Executive’s Guide Advantages Disadvantages of Custom Software

Custom software offers a way to create a competitive edge while allowing organizations to differentiate how they serve their stakeholders. Packaged software resolves many of the risks inherent in creating a custom application for auxiliary business protease that are similar across many organizations within an industry. Business leaders should determine the right composition of custom and packaged software to best deliver on transformation and strategic mandates.

 

Whats is Custom Software, Bespoke Software, In-house Software, and Tailor Made Software?

Custom, bespoke, and tailor made software are all equivalent to one another, the terms refer to software that is made from scratch, with the purposes of helping teams do better work. It allows an organization to define its’ own functionality and end-user experience rather than complying to conventions or simply best practices which is adhered to by a set of industry players.

Despite the subtle misnomer custom software is often times not completely custom as the leading software organization often use as a foundation or code a software development kit or a code base to start from. For example if someone was building a house it would be a waste of time to create a custom tile for each square inch of flooring, rather tiles are created from moulds and used throughout the house for consistency and cost savings.

Custom software can also be incorporated into packaged software as customizations, which would need to be maintained as part of  future upgrades. Where as a pure custom or bespoke software offers greater flexibility and control providing the application was well written.

What is Packaged Software, Off the Shelf Software, and Canned Solutions ?

Packaged software is pre-developed code that is purchased by businesses to typically run their: payroll, customer relationship department, sales, or websites. These are canned or off the shelf solutions created by vendors. They are typically sold to customers based on a subscription model rather than an out right purchase, or in other cases vendor requires payment for support or software upgrades.

Executive Summary on Advantages Disadvantages of Custom Software versus Packaged Software

A common decision business leaders determine is whether their organization can lead with technology, which areas of the business should then be technology enabled, and determination whether the capabilities can be acquired through purchasing packaged or custom software. Here is an overview of the key business outcomes when considering custom or packaged software.

Infographic on advantages disadvantages of custom software

Despite the age that preceded the packaged software era, wrought with complexity and challenges of developing software. The modern technology landscape has enabled the viability of creating custom software that is hosted on third-party platforms. This creates a unique business case for organizations to utilize  infrastructure as a service while creating industry leading applications that results in tangible business outcomes. In a nutshell  the gap between building your own software and buying a package one continues to close and lessen.

Advantages of Custom Software (Pros)

Custom software has many advantages, of which many are realized (or unrealized) based on the degree of customer value delivered and quality of technical execution.

  1. Allows an organization to lead with technology: Amazon, AirBnb, UBER, wouldn’t be who they are without their custom software and technologies
  2. Create new revenue streams: digital platforms and services allow organizations to monetize and define new ways to grow a business
  3. Any feature can be included: a common complaint to working with packaged software is that essential features aren’t included or simply do not function as required
  4. Full ownership of product roadmap: a common challenge when buying a packaged software is that features are on the horizon but are sometimes delayed
  5. Enables proprietary technology to be developed: bespoke software allows organization to automate and scale proprietary procedures
  6. Provides opportunities to better serve customers: packaged software is catered to people who buy the software rather than your stakeholders and customers
  7. Avoid volatile subscription costs: packaged software are often vended based on a subscription model, custom software reduces the need to be at them mercy of vendor’s pricing
  8. Resolve outages on your timelines rather than vendor’s: the recovery of custom software during outages can also be further expedited since your organization will own and employ support and developer staff
  9. Full ownership of confidential data: by developing an application and storing the data in dedicated environments, there are no issues of data access or recovery given confidential information. When software vendors go out of business this has sometimes left organizations hanging without years of customer or operations data.
  10. Lowers barriers to technical innovation: given that an organization has technical capability, using technology to lead transformative business practices and platforms becomes more accessible to organizations that have
  11. Custom software can be licensed to partners: if a home-grown software is successfully it can be pre-purposed and packaged for subscription or licensing to to other industry players

 

Disadvantages of Custom Software (Cons)

  1. Requires discipline to avoid black box dilemma: once custom software becomes a black box it becomes costly and expensive to maintain, discipline requires that there is a clear outline and understanding as to how the software functions
  2. More risky than package software implementations: all technology initiatives inherently involve a degree of risk but creating a custom software can have its own unique risks, it forces organizations to use leading development practices otherwise there is increasing likelihood of failure
  3. Requires maintenance of technology capability: all other thing equal, creating custom software means employing more technology workers and infrastructure at the trade off of licensing costs
  4. Risk of cost pressures from large infrastructure or micro services providers: most organizations may rely on a small number of big players like Amazon and Microsoft, where there may be less leverage in negotiating on-going technology utility costs
  5. Waste of resources if commonly packaged functionalities are already available: if a custom software is simply recreating the business process or functionality of off the shelf solutions then it may not be an impactful use of resources
  6. Typically more costly up-front: the cost of custom software is usually more up-front but is comparable to packaged software given total cost of ownership of custom software , though costs should be weighed against benefits to determine true value
  7. Requires a deeper understanding of whats important to customers and the business: software is only as a good as the insights it seeks to exploit and harness, organizations that do not adequately understand what is important to customers will not reap extensive value from this initiative
  8. Requires cross-functional alignment to be successful: beyond low hanging fruit a truly pivotal piece of technology requires collaboration from multiple executive leaders, because delivering things that really matter to stakeholders isn’t simply accomplished by one department

 

Custom vs Packaged Focus on the Right Proportions

Enterprises that are considering whether to build or buy should first consider what their core business is. This will lead to a series of of insights that will determine which business processes are crucial to an organization and which supportive. Ultimately the focus of business leaders is not whether to only use packaged or custom software but determine the right mix. This requires seasoned thought leadership backed by executional expertise. This process that organization embark on to truly understand what is important to their stakeholders and entire team, is the common pathway that industry leaders take.

Lead with Mindfield Technology

Mindfield Consulting has helped clients distinguish themselves with the right mix of cloud, packaged, and custom software. Our team utilizes only Canadian craftsmanship in applications and strategy to help enterprises lead with technology. Mindfield offers custom software development, eLearning corporate training, JIRA expert, and organizational design of mission critical teams.

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