Buy or Build AI?

How do you decide whether to buy a ready-made AI solution or build one from the ground up? The choice is more than just a technical decision; it's about aligning AI with your business goals. In this episode, Lois Houston and Nikita Abraham are joined by Principal Instructor Yunus Mohammed to examine the critical factors influencing the buy vs. build debate. They explore real-world examples where businesses must weigh speed, customization, and long-term strategy. From a startup using a SaaS chatbot to a bank developing a custom fraud detection model, Yunus provides practical insights on when to choose one approach over the other. AI for You: https://mylearn.oracle.com/ou/course/ai-for-you/152601/ Oracle University Learning Community: https://education.oracle.com/ou-community LinkedIn: https://www.linkedin.com/showcase/oracle-university/ X: https://x.com/Oracle_Edu Special thanks to Arijit Ghosh, David Wright, Kris-Ann Nansen, Radhika Banka, and the OU Studio Team for helping us create this episode. --------------------------------------------------------------- Episode Transcript:

00:00

Welcome to the Oracle University Podcast, the first stop on your cloud journey. During this series of informative podcasts, we'll bring you foundational training on the most popular Oracle technologies. Let's get started!

00:26

Nikita: Welcome to the Oracle University Podcast! I'm Nikita Abraham, Team Lead: Editorial Services with Oracle University, and with me is Lois Houston, Director of Innovation Programs.

Lois: Hi there! Last week, we spoke about the key stages in a typical AI workflow and how data quality, feedback loops, and business goals influence AI success.

00:50

Nikita: In today's episode, we're going to explore whether you should buy or build AI apps. Joining us again is Principal Instructor Yunus Mohammed. Hi Yunus, let's jump right in. Why does the decision of buy versus build matter?

Yunus: So when we talk about buy versus build matters, we need to consider the strategic business decisions over here. They are related to the strategic decisions which the business makes, and it is evaluated in the decision lens.

So the center of the decision lens is the business objective, which identifies what are we trying to solve. Then evaluate our constraints based on that particular business objective like the cost, the time, and the talent. And finally, we can decide whether we need to buy or build.

But remember, there is no single correct answer. What's right for one business may not be working for the other one.

01:54

Lois: OK, can you give us examples of both approaches?

Yunus: The first example where we have got a startup using a SaaS AI chatbot.

Now, being a startup, they have to choose a ready-made solution, which is an AI chatbot. Now, the question is, why did they do this? Because speed and simplicity mattered more than deep customization that is required for the chatbot. So, their main aim was to have it ready in short period of time and make it more simpler. And this actually lead them to get to the market fast with low upfront cost and minimal technical complexities.

But in some situations, it might be different. Like, your bank, which needs to build a fraud model. It cannot be outsourced or got from the shelf. So, they build a custom model in-house.

With this custom model, they actually have a tighter control, and it is tuned to their standards. And it is created by their experts. So these two generic examples, the chatbot and the fraud model example, helps you in identifying whether I should go for a SaaS product with simple choice of selecting an existing LLM endpoint and not making any changes. Or should I go with model depending on my business and organization requirement and fine tuning that model later to define a better implementation of the scenarios or conditions that I want to do which are specific to my organization.

So here you decide with the reference whether I want it to be done faster, or whether I want to be more customized to my organization. So buy it, when it is generic, or build when it is strategic.

The SaaS, which is basically software as a service, refers to ready to use cloud-based applications that you access via internet. You can log into the platform and use the built-in AI, there's no setup requirement for those. Real-world examples can be Oracle Fusion apps with AI features enabled.

So in-house integration means embedding AI with my own requirements into your own systems, often using custom APIs, data pipelines, and hosting it. It gives you more flexibility but requires a lot of resources and expertise. So real-world example for this scenario can be a logistics heavy company, which is integrating a customer support model into their CX.

04:41

Lois: But what are the pros and cons of each approach?

Yunus: So, SaaS and Fusion Applications, basically, they offer fast deployment with little to no coding required, making them ideal for business looking to get started quickly and faster. And they typically come with lower upfront costs and are maintained by vendor, which means updates, security, support are handled externally. However, there are limited customizations and are best suited for common, repeatable use cases. Like, it can be a standard chatbot, or it can be reporting tools, or off the shelf analytics that you want to use.

But the in-house or custom integration, you have more control, but it takes longer to build and requires a higher initial investment. The in-house or custom integration approach allows full customization of the features and the workflows, enabling you to design and tailor the AI system to your specific needs.

05:47

Nikita: If you're weighing the choice between buying or building, what are the critical business considerations you'd need to take into account?

Yunus: So let's take one of the key business consideration which is time to market. If your goal is to launch fast, maybe you're a startup trying to gain traction quickly, then a prebuilt plug and play AI solution, for example, a chatbot or any other standard analytical tool, might be your best bet. But if you have time and you are aiming for precision, a custom model could be worth the wait.

