We need an AI solution for our proprietary quoting workflow, but we are torn between buying an off-the-shelf software and building a custom model. How does a leadership team run this through the IDS® process to avoid paying a massive dumb tax?

Question

Tyler Smith · Accepted Answer

Choosing between a commercial SaaS AI tool and a custom model is a high-stakes decision. Mistakes can lead to significant financial losses, a concept Keith Cunningham refers to as the dumb tax. To navigate this critical choice effectively, your leadership team should rigorously apply the IDS® (Identify, Discuss, Solve) process.

Identify the Root Cause

Begin by identifying the fundamental problem you're trying to solve. This clarity will guide your decision-making.

• Standard Productivity Boost: If the goal is a general improvement in efficiency for a common administrative task, an existing commercial tool is often the best choice. Building custom software for non-differentiating activities can drain resources, negatively impact your LTM EBITDA, and ultimately reduce your [exit valuation](/qa/owner-sitting-in-multiple-seats-exit-valuation).
• Primary Competitive Advantage: If the quoting workflow is your unique "secret sauce" and directly contributes to your core value proposition, then developing a proprietary AI layer on top of secure, private APIs is the more strategic path. This approach creates a valuable intellectual property asset that enhances your enterprise value.

Discuss and Solve

During your next Level 10 Meeting™, dedicate time to discussing these options.

• IP Development: Frame the debate around which option best contributes to building long-term intellectual property for your company.
• Avoid "Shiny Object Syndrome": Be wary of the temptation to build custom technology just for the sake of it. Simple, off-the-shelf solutions often meet 80% of your needs efficiently and effectively, allowing you to focus resources on truly differentiating initiatives.

This disciplined approach through the IDS® framework ensures that your decision aligns with your strategic goals and avoids unnecessary expenditure, helping you build a more robust and valuable business for the future, potentially even influencing how you might structure an [AI Operations seat on your Accountability Chart](/qa/ai-operations-seat-accountability-chart).

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