Custom Development vs. Packaged Software: What To Choose
Updated: Dec 7, 2021
The first thing that a company should do planning to optimize business processes or cover some issue is define what tool to use for it. There are only two options: off-the-shelf software or a custom one. Until the management makes a final decision, there is no point in moving on. JEVERA wants to help make the right choice. Today, we'll talk about what ready-made software is and how it differs from custom products. And most importantly, what solution might be right for you. Here goes!
What Is Off The Shelf Software?
Off the shelf software definition
A vendor product is a solution developed by an IT developer as a service for an unlimited number of corporate users.
A supplier analyzes its target audience, identifies its core needs, and tries to solve them through service. This model is subscription-based and operates by a tariff plan system. The user buys a subscription to a tariff plan and pays for it on a 100% prepayment basis. Companies rarely enter into a service agreement for six months, a year, or longer. Usually, we are talking about a monthly service with the ability to terminate the contract at any time without negative consequences.
An example of off-the-shelf software can be any cloud solution (SaaS, PaaS, BaaS, etc.). The most prominent vendors are SAP, Microsoft, Oracle, VMware, and so on. Their solutions are highly reliable. But there is an opinion that they do not always keep up with the times, complying with internal policies. Many medium-sized suppliers provide modern products at a reasonable price.
Who does use ready-made software?
Vendor products fit almost any domain. They are actively used by retail, telco, financial industry, manufacturing representatives, etc. The company's size and its business processes complexity are much more principal here. Most often, small and medium-sized businesses use ready-made products. The reason is simple: satisfaction of needs at an affordable price. Large enterprises use off-the-shelf software much less frequently. They usually have convoluted and complex business processes that a standard product cannot cover. However, to solve some simple issues, for example, document digitization or communication, they choose ready-made solutions. It is impractical to create a custom product for these needs.
Ready-made Software Advantages & Disadvantages
Rapid implementation. The vendor will connect you to the system in a matter of hours. It significantly speeds up the process compared to custom development.
No additional equipment. A company doesn't need to purchase special hardware or install software on it.
No maintenance costs. Buying a ready-made product, you will not worry about product support and spend resources on it. The vendor updates the software itself remotely. It does not affect the solution usage and doesn't stop a commercial activity.
Flexible partnership conditions. As soon as the product no longer meets your need, you can unsubscribe. The subscription is usually on a monthly payment basis. This approach allows you to stay agile and choose relevant products without compromising the business.
Comparatively low price. Compared to the development from scratch cost, the subscription one is considered low. It can range from $ 100 to $ 500 per month, depending on the product and tariff plan you choose.
Vendor lock. Unfortunately, you can't make the appropriate changes to the software if the need arises. As mentioned earlier, the vendor updates the system on its own at its discretion.
Limitations. The level of freedom to use a ready-made product depends on the chosen tariff plan. The user is often limited in scalability, which is unsatisfactory for fast-growing or large companies.
Minimal customization. Since the vendor product is designed for many users in the same segment, it is difficult for a vendor to provide a completely customized approach. Again, there are exceptions where a limited number of users can contact the vendor directly to gain customization. However, this pleasure is quite expensive.
Poor integration. Be ready that the purchased software will not always integrate perfectly with the existing company's systems. It provokes difficulties in usage and slows down the business.
Limited coverage. Last but not least, vendor solutions will cover a limited number of issues relevant to the supplier's target audience. If your company has simple workflows, you will be satisfied. If the enterprise has a complex structure and non-standard business processes, the vendor's product is unlikely to meet your expectations.
What Is Custom Made Software?
Custom software definition
A custom product is a solution developed specifically for a client's order. The developer (vendor) or the internal IT team can work on software creation. The organization of the relationship between the supplier and the customer depends on it.
To design a custom product, a supplier must find out the business needs, study its current situation (how business processes work, what conditions its systems are in), identify bottlenecks, and start by eliminating them.
As seen, the custom product is developed to fully satisfy the customer's requirements.
It can be any solution, like an assortment management system or task manager. It all depends on what the client wants and whether this desire is appropriate in specific circumstances.
Who does use custom software?
In this case, the list is not limited to companies that want to use it but only to those who can afford it. Again, custom products can be found in any domain. However, the preferable part of customers is large business representatives. Small and medium-sized ones can rarely find funds for custom development. Besides, it is not necessary for them. Ready-made products can cover the entire range of their business processes.
As for the target audience, there are some peculiarities here. Some large companies may well do without buying custom development. For example, one large hotel or restaurant that makes a significant profit. But if we are talking about a chain of stores, hotels, restaurants, etc. - they cannot perform without custom software. The latter contributes to the approach unification and the universal work organization inside the structure. It is a core part of service provision and corporate culture.
Gas stations also can't go without custom products. First, it's always about the network. Secondly, their business processes are complex and directly related to the excise goods sale. To comply with regulations, companies must take care of data security. At gas stations, ready-made products are practically not used - this business has to purchase custom ones.
Advantages and disadvantages of custom software
Fully customized. Custom development is done exclusively for your company. No one else can use the product unless you decide to launch it as SaaS to expand revenue streams. Thus, the software will fully meet your business requirements.
Seamless integration. Since the solution is fully based on your systems' current condition, integration with them will always be flawless.
Flexibility. You will have the opportunity to change the product at any time when the need arises. The supplier's involvement in this process will depend on your wishes. In any case, you will create an order, and your internal or outsource IT team will work on its implementation.
No limitations. As seen, there can be no restrictions on speed or scalability in a custom product. It belongs entirely to you, and you solely determine its peculiarities.
Data safety. Since no one other than your company can use this software, all the data it operates on will be completely safe.
Costly. Here you should consider two core aspects: development cycle costs and support costs. In both cases, the prices are high and depend on the product complexity.
Time-consuming. Product development usually takes from several months to several years. You should consider it, making your purchasing decision.
Additional resources. There are two ways to develop or maintain software: to hire staff or use vendor services. Many large companies choose the first option. Thus, they have to constantly spend their finances on paying salaries. Moreover, in this case, enterprises operate with limited expertise while attracting a supplier. A large team of different specialists will work on the product.