Custom Software VS Off-The-Shelf: Advantages & Disadvantages
Should you buy ready-made or custom-made software? Standing toe-to-toe, the pros and cons answer two underlying questions:
Should I buy ready-made software off the internet? Or do I pay a group of people to build one for me, exactly the way I want it?
As with all things business, the advantages and disadvantages of choosing software revolves around time and cost. The straightforward answer is:
It is faster and cheaper to get off-the-shelf software. But in the long run, it can cost more because you may need to pay for the software on a monthly basis. Owing to the nuanced and unique nature of businesses, COTS often cannot provide all the features that business owners need.
On the other hand, the biggest advantage of custom software is that it is tailor-fit to the needs of a business. Because of this, custom software is able to address all the software needs of a business operation.
However, you will pay a higher upfront cost for bespoke software -- just as you would if you were to ask a tailor to fit a suit for you. There's also that matter that lies on the thin line between pros and cons: you will have to get involved in the development of custom software.
How do you decide between custom software and COTS?
Choose packaged solutions if:
You need working software right away
The initial cost of custom software is too high at this time
Your organization is small and does not plan to scale up soon
You don't need to integrate to other existing software
Security is not a main concern
Choose custom software if:
You are willing to invest time, energy, and money for a longer-term goal
You need software that meets your business needs
You need to integrate custom software to existing systems and processes
You are working with and managing sensitive data
Being involved in making the software for your business is a creative undertaking that requires time and energy. Depending on how you see it, this aspect can fall in the pro or con column.
Ultimately, the best type of software for your business depends on what you need it for, how long you need it for, and what specifications you need. Read on to gather more information on which software is best for you.
This post digs deeper and answers the following questions:
What is off-the-shelf software?
What is custom software?
What are the benefits of off-the-shelf software?
What are the benefits of custom software?
What are the disadvantages of off-the-shelf software?
What are the disadvantages of custom software?
Which software is best for your business?
What is off-the-shelf software?
Off-the-shelf software, often referred to as commercial off-the-shelf software (COTS), is any piece of software that you can immediately use after purchase. It can also be called "packaged solutions" or "out-of-the-box" software.
What is custom software?
On the other hand, custom software is software that you need to get involved in the development of, from planning to delivery. In more fancy terms: bespoke.
“Companies often choose to invest in a custom application development as a unique business asset because they have distinct operational needs or because they can leverage the technology to differentiate their business from the competition.”
Vendors do not have custom software in file. It exists in the realms of nothingness and only comes to existence that moment that you start working with a custom software development company.
What are the benefits of COTS?
Instant availability
Pay, download, install. If you are choosing a web-based tool application, it's as easy as signing up and paying the fees.
Low upfront costs
COTS is usually offered as a monthly service. You'll only pay for the service each month: similar to renting an apartment.
Community support
COTS have thousands of users. If you are experiencing some problems with your own COTS, there are hundreds of people who had that same problem before. For common issues or questions about product use, you can easily find a forum that has the answers you seek.
What are the disadvantages of COTS?
Dispersed cost
Low upfront costs can turn into a mound of recurring fees over time.
Lack of competitive advantage
Your competitors might be using the same software that you are using. Assuming all things being equal, technology might be the advantage you have over your competitors.
Security
COTS vendors often provide security patches. This can mean two things: they are proactively addressing software vulnerabilities; or they are warding off ongoing hacker attacks. Off-the-shelf software products are often targeted because of their visibility.
Uncertainty of continuity
A vendor can go bankrupt and discontinue providing service.
What are the advantages of custom software?
Integration
Out-of-the-box software may provide integrations into your existing software. However, integration is not available for all out-of-the-box software. On the other hand, you can specifically request a vendor to build software that integrates seamlessly with your software. For example, you can specify to a vendor to create custom inventory software that integrates into your existing point of sales (POS) system.
Full control of development
You are actively involved in how the software takes shape, from the drawing room to post-production tweaks.
Full ownership
The software you build with a vendor is yours. You won't have to worry about a third-party vendor being unable to continue providing service.
Cost-effective
The upfront cost of custom software can seem like an uphill financial push, compared to the low monthly fees of out-of-the-box software. But, over time, custom software costs less. Once it is deployed, your software is completely yours and you won't have to pay for it aside from the occasional maintenance or upgrade. Moreover, vendors may provide free maintenance for a period after deployment.
Competitive advantage
Custom software lets you have technological capabilities that your competitors might not have. It might prove to be the small advantage that you can have to get ahead of competition.
What are the disadvantages of custom software?
High upfront costs
Custom software can cost more in the building stage. It is financial investment to hire a software development team. One way to keep the costs down is to outsource development to an off-shore team.
Increased risks
A software development project can turn out well or poorly. You can end up with a vendor that provides high-quality software or one that fails to live up to its promise. To minimize risks, work with software companies that can offer proof of their quality work and relationship with customers.
Investment in time and energy
Unlike packaged solutions, building custom software requires your active engagement. You need to provide project requirements and specifications at the beginning stage. During the development stage, you will need to get involved so that the project takes shape according to your business goals.
Ultimately, choosing between ready-made and custom solutions depends on your business circumstances.
