Build vs. Buy: The Channel Management Software Dilemma

By Brian Joyce

Sooner or later, growing B2B organizations face an all-too-common problem. Is it smarter to build or buy their channel management software?

Installing the right channel management system offers many benefits. It helps businesses reach new audiences, boost sales, collect valuable market data, and deliver exceptional customer experiences—provided they make the right choice.

In this blog post, we’ll help you navigate the build versus buy debate.

Here’s what you’ll learn:

The factors to consider before choosing a channel management software solution

The benefits & challenges of building a channel management platform

The benefits & challenges of buying a channel management platform

Build vs. Buy: Factors to Consider Before Choosing a Channel Management Software Solution

Organizations use channel management software to track the efficacy of their partnerships. The right software can reduce distribution costs, improve brand awareness, and increase operational efficiency. However, choosing the wrong software can lead to many unintended consequences.

The wrong channel management software can lead to partner misalignment, low partner visibility, and legal and compliance issues, just to name a few.

That’s where having the right channel management software comes in.

IT departments often feel apprehensive about adding another platform to their tech stack.

While staying lean can feel enticing to internal IT teams, it's not always profitable or practical.

Sooner or later, one question remains as you scale. Is building the smart choice long-term?

Here is a list of things to consider before making your decision:

Time: Does your IT team have the time to commit to building an in-house solution? Time spent building channel management software is time taken from other crucial tasks.
Budget: While it can be enticing to create a tailored solution, it's expensive. Do you have the budget to build, maintain, and scale an in-house solution?
Scalability: Is your in-house solution designed to scale? If not, do you have the time and money to make it scalable?
Program Expertise: The subtle nuances of channel management are complex. Can your IT team provide a better solution than a third-party vendor?
Security & Compliance: Security and regulatory compliance evolve depending on your industry. Are you sure your IT team can keep up with changes in your industry?

The decision to build vs. buy your next channel management software is complex. Factoring in the considerations above can help you make an informed decision. Let's take a quick look at the benefits and challenges of the build vs. buy debate.

Benefits of Building a Channel Management Platform

Creating an in-house solution can be ideal. The chance to see all your partners within a single platform can be enticing. It's why many companies consider building a channel management solution.

Here are a few benefits of building an in-house channel management software solution:

Customization & Strategic Fit: Full control over workflows. For example, rebate, MDF, integration with ERP, or legacy dealer systems. You can customize deal registration, partner tiers, incentive models, and onboarding flows for VARs.
Competitive Advantage: Ability to build unique partner experiences and custom dashboards for distributors. Proprietary features can set you apart from other SaaS tools.
Integration: Deep integration with ERP, supply chain, and CRM systems. Designed to match your existing B2B workflows seamlessly.

In-house channel management can offer unmatched customization, control, and a competitive advantage. Despite its benefits, it comes with several challenges. Let's look at some of the challenges of an in-house channel solution.

Challenges of Building a Channel Management Platform

In-house solutions offer many benefits but also come with their share of challenges.

Here are a few of the challenges of building a channel management platform:

Time to Market: Custom builds take months or even years. That means risking missed sales cycles or partner momentum. Delays enabling VARs can slow channel growth.
Upfront Costs & Resource Drain: High development cost (likely hundreds of thousands). Internal teams must maintain the platform instead of product innovation.
Maintenance, Security & Compliance Burden: Costs for patching, SOC, GDPR compliance, hosting, and upgrades. Updates and compliance can exhaust internal teams.
Risk of Project Overruns & Technical Debt: High risk of delays, poor UX, and technical debt. Projects often go over budget. Risk of under-delivering for partners and losing trust.

In-house channel platforms offer customization and control. But time constraints, bloated costs, and ongoing maintenance are potential risks. Next, we'll look at the benefits and challenges of buying a third-party solution.

Benefits of Buying a Channel Management Platform

For many companies, buying a third-party SaaS software makes more sense.

Here are a few of the benefits of buying a channel management platform:

Automation & Efficiency: Automates claims processing, rebate calculations, MDF requests, and deal registration. Reduces manual errors, speeds execution, and frees up internal teams.
Accuracy & Compliance: Built-in validation rules, audit trials, and compliance controls reduce overpayments.
Real-Time Analytics & Partner Insights: Dashboards on partner performance, rebate ROI, and tier movement. Optimize incentives based on data-driven decisions.
Scalability & Flexibility: Manage complex incentive programs across regions, currencies, and partner tiers.
Enhanced Partner Engagement: Self-service portal access offers transparent progress tracking. Personalized incentives raise partner participation and loyalty.
Financial Control & ROI Visibility: Tools for budgeting, accrual tracking, and forecasting. Measures the financial impact of incentive programs, improves visibility, and justifies spending.
Integration with ERP/CRM & Ecosystem Tools: Seamless connection to existing systems. It automates data flow and ensures consistency across sales, finance, and operations.
Fraud Protection & Claim Validation: Automated claim validation, document support, and audit capabilities. Helps reduce fraud and streamline reimbursements.

Third-party solutions deliver automation, partner engagement, and financial visibility. SaaS channel solutions are an easy, cost-effective way to scale without administrative drain.

Challenges of Buying a Channel Management Platform

While third-party channel management platforms make financial sense, they have several challenges.

Here are a few of the drawbacks of buying a third-party channel management solution:

Vendor Lock-In: Dependency on a third-party solution. It can make it hard to switch vendors later.
Loss of Control: No control over vendor service performance. If vendor service slips or customization lags, it may constrain control and agility.

Even with these challenges, many brands still see value in speed, scale, and expert support. The best choice is a vendor who stays flexible, open, and easy to work with. With the right partner, you can lower risks and help your channel grow faster.

