Custom Software Development: The Pros and Cons for Businesses

Updated August 19, 2022

Companies generally have two choices in seeking the most appropriate line of business applications to enhance their efficiency and productivity: They can look to the market for commercial off-the-shelf (COTS) packaged solutions or hire specialists to help them with custom application development to build a software product.

For the average business owner, this decision of purchasing COTS software or building a custom application from scratch is a daunting one.

The traditional rule of thumb is that COTS packaged solutions should meet a minimum of 80% of the required functionality of a business. However, most companies choose solutions that only solve 60% of their operational business needs – leaving them with holes as their business evolves.

While COTS software is often an attractive choice to business owners for its low initial investment, hidden costs can creep up and surprise you if the product is not a perfect fit for your company. When deciding which solution will help grow your business and improve efficiencies, consider the requirements of your business from the perspective of business processes and not just from features and functions.

Many times, COTS solutions meet the functional requirements while failing to provide a solution consistent with the organization’s business processes. When assessing a COTS solution, there must be a strong consideration on how flexible, extensible, and maintainable the application will be throughout the life of the software.

Most importantly, you need to ask yourself if the COTS solution meets your specific business needs:

• Are you paying for the complexity of many features that aren’t necessary for your operations?
• Have you considered the cost of training, implementation, and maintenance?
• Do you have detailed requirements written out to make the right choice?
• Do you have an in-house support team to implement either solution?

Hire a custom software development company to support your business needs. 

Factors to Consider with Custom Shelf Solutions

A Commercial Off-the-Shelf (COTS) product seems so easy. Why should I consider something custom?

There are certain businesses – those in the healthcare industry for example – where constant changes driven by regulation and mandatory compliance make custom application development a must.

Let’s imagine a workflow situation in which a healthcare company is still exchanging papers, faxes, and e-mails. A secure electronic custom portal is a much better option that will allow them to meet HIPAA compliance, reduce paper, exchange information quickly and securely, and give them the ability to analyze the data through reports and dashboards.

A business may also consider a custom solution if it has specific goals to meet and it wants to modify its applications on an ongoing basis, which isn’t possible with most COTS solutions. Perhaps the business and its stakeholders see the value in investing in an application, which will provide additional resources and tools to its clients and work to help employees grow their business.

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 with a competitive advantage.

Innovation is a crucial driver to some business owners who want to differentiate from their competitors. Customized digital technology can give you a cutting-edge advantage to stand out from your competitors.

Often, COTS solutions seem like a slam-dunk – They’re well-marketed, and the sales process is meant to make you feel like you’ll be missing out on a key differentiator. However, COTS solutions are often still expensive, inflexible, and do not provide your organization with a unique advantage.

Ask virtually any organization that has implemented SAP (SAP is a large enterprise-resource-planning platform) – it completely changes the way a company does business, requires extensive training, is extremely expensive, and very frustrating to learn to use. Customized digital solutions are made to fit your business and to serve your unique differentiators. 

Cost is a common concern when considering a custom application development. However, a custom application built from scratch for your business may save you more time and money. Let’s compare:

A COTS product is a “one-size-fits-all” approach, so you may have to invest more time in weeding through the bells and whistles that you don’t need. 

Substantial time may be spent familiarizing your employees with its features and determining how you can maximize its general features to meet your specific needs. 

COTS solutions are not as easily modified or upgraded, and the turnaround time can be prolonged. Companies will sometimes mitigate this issue by keeping a computer running on an older browser because newer versions do not support the legacy software. 

A custom application may require a considerable investment initially, but you will likely find that you will be able to implement and use the application for all of its features more efficiently and in less time. You can also ask the consultant you are working with to provide a fixed-bid quote to keep your costs predictable. A good development shop that has done its due diligence shouldn’t have problems doing this for you.

Additional Reading: 'How to Build a Successful Development Team'

One of the best ways to determine which solution is right for your business (and help your consultant calculate a fixed bid quote) is to perform a Business Process Improvement (BPI) Assessment.

During a BPI Assessment, an experienced consultant will review and evaluate the systems and processes in your organization that are causing the most issues in the development process. Ultimately, a successful BPI Assessment will show you how to leverage technology to propel your operational performance and profitability through solutions that drive growth, user experience, and efficiency.

At MXOtech, these assessments are typically a two- to three-week engagement.

We’ll conduct interviews, audit your solutions, and work with your vendors to produce measurable metrics, such as a reduction in IT spend or an increase in employee productivity. We’ll even create a Value Stream Map to show actual time spent per part of the workflow. This data is then used to craft a comprehensive, actionable roadmap that includes a high-level project plan and projected costs. 

For example, let’s say you want to convert your manual paper process to an electronic format; if you involve your staff in its development from the get-go, you can create the application with only the features that will directly relate to your business while using the language and operational processes your staff is familiar with using. Your employees will have an instant familiarity with the application, and it will be more intuitive and increase their readiness to use it. 

