Understanding the total cost trade-offs of building or buying is a difficult but important task. Of course, you must account for cost of your bill of materials (BOM), but there is a lengthy list of short- and long-term costs associated with custom board design that are not always well accounted for.
No design manager wants to be in a situation where the cost of development is underestimated to the point where the project is no longer profitable. But the reality is that development time (and, therefore, cost) is often underestimated—only 41 percent of embedded projects finish on schedule.
To help you better understand total cost of ownership, here’s a summary of the costs that go into a full-custom control board design:
- Hardware design
- Software development (Including including software stack selection, integration, and verification)
- Mechanical design
- Selection and management of component vendors
- Test (including software and hardware test and verification, system performance testing, environmental certifications, shock and vibration, and thermal validation)
- System integration
- Design tools (if you don’t already have them)
- Assembly cost
- Production test
- Component Cost
- Sustaining Engineering
- Inventory management (this could involve re-designs as components go end-of-life, or cost of keeping an inventory of spares)
- Software maintenance (OS and driver maintenance, regression testing)
- Customer support
- Upgrade cost
These are a lot of costs to consider! Compare this to a commercial off-the-shelf (COTS) solution. Commercial vendors can not only save you development cost, but also typically use their buying power to purchase components at a much lower price, because they are typically buying in much higher volumes.
Commercial vendors can also off-load sustaining engineering costs. For example, NI’s strong vendor relationships gives us insight into roadmaps that most of our customers don’t have access to. We pass this foresight on to our customers by designing products with very long product life cycles (15 years for CompactRIO products) and seamless upgrade paths. For industrial applications with long field deployments, this type of support is critical.
If a commercial vendor can reduce cost through commoditization, is there ever a situation when the cost of developing in-house would be lower? When evaluating a COTS product that seems too expensive, you should ask:
- Will I only use a small percentage of the features this product offers?
- Will I have to “design around” this product in a way that significantly increases development cost, because it doesn’t fit well into the system?
If the answer to either of these questions is “yes,” the COTS product may be too expensive because it’s just not the right product for you. If the answer is no, it’s probably time to take a hard look and evaluate if you are underestimating your costs, particularly sustaining costs, as these tend to be most overlooked.