Prebuilt SaaS tools usually have lower upfront costs and a subscription model. It works with putting subscriptions. Custom solutions, on the other hand, may require a bigger investment upfront. In development, you require high talent and infrastructures, but could offer cost savings in the long run.

So, ask yourself a question here. Is this AI helping us stand out in the market?

If the answer is yes, you may want to build something which is your proprietary. For example, an organization would use a generic recommendation engine. It's a part of their secret sauce.

Some use cases require flexibility, like you want to tailor the rules to match your specific risk criteria. So, under that scenarios, you will go for customizing. So, you will go with off the shelf solutions may not give you deep enough requirements that you want to evaluate. So, you get those and you try to customize those. You can go for customization of your AI features.

The other important key business consideration is the talent and expertise that your organization have. So, the question that you need to ask in the organization is, do you have an internal team who is well versed in developing AI solutions for you? Or do you have access to one of the teams which can help you build your own proprietary products? If not, you'll go with SaaS. If you do have, then building could unlock greater control over your AI features and AI models.

The next core component is your security and data privacy. If you're handling sensitive information, like for example, the health care or finance data, you might not want to send your data to the third-party tools. So in-house models offer better control over data security and compliance.

When we leverage a model, it could be a prebuilt or custom model.

08:50

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09:31

Nikita: Welcome back! So, getting back to what you were saying before the break, what are pre-built and custom models?

Yunus: A prebuilt model is an AI solution that has already been trained by someone else, typically a tech provider. It can be used to perform a specific task like recognizing images, translating text, or detecting sentiments. You can think of it like buying a preassembled appliance.

You plug it in, configure a few settings, and it's ready to use. You don't need to know how the internal parts work. You benefit from the speed, ease, and reliability of this particular model, which is a prebuilt model. But you can't easily change how it works under the hood.

Whereas, a custom model is an AI solution that your organization designs and trains and tunes specifically for their business problems using their own data. You can think of it like designing your own suit. It takes more time and effort to create. It is built to your exact measurements and needs. And you have full control over how it performs and evolves.

10:53

Lois: So, when would you choose a pre-built versus a custom model?

Yunus: Depending on speed, simplicity, control, and customization, you can decide on using a prebuilt or to create a custom model. Prebuilt models are like plug and play solutions. Think of tools like Google Translate for languages.

OpenAI APIs for summarizing sentiment analysis or chatbots, they are quick to deploy, require low technical effort, great for getting started fast, but they also have limits. Customization is very minimal, and you may not be able to fine tune it to your specific tone or business logic. These work well when the problem is common and nonstrategic, like, scanning documents or auto tagging images.

The custom-build model, on the other hand, is a model that is built from the ground up. Using your own data and objectives, they take longer, and they require technical expertise. But they offer precise control, full alignment with your business needs. And these are ideal when you are dealing with sensitive data, competitive workflows, highly specific customer interactions. For example, a bank may build a custom model which can be used for fraud detection, which can be tuned to their exact transaction standards and the patterns of their transactions.

12:37

Nikita: What if someone wants the best of both worlds?

Yunus: We've also got a hybrid approach. In hybrid approach, we actually talk about the adaptation of AI with a strategy which is termed as hybrid strategy. Many companies today don't start by building AI from scratch. Instead, they begin with prebuilt models, like using an API, which can be already performing tasks like summarizing, translating, or answering questions using generic knowledge.

This set will help you in getting up and running quickly with a small level results. As your business matures, you can start to layer in your custom data. Think internal policies, frequently asked questions, or customer interactions. And then you can fine tune the model to behave the way your business needs it to behave.

Now, your AI starts producing business-ready output, smarter, more relevant, and aligned with your tone, brand, or compliance needs.

13:45

Lois: Ok…let's think of AI deployment in the hybrid approach as following a pyramid or ladder like structure. Can you take us through the different levels?

Yunus: So, on the top, quick start, minimal setup, great for business automation, which can be used as a pilot use case. So, if I'm taking off the shelf APIs or platforms, they can be giving me a faster, less set of requirements, and they are basically acting like a pilot use.

Later, you can add your own data or logic so you can add your data. You can fine tune or change your business logic. And this is where fine tuning and prompt engineering helps tailor the AI to your workflows and your language.

And then at the end, which is at the bottom, you build your own model. It is reserved for core capabilities or competitive advantages where total control and differentiation matters in building that particular model. You don't need to go all in from one day.

So, start with what is available, like, use an off shelf, API, or platform, customize as you grow. Build only when it gives you a true edge. This is what we call the best of both worlds, build and buy.

15:05

Lois: Thank you so much, Yunus, for joining us again. To learn more about the topics covered today, visit mylearn.oracle.com and search for the AI for You course.

Nikita: Join us next week for another episode of the Oracle University Podcast where we discuss the Oracle AI stack and Oracle AI services. Until then, this is Nikita Abraham…

Lois: And Lois Houston, signing off!

15:29

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