whether to build their own CDP or buy an off-the-shelf solution.
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Should you build or buy your CDP? In this article, we’ll explore the pros and cons of building vs. buying — and help you make the best decision for your business.
(Quick note: Because CDPs are defined as “packaged software,” it’s technically impossible for a company to build its own CDP. But now that CDPs are becoming more commonly known, more IT teams are thinking about building something like a CDP for their own business. We’ll be using that broader definition throughout the article.)
Should you build or buy your CDP?
What are the advantages of building a CDP?
One of the biggest draws of an internal CDP is customization. Your team can build the CDP to your business and customer needs, not your vendor’s. Similarly, you can integrate with the systems that are most important to you without paying for anything you won’t use.
You can also modify the platform yourself rather than requesting product updates from your vendor.
What are the downsides of building a CDP?
Building a CDP is a technical challenge that far surpasses standing up a database. (If standing up your own database is like assembling an Ikea chair, building your own CDP is like building a car from scratch.)
A true CDP needs to unify data from every touchpoint, connect to your marketing touchpoints, clean data and resolve identities according to automated workflows, and facilitate segmentation and personalization. This requires a ton of time and effort from your developers, as well as the other data consumers in your company.
Below are some of the biggest challenges of self-building a CDP:
Longer timelines: Building a CDP in-house lengthens your time to impact. Developing a Customer Data Platform in-house is at best a 6-12 month project, according to the Customer Data Platform Institute. (And that’s a conservative estimate: If your team doesn’t have deep domain expertise, implementation could take 18-24 months.) Such a time-intensive build demands considerable developer resources that could be spent on revenue-generating tasks.
Collaborative costs: An internal build requires a lot of collaboration. Not only do you need to coordinate with cross-functional teams, but you’ll need to work with external partners to create API connections. That’s a whole lot of meetings and back-and-forth, on top of an intense technical build.
Expense and work of self-maintenance: Sure, it’s a lot of work. But the investment will pay off once you’ve got your CDP up and running, right?
Not necessarily: When you own the CDP, the work doesn’t stop at implementation. Anytime someone requests a new API connection or product feature, it’s your team’s job to execute. You’ll also need to constantly review incoming and outgoing data to ensure that you’re staying compliant with state, national and international data privacy regulations. You’ll need to ensure that your CDP can scale in parallel with your growing customer base. And all of this demands even more developer resources, which increases both the financial and opportunity cost of your CDP.
And if your team realizes that maintaining an in-house CDP isn’t worth those costs? You’ll already be 2+ years into the process. Either you start all the way back at the beginning or you fall victim to sunk-cost fallacy and stick with a CDP that’s creating more work than it alleviates.
For most organizations, building a CDP in-house adds extra uncertainty to an already intensive process.
Buying a CDP: pros and cons
What are the advantages of buying a CDP?
Quicker implementation: The biggest advantage of buying a CDP is the time to impact. Instead of using resources to build a customer data platform, you can implement packaged SDKs in your digital properties or set up API connections once, then return to other tasks.
CDP vendors like Omeda also provide onboarding support — including access to dedicated client success managers — so that you can go from 0 to 100 in weeks, not months. If your team doesn’t have deep domain expertise, this alone can save you thousands.
Reduced costs: For most companies, buying a CDP tends to be more cost-effective than building one. Not only is the financial cost cheaper in the long run, but the time savings alone make a CDP worth the investment. While you do need to research and select vendors, buying a CDP requires less cross-functional collaboration across teams and outsourcing the build process reduces the opportunity cost of implementation.
This also makes it easier for marketing, sales and other teams to access customer data without developer intervention. You’re not just saving time and money, you’re helping the rest of your team make new money more quickly. Everyone wins.
Increased flexibility: The sheer amount of data to manage has skyrocketed in the last decade. And with the proliferation of marketing channels, that’s not going to change anytime soon.
You’ll need a CDP that can scale alongside your business — and your data set. If you’re responsible for managing your CDP alongside other business priorities, you probably won’t be able to adjust your CDP architecture in response to changing business needs — and risk compromising your data quality.
A specialized CDP vendor will have extensive integration systems that make it easier to evolve your data infrastructure. So you can easily add new first-party data sources without needing to use internal engineers — or integrate with new services without doing it yourself.
What are the disadvantages of buying a CDP?
While there are many benefits to buying a CDP, external solutions don’t come without disadvantages. By definition, you lose a certain degree of customization and convenience by partnering with a vendor.
However, the best vendors pair you with product experts ready to consult with you about your specific use case. Often, your vendor can help you meet your stated goals in a more efficient or effective way.
Data management is quickly becoming an imperative for — and its importance is evolving more quickly than many companies can accommodate on their own. So for most organizations, especially small to midsize businesses without a large engineering team, buying a CDP is the best bet.
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