In a study of insurance companies last year, Forrester Research reported 45 percent of respondents affirmed the statement: We tend to build internally rather than buy packaged apps. Yet in-house software projects post a poor track recordcontinually over-budget, overdue, and failing to meet user needs.

Another recent study from Robert E. Nolan Company underscored this issue by showing a high degree of disparate views on the quality of service delivered by internal IT units. For example, while 62 percent of IT respondents said they were satisfied with the level of service their systems provide to their customers, only 37 percent of business respondents agreed with the same statement.

So, whats going on here? Why do insurance companies IT units still show such a high predisposition for building their own applications? Is it because they can do it better than the vendors? In truth, no. But the prevailing belief they can fuels the ever-popular buy-or-build debate. Three key factors contribute to the confusion:

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