The age-old tech question: Which option is better, off-the-shelf software or custom software?
The problem is the question itself. It’s the wrong question.
Here’s the right question: Which option will best help you solve problems and meet business goals?
The answer will always be company-specific because every company has unique challenges to overcome. Therefore, when choosing to invest in your technology initiatives, you can’t flippantly choose between premade software or a more customized solution. You and your team must sit down and consider your options.
While you can look up a plethora of articles that showcase criteria you should follow to choose between off-the-shelf and custom software, at the end of the day it comes down to three key points:
- What does your business need the software to do?
- What are you willing to spend?
- How much time do you have to implement and get results?
Consider the Business Value of Implementing a New Software Solution
Even if you don’t know the particulars about the tech stack or solutions your business needs, you do know the problems you face. Identifying all the obstacles you’re hoping to solve with a technological solution is important, especially if you wish to leverage software to modernize organizational processes, improve customer experiences, and scale your business for year-over-year growth.
To identify your obstacles and the problems you're trying to solve, make sure you work with a diverse group of stakeholders in your business. Get different perspectives on how your proposed software initiatives may or may not help. Identify which departments would be most impacted, if they have the capabilities to handle slowdowns during a technology transformation, and how those slowdowns may affect the rest of the company.
Next, consider the needs of every department involved in the proposed new software solution implementation. Be aware that what one department needs to make the new software solution successful may be completely different compared to another department.
For example, some departments have common business problems that are experienced by nearly everyone in the industry. Solving a common problem does not require reinventing the wheel. In most situations, off-the-shelf software works well for solving these commonly experienced business issues.
That said, other departments in your business may have unique practices, processes, and obstacles. That uniqueness may be their value differentiator, but it can also make it difficult to find off-the-shelf solutions that will work for them. Departments and businesses with highly specific needs generally require more specific solutions that are often found through partnering with customized software developers.
Regardless of whether you have a common problem to solve or a unique one, the business value is based on what solving the problem will do for your business.
For example, if you have an internal efficiency problem with workflows, what will solving that problem do for your business? Will it:
- Improve customer service?
- Make employees happier?
- Help grow your business?
Whatever those answers, they establish the business value of implementing a new software solution. Always keep those answers top of mind when choosing between off-the-shelf and customized software options. Consistently ask if the solution you're considering solves your designated problem and delivers the business value you want. If not, it may not be the right solution.
With your business value as your guiding star, you can start looking between your options for vendors. That said, if you're not sure if your business problem is common or unique, you may still be struggling with whether to go off-the-shelf or customized.
Start by researching your problem. If you can find answers and possible solutions easily, then you may have a common problem to solve. Nevertheless, it's best to take the time now to investigate before you commit to a solution that won't work.
If there are solutions available from off-the-shelf vendors, keep your business value in mind as your ask yourself the following:
- Is this solution a perfect fit to solve the problem, or will we need to compromise our workflows?
- Will it work with our existing tech stack, or will we need to make more changes to other existing systems and databases?
- Does it align with the way our company does business, or will we have to change our processes companywide?
- Will it provide the measurable outcomes we are looking to achieve for the designated short- and long-term goals?
If you don't possess the knowledge to answer these questions, try to find someone in your company who does. If you don't have someone with this knowledge, be prepared to ask these and other questions to the vendors you meet and demand evidence to back up any claims.
If you are tech-savvy enough to answer these questions, and the answers are not ideal for your needs, don't panic. While premade software can solve typical problems, it may not work for your business’s specific needs and goals. Or, it may only solve your immediate problem, but create new issues, such as not integrating with your existing tech stack or making it harder to view your data than ever before.
When your needs are highly specific, you need a specific solution, which is when you should consider talking to a customized software development team.
During conversations with customized software developers, be ready to share how you will measure your business value so that they can have a conversation with you about solution options that align with your goals. Anything less than that will not address your needs.
That said, be open-minded to options.
The premise that "You don't know what you don't know" has never proven more true than it does when talking with business process analysts and software solution developers. These professionals have worked with a number of companies and have helped solve a wide range of problems within your industry. They know what works well and what may prove risky.
While you and your team may have some ideas on what you think will get you to a better position, a team of experienced customized software designers will bring additional options to the table that you may have never considered. Such options may be better suited for your business, be more cost-efficient, and could deliver faster on your established business value.