Still Debating Build vs. Buy? Get the Resources You Need.

Need a quick resource on the benefits and challenges of the build vs. buy debate?

Download our Build vs. Buy Infographic here. Interested in learning more? Here’s an in-depth guide for managing successful channel incentives.

FAQ

What is channel Management Software?

Channel management software helps B2B companies manage indirect sales through partners like VARs, distributors, and MSPs. It streamlines marketing, sales, incentives, and analytics across partner ecosystems.

Businesses use channel management processes to market, sell, and distribute products through partners. The goal? To reach the largest number of customers or end-users. Suppliers use partnerships to expand their customer base and improve indirect sales processes.

They offer partners marketing assets and sales strategies to enhance customer experience.

These partners, often referred to as "channel partners," come in several forms:

Distributors

Wholesalers

Value-Added Resellers (VAR)

Managed Service Providers (MSP)

Independent Software Vendors (ISV)

Choosing the right software solution is vital to the success of any organization installing a channel management system.

Pain Points Solved: disconnected partner workflows, manual tracking of incentive performance, lack of visibility into indirect sales.

Business Outcomes: streamlined partner operations, centralized data and performance tracking, improved partner collaboration and ROI measurement.

What are the pros and cons of building a custom channel management platform?

Pros:

Full customization (rebates, MDF, ERP integration)

Competitive differentiation

Deep workflow alignment

Cons:

Long development cycles

High upfront costs

Ongoing maintenance and compliance burden

Risk of technical debt and project overruns

Pain Points Solved: lack of tailored workflows, inflexible incentive structures, poor integration with legacy systems.

Business Outcomes: strategic alignment with internal processes, competitive differentiation through proprietary features, full control over partner experience and data.

What are the benefits of buying a third-party channel management solution?

Fast time to value

Automation of claims, rebates, and deal registration

Built-in compliance and fraud protection

Real-time analytics and partner insights

Scalable across regions and currencies

Seamless ERP/CRM integration

Pain Points Solved: manual errors in claims and rebates, compliance risks and audit challenges, partner disengagement due to lack of transparency.

Business Outcomes: Efficient incentive operations, better financial oversight and fraud protection, increased partner loyalty and program scalability.

How do I decide whether to build or buy channel management software?

Consider:

Internal IT bandwidth

Budget and ROI expectations

Scalability needs

Compliance requirements

Time-to-market urgency

Long-term strategic goals

Pain Points Solved: unclear ROI from channel investments, misalignment between IT and channel teams, overspending on underperforming solutions.

Business Outcomes: informed decision making based on strategic fit, better alignment between business goals and tech capabilities, optimized resource allocation and faster time to value.

What industries benefit most from channel management software?

Industries with complex partner ecosystems, such as:

Building materials

HVAC

Electrical

Plumbing

Appliances

EV chargers

SaaS and IT services

Pain Points Solved: fragmented partner ecosystems, manual incentive tracking across regions, difficulty scaling partner programs.

Business Outcomes: industry-specific workflows and compliance, scalable partner engagement across verticals, improved channel ROI in complex B2B environments.

What risks come with building your own channel management system?

Delayed partner enablement

Missed sales cycles

Under-delivered UX

Compliance gaps

Resource drain from core product teams

Pain Points Solved: delayed partner onboarding, high development and maintenance costs, compliance and security vulnerabilities.

Business Outcomes: risk mitigation through vendor expertise, faster partner enablement and program launch, reduced technical debt and operational overhead.

Can third-party channel software integrate with my ERP and CRM?

Yes. Leading SaaS platforms offer native or API-based integrations with systems like SAP, Oracle, Salesforce, and NetSuite.

Pain Points Solved: data silos between sales, finance, and operations, manual data entry and reconciliation errors, inconsistent partner onboarding.

Business Outcomes: unified data flow across systems, real-time visibility into partner performance, increased operational efficiency and accuracy.

What is vendor lock-in and how can I avoid it?

Vendor lock-in occurs when switching providers becomes costly or complex. To avoid it:

Choose vendors with open APIs

Negotiate flexible contracts

Prioritize interoperability

Pain Points Solved: inflexible contracts and limited customization, high switching costs, reduced agility in adapting to market changes.

Business Outcomes: greater flexibility and control over tech stack, future-proofing your channel strategy, easier vendor transitions and scalability.

How does channel software improve partner engagement?

Features like self-service portals, personalized incentives, and transparent progress tracking boost partner participation and loyalty.

Pain Points Solved: low partner participation, lack of transparency in incentive programs, poor partner experience and retention.

Business Outcomes: high partner satisfaction and loyalty, increased program participation rates, stronger partner relationships and performance.

What KPIs should I track with channel management software?

Partner performance

Rebate ROI

Tier movement

Claim accuracy

Program participation rates

Forecast vs. actual spend

Pain Points Solved: inability to measure program effectiveness, lack of financial visibility, missed opportunities for optimization.

Business Outcomes: data-driven decision-making, improved incentive ROI and budget forecasting, continuous program involvement and scalability.

Topics:
Incentives & Rewards

Authored by Brian Joyce

For over 5 years, Brian Joyce has been a noteworthy leader in the B2B writing space. You may know him from his work as a Content Strategist & Copywriter for 360insights, a market leader in B2B incentives, but Brian can also be credited as an adept writer in the B2C and D2C spaces where he has produced content that consistently ranks at the top of Google for franchises, global brands, and even celebrity entrepreneurs. In 2013, Brian was honored as an Amazon bestselling author of young adult fiction where his debut novel stayed on the bestsellers list for over 2 years. He holds a Bachelor of Arts degree from Rhode Island College and resides outside Providence with his wife, two children, and a cat with terrible depth perception that likes to take misguided jumps.