Ultimately, every expanding firm will run into the very same dilemma. Spreadsheets do not work together, several systems do not cooperate, and someone throws an idea in the air saying, "Perhaps we should develop our own software." Someone else replies, "Not necessarily; perhaps we simply have to buy it."
And both people are correct, which is the exact reason why this dilemma is so irritating. There can be no winners in the choice between proprietary and commercial software – there is only one option that works better for you. And let us find out how to pick the winner.
What we actually mean by each option
"Off-the-shelf software," or commercial off-the-shelf software, which means the same thing, is the pre-developed solution intended for a variety of clients. Just consider solutions like Shopify, QuickBooks, Salesforce, Slack. All you need to do is sign up and set some parameters – and here you have it!
The custom software is the software developed exactly for your company. First of all, your workflows are analyzed by a team, and then a software solution is designed according to your workflows.
Another approach could be the customization of a pre-built system or the integration of several systems. And there are lots of companies who prefer this way.
The case for off-the-shelf software
Speed comes first. There is no way anyone will be able to develop such a tool for you in case you need to implement it on Friday. Just buying it is the faster choice.
The upfront costs are also an important point. The yearly subscription would be a few thousand dollars, while developing something on your own would easily exceed hundreds of thousands. It is an important difference, especially for a startup on the low budget.
The third advantage is the possibility to get the software, which has been tested by many other people and where the most common bugs have already been fixed. Customer support, documentation and community forum have become available. In case something doesn't work at 9 PM, you don't have to contact the person you hired half a year ago.
The disadvantages appear later. First of all, you have to pay per seat and the more people you hire, the higher your expenses become. Secondly, you have to do everything according to how the software wants you to. Lastly, if the vendor doesn't have some certain features, you have to request them.
The case for custom software
The first benefit that comes from custom software is its fit. With an unusual process in your logistics company or clinic, using off-the-shelf software will always lead to patches, workarounds and extra effort. People will start managing their spreadsheets on their own. Data will be entered twice. In the end, this solution will only cause problems rather than provide advantages.
Firstly, the custom software brings you ownership and control. With it, you will get a chance to set your own agenda for future development and not rely on the price increases of the vendor and find one morning that your favorite functionality is gone.
The next advantage is integration. Custom software can be created with integration in mind and can be made without using any connectors that might later become a problem if anything in your system or third-party application will change.
One more thing that should be mentioned is competitiveness. If your software plays a major part in your uniqueness as a company, being a pricing engine or a special customer experience, you definitely won't want to use the same software that your competitors can buy tomorrow.
Bad news? It's costly, time-consuming and risky. There are often project overruns, changing requirements during implementation and you'll become a new owner of all maintenance after deployment.
Comparing them side by side
The following is a brief analysis of the pros and cons involved:
- Initial cost: The ready-made product will be less expensive initially. The custom software will be more costly initially.
- Long term cost: The subscription cost will be quite high in several years from now. Initially the custom software will be more expensive, but after that it might become less costly.
- Start-up time: Days or even weeks for ready-made, months for custom.
- Scalability: The ready-made software will eventually hit its plan limit. Custom software can scale as you design it.
So how do you decide?
Forget about the theory and ask yourself some straightforward questions.
Is this something we really need or just an extra? The examples are accounting software, payroll, email services – all extras. Buy them. What makes your company unique and different from others? This is when customization shows its value.
Is there a product covering 80% of our requirements? In such a case, buy this product and accept its drawbacks. The customization of the rest 20% is what usually spends the budget.
How much time and money do we have? Take a moment and think – half-baked custom solution is even worse than a bad solution working from day one.
What will happen in three years? When we expect a growth in the number of users or employees by three times, consider the cost of the subscription model of the service. Sometimes it may become more expensive.
Do we have people who will support the software? The software is not a one-time deal. It should be supported no matter what – either you do it yourself or outsource the task to someone else.
The hybrid approach most companies land on
However, in reality, the most effective teams do not put all eggs into one basket. Instead, they choose ready-to-use tools for regular tasks, such as accounting, HR, communication, and develop a customized software for the peculiar parts. Typically, they start with a ready tool in order to see whether it works and then replace some elements with a customized software once they get to know their requirements.
It is much safer because you will learn about your business requirements and not have to pay for development of that which you could easily rent.
Choosing the right partner if you go custom
Should you prefer building, then the choice of your partners gains in significance almost as much as that of the software product itself. An ideal development partner will begin posing difficult questions right away and refuse to include unnecessary features into the product. It seems logical to first look through the reviews, case studies, testimonials, and past projects of the development firm you consider working with, and a Top Custom Software Development Companies list might come in handy while making this decision.
Whichever top list you turn to, you should always contact at least two or three potential vendors, ask them to introduce you their past clients, and avoid those who are ready to offer you an estimate and implementation timeline without having defined the scope of the work.
The bottom line
Turnkey software wins through its speed, low cost, and simplicity. Custom software wins by virtue of being tailor-made, providing control, and creating future differentiation. Neither one is necessarily "better" than the other, period.
If you have common requirements, buy. If you have special requirements that define your competitive edge, build. And if you are unsure of which road to take, begin with the turnkey software and learn from it how your company will be using it.
A good software decision is not necessarily the one that looks fancy on paper. It is the one that your organization will like two years down the road.
