Good digital technology is no longer a nice-to-have in hospitality but an essential for brand differentiation, data collection and customer engagement. For enterprise-level operators embarking on digital transformation, the question inevitably arises: should we build our own technology or outsource it to a third party?
Both approaches come with benefits and challenges. Building your own tech allows you total design control and avoids dependence on third parties, however, it is relatively high-risk, and often comes with a higher price tag than anticipated. Outsourcing your technology, on the other hand, guarantees fast adoption of a working tech solution, but ultimately takes the control of customisations and feature development out of your hands.
So, what if you don’t want to compromise between cost and control? For operators in this category, we propose another way. A third way. We call it the blended tech approach. It allows you all the benefits of third party expertise and infrastructure while continuing to build on your internal tech development and for the right operator, it can be a real win-win.
Should I buy third party ordering technology?
As with most strategic choices, the real answer to this question is... it depends. Every operator has to weigh up the options, and their unique business needs, to decide on what’s best for them. When we speak with prospective clients, we generally start with these three key questions:
- What do you need to achieve?
- How much can you afford to invest?
- How quickly do you need it?
If you need to get digital ordering up and running quickly and with little up-front investment, working with a specialist third party provider can be a great option. With a quality white-label solution you can get something that looks and feels like your brand, and is ready to switch on in a matter of weeks. The solution won’t be designed specifically for your business but as long as you find a provider with the functionality you need, this needn’t be a deal-breaker.
Buying a white-label solution is not only a suitable approach for small businesses. YO! were so impressed with our tech suite that they ditched their legacy systems, and long-term EPOS provider, to introduce an entirely new tech stack with the Vita Mojo system at the centre. As a result, YO! successfully developed a seamless customer experience and more efficient operational model for their restaurants, with lower labour costs, less food waste and greater profitability. They are building a single customer view of their guests including frequency of visit, direct feedback and basket-level sales data across 95% of orders.
Should I build my own ordering technology?
When operators get to a certain size, they (quite rightly) start thinking about taking ownership of their technology and building it in-house. While a strong white-label solution will provide a lot of depth and agility, the benefits of building your own technology include more control, a fully bespoke system optimised specifically for your business, and no ongoing fees to pay to third parties.
For ambitious operators with the scale and capital to justify the investment, a custom build may well be the way to go. Starbucks is one success story - they built an ordering app which deliver a great user experience and builds stronger relationships with their customers - and there are many others out there. However, there are a lot of companies who tried, and failed, too.
Building good technology is hard.
There’s not a CTO in the world who would disagree - it requires a surprising amount of functionality to get an ordering system that’s usable, let alone one which meets your Head of Marketing’s ambitions. Good tech teams know this, but they don’t necessarily realise some of the ongoing costs and challenges that can arise when managing your own hospitality tech. These challenges can include:
- Resource-heavy support & maintenance
Sadly, even the best ordering technology can’t just run itself. Hosting the technology, providing an on-call team, and jumping on any issues when things go wrong requires people, time and money. Developing your own systems means managing all of this internally and it's often harder than it sounds.
- High ongoing costs of research and development
If good technology is to stay good, it requires continuous iteration and improvement. This process can get pricey when you’re footing the whole bill yourself - unlike third parties, who get to spread costs across their client base.
- Pressure to deliver new features quickly
Digital ordering tools are evolving rapidly as the hospitality industry undergoes accelerated digital transformation. If you want to trial new things such as kiosks, table service, digital loyalty schemes, or a new kitchen management system, building it from scratch will cost time you almost certainly don’t have.
In pursuit of technology excellence, hospitality brands can easily become distracted by these resource-intensive investments where engaging third parties might better allow them to focus on their core competencies.
Avoid the sunk cost fallacy.
Once you’ve started down the route of building your own tech it can be hard to turn back. Even if it’s under-delivering, over budget or lacking in functionality, it’s human nature to want to press on with a project because of the sunk cost fallacy.
Larger organisations can be especially prone to the sunk cost trap, pouring millions into internal tech projects while failing to unlock the real potential of digital ordering. Uncomfortable though it may be, a willingness to reflect and change course is one of the key tenets of the Lean Methodology, and the hallmarks of great management.
The good news is, switching from build to buy doesn’t have to mean ripping out all your hard work and replacing everything because, actually, you can do both...
The Third Way: a blended approach to your hospitality tech.
A blended approach to developing your technology is one that combines the best of build and buy, giving you access to the resources, expertise and stability of a third party provider while leaving you in control to differentiate the value-adding elements of your user journey.
Hospitality can learn from other sectors when using a blended approach. For example, in the airline industry big names such as EasyJet, KLM and United Travel Airlines partner with online travel agencies to power parts of their online booking experience. This collaboration doesn’t weaken their brands, instead it saves them the hassle and cost of building technology that can be provided by specialist third parties, saving their resources for functionality that will benefit from a custom build.
A blended success story.
At Vita Mojo, one of our largest clients came to us when they were already heavily invested in their own tech build. Choosing to work with us wasn’t a choice to throw that all away, it was a choice to build on the best elements of their own technology by quickly adopting the best of what our systems have to offer. They de-risked their development of core functionality, allowing their team to remain focused on what they do best. Vita Mojo’s technical teams working closely alongside theirs, creating an industry-leading digital solution for their brand, and rolling it out in the span of just a few months. Had they continued to build the entire system themselves, it would have likely taken years.
A blended tech approach may be the key for your brand, to enabling you to deliver the user experience and functionality you need at a speed and price point that would be impossible on your own.
What do I do next?
Whether you’re well into building your own technology or just starting out, our friendly team would be more than happy to chat through your challenges and needs, and help you decide on the right solution for you - whether that’s build, buy or a combination of both.
At Vita Mojo, we take the time to really get to know your business, understand what your goals, and set a realistic roadmap for getting you there. Years of experience in hospitality tech enables us to deliver best-in-class technology solutions: solving the challenges that enterprise businesses are facing today and getting them off the ground fast. If that’s what you need right now – let’s talk.
Written by Rob Pendray, Head of Product at Vita Mojo.