Companies Turn to Generative AI to Build Custom In-House Software Solutions

Businesses of all sizes are embracing a do-it-yourself software model powered by generative AI, sidestepping costly licenses from vendors such as Workday, SAP and Salesforce. West Monroe’s chief people officer estimated that building a payroll-error checker and manager insight tool in-house avoided more than $300,000 a year in vendor fees. A McKinsey poll of 1,719 executives reported that roughly a third of organizations have chosen to build rather than buy at least one product feature using AI.

High-profile examples include Spotify’s HR Bot, which answers routine employee queries, and Twilio’s Jarvis, a sales-call analysis coach adopted by about 80% of its sales force and credited with halving deal cycles. While the trend could chip away at add-on revenue for enterprise software firms, overall IT spending is still projected to rise nearly 16% to $1.47 trillion, according to Gartner. Companies acknowledge the maintenance and compliance risks of home-grown tools, but many see the potential savings as worth the challenge.