On the flip side, some worry that going with a custom application development will trap you with the company that developed the solution, keeping your application hostage. However, working with a shop that uses a widely supported and flexible framework such as .NET for their applications will keep you safe from this scenario. 

We develop all our web-based software applications in .NET and recommend any consultant you work with does as well. Given its popularity and tremendous benefits for various issues such as memory management, security, and exceptional handling, the .NET framework is an ideal choice.

A custom software solution can be truly transformational for your business when developed in the right framework with the roadmap.

If you’re not quite ready to build a custom application from scratch, hybrid solutions allow you to take off-the-shelf software and customize portions of the existing framework to meet your needs more aptly. 

There are custom software interfaces that can be used to connect various systems with your line-of-business applications to allow for integration, to streamline, and information-sharing between disparate software systems.

Where to Get Started with Custom Software Solutions

If you’ve decided to develop a custom software development solution, what’s next? It’s important to be involved in the know-how. What’s the process like?  How do you stay on time and on a budget? How do you work with a new management system?  

Let’s say you found a company you want to work with on building your new application software. Before you sign on the dotted line, you’ll want to ask the specialists these two essential questions:

• What are your processes for development, implementation, and project management?
• How will you work internally with us? Is there room for scalability?
• How does automation work at your company?
• What's your company's methodology for work?

A little secret in consulting — Software development and COTS solution deployments often result in additional costs, frustration, or failure due to a combination of poor project management processes and low engagement from the client. Don’t fall for a flashy sales presentation.

Instead, dig deep into the project management and delivery process. Ask questions such as:

• “How often am I going to be able to test working portions of the project?”
• “Will I have direct access to the delivery team?”
• “How do you adjust to new information?”
• “What will cause me to have to pay more money beyond the quote I’ve received?”

A reliable partner will be able to describe a project delivery process that allows you to inspect working software every 2-3 weeks.

In fact, they will insist you test the software every 2-3 weeks so that they can make minor adjustments along the way, hence avoiding project extensions due to major modifications at the end. They will be able to send daily metrics that show you visually how a project is progressing. Anything short of that is rolling the dice on the success of your project.

Prospective partners should be passionate about their project management process because this is the vehicle that ensures what is promised will become a reality.

Make it a priority to know precisely how the promised services will be delivered.

How Do You Make the Most Out of a Software Development Process?

Everything goes back to efficiency. Bottom line – You can’t run a business without the right mobile apps or custom software applications to support it.

Whatever line of business application you choose, your new software should allow you to repurpose your staff to eliminate inefficient or unneeded administrative tasks.

This is your chance to be innovative, which is even more key if you’re a startup in a competitive market. 

If you have a bespoke software solution that no one else in your market has, it can be your “secret sauce” that allows you to stand out, and in some cases, even charge more money for your services. 

For example, if you started as a service provider that provides software development services, you can now offer technological tools to customers that help them save time and money in their own business. If you have a COTS solution, you can improve efficiencies and save time and money.

Creating a real-time solutions portal that allows your customers to go in and download different company templates or other self-sufficient elements will facilitate your interactions, and those offerings add value to your services. 

You will not have to spend as much time educating your clients because everything is there in one portal, including videos to educate existing clients and potential customers on your business, or a function that allows you to push out alerts to multiple clients at one time.

This higher level of collaboration and efficiency will help you stand out in your market.

Use the Best Custom Software Development for Your Business

Your business needs to go through a digital transformation - get the lifecycle going with an upgrade to your development products. 

Let’s review the basics of what you should do once your business application is implemented:

• Maintain your product
• Grow it
• Keep your wish list growing
• Let the system allow you to be more efficient.

Your digital assets should be treated as a valued employee, cherished, and cultivated. This “employee” will never quit, show up late, or make mistakes. Keep them growing and investing in them just as you do with those who work for you.

Learn how to determine whether you should go “off-the-shelf” or create a custom application in Part 2 of this article, "How Do I Know Which Type of Software Application is Right for My Business?"

Looking for help with your custom software development project? Browse our directory of trusted software developers. 

About the Authors

Joanna Sobran is the President and CEO of MXOtech. Joanna has both unique and vast experience in the IT industry. For more than a decade, she has focused on delivering a high-level customer experience with innovation. She has created a niche for MXO by approaching each client’s business individually, with creative technology solutions crafted specifically to address their issues. Whether it’s through using better technology solutions, improving operations, or education, Joanna treasures her clients and truly cares about their success

Sean Blair is the Chief Technology Officer of MXOtech. He has a broad base of experience that includes 16 years of delivering projects and products for health care companies. Sean also has experience delivering customized application development and system integration solutions in both the energy and utility, and manufacturing and distribution, space. His focus at MXOtech is ensuring that the clients receive the technological solutions that best fit their needs. Sean has a passion for technology and is constantly pushing the envelope to ensure MXOtech can offer the very best for our clients.