Deciding between off-the-shelf and custom software

Choosing between custom software and off-the-shelf software for your company is a big decision, and it can be a difficult one. No matter which you choose, there will usually be a significant investment of time and money, and the choice you make will affect your company for years to come. You want to make the best decision you can.

So let’s take a look at the factors you should be considering when making this decision.

Define the problem

The first step in choosing a software solution is to define the problem you need to solve. (If you’re at this stage of the process, you may have already done this, but I want to emphasize its importance.) Software, whether it’s off-the-shelf or custom-made or a hybrid solution, is only a way to solve a problem­—nothing more, nothing less.

Before looking at software solutions, define your problem and goals clearly: come up with a list of features and functions that are absolutely necessary. Then come up with features that are not absolutely necessary but that would be valuable.

Defining your goals is important because it prevents you from getting off-track and from considering software solutions that have more features, or less features, than you need. This is a factor no matter if you’re looking at off-the-shelf or custom software. You don’t want to end up with a system less robust than you need; you also don’t want to spend a lot on a system and only use a fraction of the features.

When is off-the-shelf software best?

Most companies choose off-the-shelf software offerings because that software is capable of solving common problems that many companies routinely face. Examples of popular OTS software are:

  • Human resources and personnel software
  • Project management software
  • Accounting software
  • Learning management systems
  • Inventory management systems
  • CRM software

These softwares handle processes that are not part of a company’s unique competitive advantage. For example: most companies do their accounting in similar, standard ways; their accounting process is not what makes them unique, competitive, or successful.

If the process for which you’re trying to find software is part of what makes your company different and successful, this is a sign that off-the-shelf software will likely not be a good idea.

It may be tempting to buy an existing commercial software that does 90% of what you want it to do. It’s inexpensive, and it’s tangible: it’s right in front of you, ready to go. What often happens is that you will get the software, and then find that the 10% of your process that it couldn’t handle is actually very important to your business.

The lack of those features may then necessitate employees to try workarounds to get the system to do what they need it to do (like using data fields for data the fields weren’t meant for or tracking some data entirely outside the system). This leads to a database that’s impractical and incomplete, which prevents centralized reporting and, in turn, leads to employees not using the system.

Over the years we’ve heard dozens of these kinds of stories from our clients, who came to us after realizing that their attempt to fit a square peg into a round hole wasn’t working that great.

Of course there are plenty of instances when off-the-shelf software is a great fit. The point is: you have to be confident that the off-the-shelf platform will do what you need it to do, and that it won’t be a hindrance to your process.

Some off-the-shelf software fits great, yes; for some companies, it can be a struggle.

Choosing off-the-shelf software

If you decide that pre-existing software is the right fit for you, the next step is to see what’s out there. You might already be familiar with the software offerings available, or maybe you have to research them a bit. If you don’t know what’s out there, here are a few options for getting clear about software options:

  • Research/search online.
  • Research it internally: ask around in IT or another relevant department to see if there might be people familiar with the software landscape. (Sometimes, at big companies, you may find a person or department already using a tool that works great, but who just hasn’t shared it widely.)
  • Ask peers in your industry about what they use. Reach out to them directly or find industry-specific forums or groups online. (Some companies are quite honest and open in sharing information, and some of course won’t be. You never know until you ask.)

The next step is to evaluate the software. Some ways to evaluate existing software offerings are:

  • Hire an industry-specific consultant to evaluate what softwares are available and whether any will fit your needs.
  • Sign up for free trials of software (which most reputable software companies offer) and test its practicality.
  • Read reviews from users about their successes and failures with the software.
  • Contact companies that are using the software and ask them questions.

As you research existing software, compare them all to your list of required and desired features. Keep detailed and organized files about how each software stacks up against your needs.

The costs of OTS software

Off-the-shelf software can be tempting because it is usually less expensive in the short-term. But there are hidden costs to off-the-shelf software that must be taken into account. Here are a few costs and downsides associated with OTS software, some of which may not be obvious in your initial brainstorms:

  • Leasing/licensing/support fees. When factoring in licensing and other ongoing costs, take into account that your cost to use the OTS software may rise as your company grows.
  • Training. There can be extensive training costs and lowered productivity that come with switching to a new system. (There will be training costs associated with a custom solution, too, but these can be lower when your custom solution is built to mirror existing processes.)
  • Software company reputation. The reputation and stability of a software provider should be taken into account. If a software company goes out of business, or the software is no longer supported, it can be expensive getting someone to maintain or update it, or it might necessitate a costly switch to new software.
  • Security issues. If you use multiple off-the-shelf softwares to meet your needs, this can create a potential security problem. It’s difficult to track access and permissions across multiple systems, which makes it possible ex-employees might unknowingly retain access to some systems. Also, with multiple logins, it may not be possible to restrict access to the extent required by the data access policies of your organization.
  • Maintenance/customization. If you find OTS software isn’t meeting your needs, it might be necessary to bring in a developer or consultant (e.g., an ERP or SAP developer) to add features. These specialized consultants usually cost about double or triple what a standard consultant would be paid. (This assumes that customization is possible, which, with many OTS solutions, it’s not.)

If the shoe fits, it doesn’t mean it’s the best shoe

Just because there is an off-the-shelf solution that works, this doesn’t mean that the off-the-shelf solution is necessarily the best. Here are a few factors that can make custom software a good choice even if an off-the-shelf solution is available:

  • You’ll be using the solution for a long time. The longer your company will be using the solution, the more a custom solution makes sense, because you’ll be eliminating the long-term costs of licensing the OTS software while spreading out the development costs of the custom software. You’ll also be able to map the software exactly to your process and change as needed. This can give you an advantage over your competitors.
  • Easier to administer and track. There may be several existing software offerings that could, when used together, meet your needs. But a custom solution offers an opportunity to do all of these things in one place. This means that employee activity and access is easier to track and control. (This will be both a security benefit and an administrative time-saver.)
  • It fits your process exactly. When developed correctly, custom software mimics and enhances the exact process of your business. With OTS you may get a lot of the things you need but because it’s not an exact match you;ll have to implement some manual or inefficient workarounds to get it to work. This is not the case with custom software as it takes your unique processes into account from the beginning.

Hybrid Solutions

Finally, you should remember that the question of custom versus off-the-shelf isn’t always an either-or/black-or-white type of question. There are many situations where adding some customization to an existing software is the best route. In fact, this is a large part of what we do at igNew.

If an off-the-shelf software gets you close to a solution, then sometimes the best option is to create a few auxiliary custom-coded solutions that integrate with the commercial software to get it to do all the things you need it to do.

Again, it all goes back to ‘solving the problem,’ and to best solve a specific problem, you have to look at all the factors in play, which will include: your specific goals and plans for the software, your budget, what software already exists, and how difficult custom software would be to create to fit all your needs.

This is why it’s so important to get consulting from an expert: to look at all the options and to come up with an optimal plan, whether it’s a fully custom solution, an off-the-shelf solution, or a hybrid solution.

If you have any questions about anything I’ve said here, or want to talk about whether custom software might be a good idea for your business, reach out to us with our online contact form here, give us a call at 502-272-1123, or email me at david@ignew.com

About igNew

I’m David Galownia, the owner and President of igNew. igNew is a proven software development team; we’ve been building transformative solutions since 2005.

At igNew, we’re driven by a passion for solving problems and enabling your business to achieve greater heights through technology. Our clients are typically medium sized, high-growth companies who are striving to be more efficient, more agile, and more profitable. We will work with you only if we’re confident we can drive a substantial return on your investment.

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