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 whether to buy a commercial SaaS AI tool or build a custom model is a high-stakes decision that can cost you hundreds of thousands of dollars in wasted capital, which Keith Cunningham calls the dumb tax. To resolve this, your leadership team must run this issue through the IDS® process with absolute discipline.

First, identify the root cause of the problem you are trying to solve. Are you looking for a standard productivity boost, or is this quoting workflow your primary competitive advantage? If it is a standard administrative task, buy an existing tool. Building custom software for a non-differentiating activity is a waste of resources that drags down your LTM EBITDA and ultimately hurts your exit valuation.

If the workflow is your secret sauce and directly drives your value proposition, building a proprietary AI layer on top of secure, private APIs is the right path. This option creates a proprietary asset that increases your enterprise value. During your next Level 10 Meeting™, list the options, debate them based on whether they build long-term IP, and make the decision. Do not let the shiny object syndrome of building custom tech distract you from simple, off-the-shelf solutions that get the job done for eighty percent of your needs.