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Buy, build or forgo AI: what changes the investment decision

| 6-minute read

An in-house solution can look cheaper and lose its advantage as rework increases. The decision rests on the cost of an accepted outcome and the ability to maintain service quality.

Our view: buy when a solution meets the need and its dependencies are acceptable; build when the differentiation also justifies the operating burden; defer when the evidence is not yet sufficient to decide.

In its 2026 survey, McKinsey reports that 32% of respondents say their organisations decided against purchasing at least one software product or feature because of agentic coding tools. This describes a reported decision, not its profitability. It does not establish that building is cheaper.

Compare service commitments

A vendor quote and a prototype budget do not necessarily cover the same service. Before comparing them, define scope, quality, response times, exception handling and maintenance ownership. Conventional automation or process simplification also deserves consideration.

Buy: use representative cases to verify what the contract includes, what is billed by usage, what can be exported and what remains the organisation’s responsibility. Vendor controls do not replace internal controls.

Build: fund a lasting capability for testing, oversight and maintenance. An in-house product can still depend on external models, infrastructure or suppliers; building does not by itself guarantee control over data.

Defer or forgo: retain an explicit alternative, with its cost and a review date. This is justified when the need remains poorly defined, quality is insufficient or operating resources are unavailable.

Calculate the cost of resolved cases

Entirely hypothetical example, unrelated to any client engagement. A company compares three ways of processing 60,000 requests a year over three years. The full cost of human processing is assumed to be €1.50 per request, including quality control and oversight. Both AI options resolve 80% of requests to the required standard; humans fully reprocess the remaining 20%. Response times and final quality are assumed comparable and must be demonstrated before committing.

Assumptions: €20,000 setup for the purchased solution, billed at €0.50 per resolved request; €40,000 for in-house development, then €0.10 per attempt and €10,000 annual maintenance. Each AI option also includes €6,000 annual operating oversight and quality checks on 5% of resolved requests, at €0.75 per check. All amounts are modelling assumptions, not market prices.

Three-year cost comparison, in euros
Item Buy Build Human processing
Setup, one-off 20 000 40 000 0
Annual usage 24 000 6 000 0
Annual human handling and rework 18 000 18 000 90 000
Annual quality checks 1 800 1 800 Included
Annual maintenance Included 10 000 Included
Annual operating oversight 6 000 6 000 Included
Three-year total 169 400 165 400 270 000

The calculation is reproducible: 48,000 resolved requests, 12,000 human rework cases and 2,400 quality checks per year. Buy: 20,000 + 3 × (24,000 + 18,000 + 1,800 + 6,000) = €169,400. Build: 40,000 + 3 × (6,000 + 18,000 + 1,800 + 10,000 + 6,000) = €165,400.

Building retains a €4,000 advantage over three years. This is not enough to decide without testing the model’s sensitivity. Amounts are undiscounted and exclude tax and financing. Both options are assumed operational at the start of the period, with no ramp-up. Migration, exit, parallel running and additional delay costs must be added when applicable.

The difference from human processing values the resources used. It becomes a cash saving only if expenditure is actually avoided. Freed-up time can create useful capacity without reducing expenses.

Test what reverses the ranking

Two tests reveal how sensitive the initial ranking is.

First test: an additional €6,000 in development takes the in-house total to €171,400. Buying becomes €2,000 cheaper. Delivery cost cannot be treated as a detail to resolve after the decision.

Second test: if both solutions resolve only 60% of requests, human rework rises to 24,000 cases per year. With other assumptions unchanged, buying costs €204,050 over three years, versus €218,050 for building. Outcome-based billing offers more protection to the buyer here; that advantage would change under a different billing model.

Resolution rates must be measured on representative requests, including difficult cases. Sampling does not guarantee the absence of errors in unchecked responses. When some errors are unacceptable, systematic validation may be necessary and must be costed separately.

Make a conditional decision

Under the central assumptions, we would not recommend committing to a build solely for cost savings. Its €4,000 advantage must be weighed against additional operating responsibility and still-hypothetical performance. Differentiation, integration requirements or demonstrably better control may nevertheless justify building.

The decision paper should specify five things: the expected service, costs over the same horizon, quality evidence, operating ownership and thresholds for continuing, revising or stopping. The investment decision can then be reviewed against evidence.

Arlan Grey supports this assessment through its AI Decision Diagnostic: comparing options, testing assumptions and producing a recommendation with implementation conditions. Scope, deliverables and fees are defined in an engagement proposal.

Source and scope

McKinsey, The state of AI in 2026: On the road to ROI. Published 25 August 2026, accessed 27 September 2026. Self-reported survey of 1,719 participants across 97 countries, conducted from 4 May to 8 June 2026. Its findings are not estimates specifically for French SMEs or mid-sized companies.

The decision framework and simulation are Arlan Grey analysis. Amounts, volumes and performance levels are hypothetical; no client reference or promised result is presented.