Leaders in various industries are embracing digital tools to improve their firms. It could be to begin digital changes, support new remote workforce models, improve customer relations, or automate processes. Fortunately, software is now more widely available than ever. The power of choice, on the other hand, might be overwhelming. Furthermore, your technological decisions can mean the difference between falling behind or staying ahead in your sector.
So, what strategy should you employ when it comes to technology? Should you use off-the-shelf (or SaaS) software or custom-built software?
It’s similar to deciding whether to buy or rent a property. It is conditional. You must examine your budget, future ambitions, and a variety of other things. It is oversimplified to assert that “renting is always better” or “purchasing is always better.” So, in order to assist you in making the best option possible, we’ll go over the benefits and drawbacks of each approach.
What is Off-the-Shelf Software?
Off-the-shelf software is also known as pre-packaged software, out-of-the-box software, and, more recently, SaaS software. Off-the-shelf apps, whatever you call them, are pre-built software that is straightforward to build and use with little to no customization. It’s designed to appeal to a broad audience. Here are some popular instances that you may be familiar with:
- SurveyMonkey
- Zoom
- Quickbooks
- Slack
- Docusign
- Salesforce
- Shopify
- HubSpot
There is a wide range of off-the-shelf software available in several businesses. And, these days, the majority of these solutions are also SaaS software, which is cloud-based software that you access through a web browser and the internet.
Many firms have increasingly chosen off-the-shelf products to conduct their operations due to their ease of use and low cost. In fact, companies with 50 or fewer employees have approximately 40 applications, whereas those with 1000 or more employees have over 200. In addition, an employee uses an average of eight SaaS applications.
What is Custom Software?
Custom software is the polar opposite of off-the-shelf software. Custom software, as opposed to off-the-shelf software, is built to satisfy the specific demands of a single firm. It is created by software engineers (external or internal) who adhere to development concepts such as agile planning.
And, while it has always been an option (even before off-the-shelf), it has a negative reputation as a time-consuming or expensive one. Custom software, on the other hand, can be developed by firms of all sizes to obtain a competitive advantage in their market. Consider the following: If you wanted a car created and manufactured specifically for you, you could employ designers and engineers and pay for all of the materials used to make the car from the ground up. You’d receive your dream car, but the price tag would be a nightmare. Alternatively, you may buy a pre-made car and then tweak specific pieces inside the basic structure.
Let’s look at some of the things to think about when considering whether to invest in off-the-shelf or custom software for your company. Neither alternative is superior or inferior on its own. However, when it comes to your individual business, each will have advantages and disadvantages that may affect which you choose.
Pros and Cons of Custom Software
Benefits:
- The program is tailored to your specific business or group. If your sales process is highly specialized due to your particular industry, or if you don’t handle sales at all, a custom-made platform allows you to customise every aspect of the platform to your needs. As a result, you’ll never have to deal with an interface that doesn’t exactly fit your workflow.
- You only have the features you want. One issue some businesses have with pre-made software is that sometimes they feel they’re paying for features they don’t use. All while having to pay more for features they actually need. With custom software development, you only build in the features you know you’re going to use.
- There are no monthly or annual subscription costs. One of the most appealing aspects of a custom-made solution is that once it’s designed and tested, it’s completely yours. Of course, you’ll still need to pay an IT professional to keep the program up to date and serviced. So it’s not like you pay for it once and never pay for it again.
Drawbacks:
- High upfront costs. Building custom software is a time-consuming and expensive process, therefore hiring the right software engineers to complete the task can be prohibitively pricey. Not only will you need to pay for the expertise, but you’ll also need to spend for the actual infrastructure. A unique system can cost tens of thousands, if not hundreds of thousands of dollars, to create, and initial estimates can occasionally be inaccurate.
- It takes time to build. If you choose a custom-built platform, you will have to wait a bit before you can use it. Meanwhile, your sales force will continue to use your existing system for maintaining contacts and tracking sales. That might be aggravating when they know something better is on the way.
- Maintenance and updates are your responsibility. Companies that use one must have a dependable staff of IT professionals on ready in case something goes wrong. Tech support raises the cost of having one and reduces the benefit of not having to pay monthly or annual subscription fees.
- There are no dedicated training resources. It is up to your team to understand how to use your bespoke system once it has been built. Because the product was created specifically for you, there will be no useful videos, classes, or tutorials available to you. If your organization is made up entirely of technological gurus, this may not be a big deal. However, mastering a new platform, especially if it is one created specifically for them, can be difficult for many people.
How to Choose Between Off the Shelf Software vs Building Custom Software
Here are some of the key distinctions between these two software techniques.
