How to Decide Between Off-the-Shelf and Custom Software for Your Business

April 10, 2019

Every company faces the "build or buy" dilemma when automating its business. The biggest challenge for business executives is balancing the company’s short-term needs with long-term goals for growth. 

In the automation process, companies need to decide between off-the-shelf and custom software. Each of these options presents pros and cons businesses should consider before deciding. 

Off-the-shelf software is pre-designed for a wide range of customers while custom software caters to specific business needs. 

Custom Software vs. Off-the-shelf software

Because off-the-shelf software is designed for all, there is a risk that it might not meet all of your business’s requirements and force you to customize later. 

Before deciding which type of software would best meet your business's needs, you should consider the benefits and limitations of both off-the-shelf and custom software. 

Differences in Cost

Off-the-shelf and custom software offer different levels of value. 

Off-the-shelf software typically costs less than custom software and you need to only pay a one-time fee to start using it. 

This is because the cost is split among thousands of users that buy the same software license, making off-the-shelf software cost-effective. 

Custom software, on the other hand, needs to be developed and programmed for your specific business needs which require discussions, drawing out requirements, wireframing, and building the software. This is why custom software is more expensive than off-the-shelf software. 

Competitive Differences

Off-the-shelf and customer software offer different levels of competitive advantage. 

There is not much space to leverage off-the-shelf software because your competitors are using the same product. They know exactly what you can achieve with it and what your restrictions are. 

Custom software is more flexible and can be tailored to fit your business requirements. Custom software developer companies can also modify it as your business evolves. 

Think Carefully About Your Business’s Needs

Before you decide on a type of software, think through your business's needs and consider all of your options. You need a type of software that will help maximize the growth potential, decrease costs, and increase revenue. 

Consider Your Budget and Understand How the Cost of Software Is Determined

The cost of software is determined by the project estimation process. 

Software project estimation process

This process consists of 6 steps which include everything from determining software requirements and development to integrating the software and migrating existing data. 

1. Determine Scope

The first step is to write down what you want the software to accomplish.

By outlining project requirements, you can get a good idea of how much it will cost because project requirements are directly proportional to the project cost. Be sure to consider all possible deliverables and constraints. 

In the initial stages of the project estimation process, BinaryFolks sets up frequent meetings with clients to get a complete picture of the software they want to develop. Good software developers strive to understand their clients’ business requirements and then translate it into a technical requirement document that will be used in the development process.

2. Design the Software

Engineers can begin designing the software after the project’s scope has been clearly communicated and your developers have a technical requirement document. 

Keep in mind that the software development company will need to allocate time and resources to both user interface (UI) and user experience (UX).  

Designers will need to choose a design that represents your business holistically and is intuitive, modern, visually appealing, and simple enough for everyone to use without an extensive learning curve. 

3. Integrate New Software with Existing Systems 

When the software has been designed, it’s ready to be integrated with the business’s existing systems. 

This part of the process is always the most challenging because a lot of unknown variables are involved and requires extensive research and development (R&D) before specialists can dive in. 

Designers need to familiarize themselves with the API, data structures, protocols, and user authentication. They will achieve minimal functionality to get an idea of the product and understand its endpoint before integrating the whole program. 

4. Development Phase

Once the requirements, information, and UI/UX design get final approval, actual development begins.  

This phase needs a lot more manpower and hours than people might expect. 

The development phase also includes all the time that is consumed in the form of communication overhead and the timeframe that is committed to the client. 

5. Adjusting Software Complexities and Requirements

When interfaces include multiple systems, the software can sometimes become too complex which makes it become too costly and risky to modify. 

If this is left unchecked, it can impact projects and leave behind clunky, inefficient applications. 

It is normal for the software requirements and scope to change in the development process as more features and workflows are added or removed. Anytime this happens, cost needs to be adjusted as well. 

6. Migration of Existing Data

Whether it’s about data consolidation on a single platform, upgrading to a completely different platform, a merger, or an acquisition, your company will likely need data migration. 

Sometimes, a group of applications, like servers, files, and databases, needs to be migrated simultaneously. If this is not done correctly, it can result in interrupted service for end users.    

What You Can Expect from a Finished Product

There are different types of software, depending on your needs and what the scope of your project is. 

  • Compact Class software ranges between $3k - $10k and includes prototypes, single-feature stand-alone software. Think of this as a software application that does one simple thing and nothing else. 
  • Moderate Class software ranges between $10k - $40K and includes software remodeling, web application or mobile app development that has few critical features, and an MVP.
  • Extravagant Class software costs more than $40K and includes enterprise software with a rich feature set, cross-platform system, multiple third-party integrations, all of which are flexible and configurable.

Always keep in mind, however, that software development pricing varies among on-site, off-shore, or outsource development and thus, the location. The above estimates are drafted based on outsourced prices.  

Software Solutions Are Not One Size Fits All

Good software is designed to meet business expectations and increase productivity. However, the software will not work until every aspect of its functionality is designed, developed, tested, and maintained. 

Make sure you understand both the short- and long-term costs of off-the-shelf and custom software before choosing which type to integrate into your business. 

 

 

About the Author

Headshot of Jyotirmay SamantaJyotirmay Samanta is CEO of BinaryFolks, a software development company with a specific focus on cutting edge SaaS-based web application development and mobile application development. He is an entrepreneur and technocrat with more than 18 years of experience working in different technical leadership roles with a focus on Cloud Network Infrastructure. Working in different global branches of Google, Amazon, and Salesforce helped him understand different work cultures, techniques, and values across different continents.