At the end of the day, whether you need a more common problem solved through an off-the-shelf vendor, or if you have a more unique situation that may require the extensive knowledge and experience of a customized software developer, always keep your goal in mind. If you are driven by what delivers value, don't let yourself or anyone on your team stray from that point.
Software Solution Budget for Short-Term and Long-Term Goals
As you consider what to budget for your software solutions, be aware of how off-the-shelf vendors charge versus customized software development companies.
Commercial vendors usually offer a subscription-based plan, which does make the investment cheaper upfront. Nevertheless, off-the-shelf vendors often have both hidden and additional charges based on your needs.
For example, you may need to purchase a certain number of licenses to use the software. If you want customer support, you also have to pay for that service. No doubt your business will scale, and that means you’ll have to pay for each new user and new customer interacting with the software.
Also, as the commercial vendor updates their solutions and services, they often force these updates on users. Such updates can alter how tools work, remove data points, and change your interface portals' usability, all of which cause slowdowns. While the updates are part of the service, fixing problems the updates cause may cost additional fees if you need customer support to remedy the issues.
Finally, most businesses use less than 20% of an off-the-shelf solution’s tools, but their monthly subscription fees go toward updating that 80% of the service they rarely use. Not a great ROI when you start crunching the numbers.
With custom software development companies, you are often paying them for their time and materials, which can require more capital upfront. That said, understand that you’re paying for the following benefits:
- Exclusive focus on your specific business problems and product solutions
- Extensive industry knowledge to address your processes, strategies, and product road mapping
- Collaboration and innovation during every step of the process to make sure you're aligned
- System updates that take your needs and entire tech stack into consideration prior to rollout
While these are the expectations and best practices for what you’re buying when you opt for customized software development, recognize that not all developers operate to these standards. That's why vetting is so important. Just because a business offers what they call American standards at overseas pricing does not mean you're getting a better deal. With software development, you really do get what you pay for.
Getting Measurable Business Results from Your Software Solution
After identifying how you measure business value and reviewing what your money will get you, now it’s time to address when you’ll get your results.
Commercial vendors discuss how their off-the-shelf solutions offer plug-and-play usability. It’s true, you can buy the product as-is out-of-the-box and put it into your business. It seems like it should be a seamless integration that works immediately and solves your problems.
Unfortunately, out-of-the-box is not as seamless as it appears.
Commercial software is easy to upload, but getting it to communicate with every other software system in your tech stack may require APIs (application programming interfaces) that allow the new software to communicate with the existing software. That said, there may not be a ready-made API to talk to all the software programs you possess.
Furthermore, when you purchase a commonly used piece of commercial software, there are additional security concerns to consider. Hackers are far more likely to target commercial software because the number of potential targets could result in a huge payout.
It’s not to say that commercial software is less secure than customized software. (Check out this article for details on which is more secure, commercial, or customized software). No matter what type of software you get, the onus of security is still on your company.
If the commercial software you implement works directly with all your systems, can provide the business value you need, and offer the data to prove those results, then at first glance it is the faster choice. Nevertheless, commercial software is usually not a 100% perfect fit, so buyers should expect productivity slowdowns with the implementation process.
Customized software does require more time upfront for the team to learn your business needs and execute solution development. There’s no way around it. But consider what that time investment gets you in measurable results.
- Instead of having to bend your company to fit a solution, customized software solutions are designed to fit your immediate business needs.
- Everything that matters to your business is reflected in the solution build.
- Agile implementation lets you test the solution in progress and request changes as needed to get the right fit you want.
This level of tailored care is designed with long-term success in mind. Yes, it will take a little longer, but that investment of time results in you getting the best solution for your business needs, and one that may better complement your current systems and operational processes.
AltSource Answers Customized Software Questions
Our product management team is always available to address your concerns about investing in a customized software solution. Even if it means losing your business, we will tell you if customized may not be the best solution for your needs. After all, we value partnership above profits, and we want to give you an honest answer.
Reach out to our team directly with your questions or to set up a time to talk: firstname.lastname@example.org
In the meantime, we highly recommend that you review our case studies to see how customized solutions have helped other businesses modernize data systems, create better customer experiences, and improve their overall go-to-market strategies.