Eli5 article review series: Software modernization, buy or build

How Property &Casualty insurers can successfully modernize core systems‍

Source: McKinsey

Abstract Building from scratch is becoming rarer because it traps your innovation at the go-live date. But buying off-the-shelf software isn't a silver bullet either; it requires adapting your business to fit the software. McKinsey argues that building a custom platform often locks in a company's innovation at the go-live date, and over time, poor documentation makes it impossible to evolve.

Review and insights When diving into an Architecture Review, we rarely see simple, isolated systems; instead, we find that a company's software and processes have become deeply entangled over time. While modernizing, we discussed the following core hurdles:

• The Business/IT Divide: Huge implementations often fail because they lack cohesion between business and IT. IT either runs a project without business involvement, or the business buys software with no grasp of the actual IT landscape.
• SaaS Conformity vs. Unique Rules: Buying commercial off-the-shelf (COTS) software usually means the business has to adapt its processes to fit the software. But companies often have complex, unique ways of doing things because of strict compliance or contractual reasons.
• The Value of the Wrapper: Extending legacy systems with modern wrappers can be a strong, flexible solution for fast time-to-market. While it is not a "forever" solution, extrapolating the data into a new system or adding a functional API layer provides immediate business value to your end customers without instantly forcing a complete operational overhaul.

Concluding remarks. It perfectly outlines the dangers of forcing proprietary business rules into a rigid SaaS box, though it underestimates the pragmatic value of targeted, modern wrappers when an organization isn't quite ready for a massive transformation.
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Retool's 2026 build vs. buy report reveals 35% of enterprises have already replaced SaaS with custom software‍

Source: Business Wire / Retool

Abstract AI has completely resurrected the "build" option. While McKinsey recently warned against custom builds, new data shows AI is making custom software development so fast that teams are actively ditching SaaS. 35% of teams have already replaced at least one SaaS tool with a custom build, and 78% expect to build more in 2026. However, this unchecked speed is creating a massive "shadow IT" crisis that CTOs urgently need to address.

Review and insights Because development is outpacing governance, 60% of respondents report building software outside of IT oversight in the past year, with 25% doing it frequently. This creates unique challenges:

• The "SaaS-pocalypse": Fueled by LLMs, it is easier than ever to build internal tools that replace single-function SaaS apps. However, spinning up rogue, vibe-coded applications creates a giant problem for information security.
• The Shadow IT Explosion: Employees bypass IT because they see organizational governance as "red tape" limiting their speed. If a company doesn't provide secure, approved sandbox environments for rapid AI building, employees will simply use unvetted AI tools, resulting in customer data living in systems with zero authority.
• The Need for AI Leadership: Overcoming this requires more than just restricting access. Companies need dedicated AI Officers to educate employees, establish secure internal facilities, and ensure that rapid development doesn't turn into tomorrow's technical debt.

Concluding remarks It shines a stark light on the reality of modern enterprise development: if you don't control the speed of AI-assisted building, your employees will build outside of your oversight, multiplying your security risks.

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Full video episode: Software modernization, buy or build

The first step to start your modernization journey

Software modernization and architectural rebuilds lie at the heart of Eli5. We solve complexity to deliver direct business value by focusing on pragmatic, cloud-native transitions.

Whether you are debating buying an off-the-shelf platform or dealing with the sprawl of employee-built "shadow IT," you need total visibility into your current tech landscape.

Would you like to book a free brainstorm to discuss your legacy stack? It is the essential first step to turning your technical debt into a scalable, modular future. 

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