Question

Which of the following statements regarding software acquisition (purchase vs. in-house development) is false?

A. software developed in house can cost 10 times more than purchased software
B. when a suitable software package is available for purchase, it is better to buy it rather than try to reinvent it in-house
C. the annual maintenance of in-house software is typically 25% of the development cost, whereas the annual maintenance of purchased software is typically 50% of the purchase price
D. none of the statements are false

Answer 1

The false statement regarding software acquisition is C, which incorrectly suggests that the annual maintenance cost of purchased software is typically 50% of its purchase price; it is generally lower.

Step-by-step explanation:

The question relates to the decisions involved in software acquisition, specifically whether to purchase software or develop it in-house. Among the given statements, the false one is statement C: the annual maintenance of in-house software is typically 25% of the development cost, whereas the annual maintenance of purchased software is typically 50% of the purchase price. This statement is inaccurate because it is generally accepted that the maintenance cost of purchased software is a fraction of its purchase price, often cited as being between 10% to 20% annually, not 50%. In contrast, in-house developed software can indeed have maintenance costs around 25% of its original development cost per year.

Statements A and B, however, generally reflect the truth in many scenarios. In-house software development can be significantly more expensive than purchasing off-the-shelf solutions. Additionally, reinventing the wheel by developing a software solution in-house that is already available in the market is usually not cost-effective or efficient.