COTS (Commercial Off the Shelf) vs Custom Software Development: Does your business really need tailor-sized solution?

What is Better for your Business?

It is a constant dilemma for a business owner to choose between box-in solution or to develop a custom software solution. While it seems reasonable to compare the cost for a ready-made solution and custom developed solution, it is also important to understand how it will be incorporated into the companies’ business processes and further supported and customized. It is not just a ‘Buy or Build’ question.  The decision may significantly predetermine the direction in which the company will develop in a mid- and long-term perspective. Every kind of business has its own unique business processes to perform efficiently, by choosing cheap, common and less-effective program a company may lose identity that highlights it against competitors. But that doesn’t mean that you should immediately find a bespoke software developer instead of buying a yearly subscription for more or less reliable and suitable for your business out-of-the-box solution. Well-known ‘buy nice or pay twice’ is not a guide to action, because price also matters.

If you are managing a medium or small company (especially a startup), balancing between your company’s ongoing and long-term needs becomes one of the most difficult challenges. You have to take into account many factors such as type of your industry, enterprise size, scaling-up strategy, technical proficiency team level, time, budget, etc. No matter whether it is for improving task fulfillment, hiring, accounting, or customer relationship management, selected software should keep operations running flawlessly. Both out-of-the-box and custom built solutions have their benefits and drawbacks.

How do not get confused and make the right choice? Read the full article below.

Startups: do they really need custom developed solution?

As a rule, small businesses prefer to save money and not to buy software at all, until they can solve their problems somehow (e.g use Excel instead of CRM system). The major problem here is in misplaced priorities, while company expand rental space and decide to hire an additional unit for conducting office management records, rather than pay $150 a year and let the software do the routine. Sometimes such a small step helps to improve processes, boost productivity and reduce costs in practice. In this case it doesn’t matter to use off-the-shelf or bespoke solution, but surely commercial software is more affordable in terms of price and easier to integrate into the working process.

Chuck Cohn (founder and CEO of Varsity Tutors) notes in his Forbes article that a small company should better start with off-the-shelf software, until there is no need for further customization, additional functionality and compatibility with some other components or apps. However, when additional requirements arise there are several ways to deal with them: look for plug-ins and ready-made apps that can be easily integrated, or ask the product owner for the customization, find a service provider to customize the product upon your needs or develop a customized solution from scratch.

Mid-sized Companies: software to scale business

Successful emerging business usually grows and evolves faster than its management expects. Efficient scaling is possible only if your software can adapt to meet ever-growing company needs faster than they arise. Custom developed software can become a competitive advantage, it works faster, might include features that can replace several programs at once or can be integrated with the programs that work in different jurisdictions (e.g. places of production and headquarters located in several countries or even continents). The ambitious business tries to foresee market situation and potential problems to be able to react to rapidly changing circumstances: in such conditions out-of-the-box product’s maintenance can become a soft spot for further development. In case of any technical issues, the company will become dangerously dependent on a vendor’s technical support team staying in a line or trying to reach necessary technician. Also, they can change the price for custom software development services or decide not to spend time on the issue.

Using custom software does not only mean ‘buy tailor-sized program’, custom software solution companies usually provide better maintenance and technical support. Certainly, there are risks associated with custom software too, e.g. the purchasing company must have clear in-depth understanding of the final result. Without clear, detailed and comprehensive requirements the product might not meet their needs. Customer company should investigate and analyze its processes constantly, identifying new needs, which will be amended in the SRS (Software Requirements Specification) and satisfied by contractor. Also, the risk of frequent changes and modifications might result in added costs as more development time and effort is required, though the final software solution will be worth such expenses in mid- and long-term perspective.

Enterprises: too big to fail

Managing large size business or enterprise is probably the only case in which we completely do not recommend to ignore custom software development. Large-scale business does not have time and options experimenting and risking on the stability of business processes. Enterprise inner system usually becomes colossal, it is an efficient and well-functioning mechanism, and most often enterprises have their own developers that maintain and support it. But then rises a question: why do large companies request for custom software development services while they can develop an in-house solution? The answer is simple: they need to reallocate the resources. Pulling off specialists and managers from the existing tasks, delegating their tasks and processes to other employees is a long-time process for huge enterprises. The key competitive advantage that custom software development companies can provide is their mobility, speed, sideview and deep understanding of inner company infrastructure that emerges from their extensive experience.

While commercial solutions may fit many small- and mid-sized businesses, they can unlikely respond to the majority of enterprises challenges, they simply can’t foresee every company uniqueness and don’t have the same efficiency as custom developed software. It’s not just a question of customization, price or integration; everyone can wear mass market suits, but that doesn’t mean there is no need for tailor-made ones for a special occasion.

Conclusion: don’t forget to try and experiment first

Along with commercial off-the-shell software drawbacks and risks that custom developed software might bring, we still insist on the joint use of ready-made products in parallel with the preparation of the SRS (Software Requirements Specification) that will help your contractor better and faster deliver suitable tailor-sized software solution. By meeting these exact specifications, it can cover every aspect of business without unnecessary extras, but it takes time to try, experiment, analyze and record.

In the end we want to remind an interesting fact: a few years ago, Boris Evelson answering Forrester question about the percentage of reporting applications that are homegrown versus custom built noted that still the majority of reports (about 50%) are still being built in Excel and Access, which means there are still much work to do to make worldwide business processes more efficient and stable. It’s too risky and expensive to ignore business’s needs, thus better try on trial version of any commercial off-the-shell product at least, rather doing nothing and expecting to develop custom software product once.