Should You Build Your Own Software or Buy Off The Shelf?

When business problems require a software solution, companies have a choice to make. They can either find software on the market that meets their needs or build their own custom solution.

Off the shelf software is often preferred, given how fast and cost effective it seems. However, there are other considerations that can reduce the value of “one size fits all” software.

Sometimes companies need a more tailored approach in order to achieve their business goals, and using off the shelf products does more harm than good.

How can companies decide on the right path?

Read on for a thorough review of the benefits and drawbacks of each approach, followed by some suggestions for situations when neither seems to be a good fit.

Off the Shelf Solutions

The term Commercial Off the Shelf Software (COTS) encompasses all software created to serve the needs of a specific market.

COTS products have a collection of features that perform commonly required functions, with bonus features depending on their specific market.

Advantages of Off the Shelf Solutions

Start-up costs

The cost of building COTS is shared by all its eventual users, so the initial investment is low.

Companies can lower those early costs even further by choosing subscription software over one-time purchase programs.

Rapid deployment

COTS can be set up right away and put in action as soon as configuration is complete.

Software as a Service (SaaS) options don’t even require a download; companies can begin using them immediately after purchase.

Feature-rich

The exact number of features depends on the product, of course, but there’s often a generous variety of features included off the shelf software.

Companies can use extra features to experiment with changes to their digital strategy or business model without buying another piece of software.

User support and maintenance

COTS are supported by their parent company. Higher level technical support can usually be had with a service contract.

In most cases maintenance continues for a long time after the specific product has stopped being sold, so there’s no need to buy newer versions if the original still works.

Wide audience of users

People love to talk about their favorite software.

When using COTS, it’s easy to find reviews, tutorials, hacks, and other resources online.

Training

Staff may already be familiar with off the shelf software from other positions.

When the product is very new, vendors often offer training at competitive rates (or even include it for large purchases).

Interoperability

Popular COTS may offer build-in links to other software in the same field. This is especially relevant to analytics and CRM software.

Consider Microsoft Power BI: it offers interoperability with a variety of popular enterprise software.

Drawbacks of Off the Shelf Solutions

Low functional coverage:

Off the shelf solutions may not fully meet a company’s requirements. COTS is built to appeal to the broadest possible group of customers.

Their developers can’t afford to create tailored solutions that narrow their market, so their programs focus on the most common needs.

Some vendors offer further customization for additional costs, but there’s only so far that can stretch ill-fitting features.

Independently modifying COTS may be against the license agreement, too. Even when it’s not, doing so is notoriously hard (read: expensive and time-consuming).

Companies can always request that features be added in future patches, but the developer is under no obligation to honor those requests.

Large security target

The more companies that use a specific off the shelf software, the bigger the target for malicious actors.

COTS vendors do have dedicated security teams, but they aren’t infallible. Having no control over this aspect of security is a major concern for some companies.

Regulatory and legal issues

COTS isn’t guaranteed to meet regulatory guidelines. Using the software may not properly protect HIPAA data, sensitive information, or comply with domain-specific legal guidelines.

A read through the Terms of Service of any major off the shelf program turns up warnings about this, but it’s easy to overlook.

Workflow disruptions

Companies have carefully designed standard operating procedures.

New off the shelf software can be out of sync with these, forcing companies to either overhaul their internal processes or accept a limited utility of the software.

Hidden costs

The lower initial investment doesn’t translate into lower total cost.

COTS can have hidden costs that add up in the long run: licensing, premium tools, service upgrades, and customizations.

Companies should also include the opportunity cost and lost productivity of rearranging their workflows to suit the software.

Slow to evolve

Vendors resist new software trends. They want to get maximum ROI on the software they’ve already built before changing direction, so COTS is slow to adapt to changing enterprise needs.

This can eased to some extent with updates and patches to add new features.

Rigidity

Every business is different, but to maximize their customer base vendors must attempt to flatten or standardize processes on a large scale.

As a result all companies who use the software tend to operate rather similarly to each other.

Beside providing a lower competitive advantage, this could stifle agility and innovative thinking.

Complexity

Because COTS doesn’t meet all a company’s needs, businesses cobble together a collection of software to cover the gaps.

Even when it’s not an official process, employees and lower managers do so to make their daily tasks easier.

The resulting mis-mash of programs creates bloated processes with a high potential for lost data or redundant labor.

The extra features that seemed like a bonus create internal confusion, too, especially when used inconsistently between departments.

Customized For Your Needs

Custom software is built on demand to a company’s exact requirements and specifications.

It goes through a developer who may also offer support and maintenance for the software, though the company still owns it outright.

Advantages of Building Your Own Solution

Perfect fit

Custom software is tailored to suit the exact needs of a company. There’s no “making do” or “close enough”.

The software does what is needed in the precise way desired without the bloat of unwanted features.

Can start small and scale

Though building custom software takes time, most developers start with a minimum viable product (MVP) that can be put into use quickly while the remaining components are finished.

Features are developed in the order desired, with flexibility to potentially change that order as business goals shift.

Fewer compliance issues

Companies that operate under strict regulatory and legal guidelines have the power to make sure everything operates as it should.

The additional layer of oversight reduces the financial risk  security breaches and legal issues.

Responsive

Custom software is easily modified to meet changing business needs.

It’s highly responsive to new trends and can be designed to scale well as demand on the software grows.

Smaller security target

When a product is custom, it innately has a smaller pool of potential malicious actors.

There aren’t as many people who want to break in, which makes it less likely that anyone will expend the effort required to bypass the security protocols.

The commissioning company can also fine-tune their security tools in response to potential threats.

Competitive advantage

Working with software that no one else has allows company to react in ways their peers can’t.

It sets company apart from the majority of their industry and empowers innovative thinking.

Streamlines workflows

Custom software is built the way a company operates, not the way a vendor thinks the company operates.

It facilitates efficient workflows by making it easier for things to work the way they should.

Disadvantages of Building Your Own Solution

Price

Custom software requires more investment than off the shelf software. The company can’t offload development costs on potential future users like COTS does.

Extra features and updates must be paid for as well (unless they were included in the original contract).

Time is another consideration. Developing new software involves a lengthy discovery process, progress checks, a QA process – in short, it takes much longer than simply downloading an off the shelf product.

Companies who choose this path should be prepared for some disruption.

Requires good relationship with developer

Software is only as good as its maker. Building custom software requires finding a reliable software developer, and the relationship doesn’t always end when software is complete.

Custom software must still be maintained, and that’s easier to manage for the developer who made it.

Training

Third-party training for custom solutions isn’t an option.

The software developer trains the first group of users, who need to establish training materials and keep their skills up to help future employees.

Standalone solution

There’s no wider community of users to help with custom software.

Companies can’t turn to their industry peers for advice, tool hacks, or reviews.

Is There a Middle Ground?

There are times when an off the shelf solution doesn’t fit, but custom software isn’t an option for some reason.

In these cases it’s possible to find a sort of middle ground through a few different methods.

One approach is to find several COTS that collectively meet the company’s needs and have custom connections built to unite their functions or reporting processes.

Some companies do this with the analytics tools from programs like MailChimp and Salesforce.

This maximizes the effect of COTS tools, enables more customization than software settings can offer, and loops in the tools a company already uses. It does still require going through a developer, though.

Also, the cost of purchasing all the desired software may be less than a custom solution but the complexity might still make it an expensive solution.

With some off the shelf software, third-party vendors exist who offer add-ons to popular COTS.

These programs bridge gaps in functionality and resolve issues relating to a specific market.

If these are available for the desired software, it could be a cost-effective way to get desired features with a single additional purchase rather than going through the development process.

Availability is the issue, though; this kind of option isn’t guaranteed, and third-party modifications can interfere with the function of the base software or potentially violate a service contract.

There’s a shortcut to custom software which relies on incorporating off the shelf components into a whole new product.

Custom software doesn’t have to mean new code from the ground up; in fact, that’s a very inefficient way to work with no real return or benefit.

Developers can take off the shelf components that address specific features and combine them into a new “custom solution” that fully meets the company’s requirements.

This path has a lower overall cost than fully custom software while providing the same kind of competitive edge and specificity of design.

A word of warning: adding too many layers to off the shelf components can reduce their performance.

There’s also the potential to force base components aren’t actually what works best into the structure or “reinvent the wheel” by making something functionally identical to an existing product.

This method shares the higher price point of custom software.

Choosing a path

The path that’s right for a company depends very heavily on their particular circumstances.

As a general rule, use off the shelf software if budget is low, requirements are simple, a solution is needed immediately, or staff turnover is high.

It’s also a good tool for covering general operations while refining exact requirements before building custom software.

Custom software is the better choice when requirements are specific or unusual, there are legal and regulatory considerations, the company wants a competitive edge, and there are funds available for investment.

Custom solutions generally provide better ROI in the long run, too.

When the available COTS solutions are almost what is needed, but some central requirements would go unfulfilled, choose a “middle ground” option.

Whatever path a company ultimately takes, software should be a long-term business choice.

Choose what works with the company’s workflows, budget, and digital strategy.

Spending slightly more at the outset can have a powerful effect on profits through increased efficiency and agility.

Are you trying to decide how to approach your next software development project? Concepta can provide you the information you need to decide between a simple custom dashboard or fully custom software. Set up a free consultation today!

Request a Consultation