1. Time to Launch
Off-the-shelf solutions are well-known for being simple to implement. You can get up and running in some manner with just a few clicks and payment. Because off-the-shelf software is pre-built, it is simpler to deploy and implement for your team. Depending on the solution’s complexity, you might be fully implemented in minutes or 4 to 6 weeks.
A custom-built solution, on the other hand, will go through a full software development lifecycle to design and configure the program to your specific needs. It’s a more complicated procedure in which developers gather your requirements (scope) before building, designing, and testing your solution. Depending on the scope and complexity of your project, it could take weeks, months, or even a year to completely actualize and roll out the solution to your team.
However, there are techniques to “speed up” the custom software development process.
- Start with a minimum viable product – Build only the basic elements required to solve your business problem at first, and then add more features slowly based on user input.
- Leverage existing software – Use pre-existing software as a base and then add functionality tailored to your company on top.
- Semi-custom software – Utilize pre-built modules that are highly adaptable to your needs.
2. Ownership and Maintenance
Any sort of software requires continuing maintenance, such as bug removal, update installation, security patches, feature enhancements, and so on. However, the type of software defines who is in charge of continuing maintenance and improvement.
The third-party software provider owns off-the-shelf software, which is “licensed” to the end-user (you the customer). Because the application operates on the provider’s servers, they are responsible for its security, performance, and upkeep. The supplier then distributes the expense of maintenance and support across its entire user base, which is why you must pay a monthly fee to access the program.
Custom software, on the other hand, is exclusive to you as a single customer. You have complete control over the solution, whether you produced it in-house or with the help of an outside developer. This means that you are responsible for the cost (as well as the responsibility) of maintenance, upkeep, and other infrastructure.
Pros and Cons of Total Ownership
Each method has benefits and drawbacks. On the one hand, not having to care about or think about maintenance might be a significant relief for a SaaS user. And it is because you share resources with others that you can pay less for the program. However, you have no influence over what features are produced, when they are built, or whether a server goes down. In some ways, your options are limited.
Other entrepreneurs, on the other hand, desire proprietary software because they want complete control. They want to collaborate with a development team to create exactly what they require, when they require it. They do not want to share infrastructural resources with tens of thousands of other people.
Even if you are not a “technical expert,” you may rely on your external development partner to manage your continuous maintenance and security upgrades, allowing you to successfully maintain unique software.
Is ultimate ownership of your product, however, worth the time and effort? It is determined by the solution. Do you need to create and administer a simple digital solution, such as Trello, on your own? Most likely not. However, you may wish to create a platform or workflow that handles your key activities exactly as you require to conduct your business.
3. Customization and Flexibility
Custom software wins hands down when it comes to a user’s capacity to tweak and add features. You can develop the software precisely how you want it from the ground up. By far the greatest significant advantage of developing your own solution.
Of course, total personalization comes at a cost in both time and money. However, for many businesses, the benefits outweigh the costs. You will always be able to control and evolve your software as needed over time. However, when it comes to SaaS software, you’ll also come across terms like “customizable” and “configurable.” While you will be able to make changes to the program, they will be limited. You cannot fundamentally alter the way the program operates to meet your own business requirements. You will not have access to the “source code” to do it because you do not own the product.
Off-the-shelf providers are open to customer feedback and are incentivized to improve their features on a regular basis. However, it is not in their business model (or in their best interests) to design one-off features for each individual customer. Their philosophy is to invest time and money on things that will benefit the greatest number of customers at the same time. This can be a constraint. If the specific functionality you require isn’t available, you may have to resort to a manual workaround to get the product to “kind of work” for you.
4. Integration
Since the advent of cloud-based software, it has become easier than ever to implement various software solutions for specific company operations. However, multiple platforms may result in segregated data. How can you efficiently distribute data across all of your systems?
Fortunately, much progress has been made in recent years to connect and automate data between systems through the use of APIs.
HubSpot, for example, currently provides over 500 pre-built integrations. HubSpot, like other providers, is constructing a software “ecosystem.” They (and others) understand that the value of their product is only as great as its ability to integrate with other tools you use alongside it.
However, not all integrations are created equal. Integration is a technically complicated procedure in general. You must make two systems that were not designed to communicate “speak to each other.” Furthermore, some software is simpler to integrate than others. For example, integrating a system with a current API is easier than integrating a legacy system that relies on an older interface that only supports CSV or XML data formats.
More Integration Options with Custom Software When it comes to integration, though, custom software may have an advantage. If you know you need to integrate with systems X and Y, you can design your bespoke software solution with that in mind, which means you’re anticipating how data will be formatted and saved to be shared with these other systems. Furthermore, you are more likely to have more alternatives for connecting with various systems, whether they are current SaaS platforms or legacy software with no genuine interface for easy connection.
5. Pricing
The way you pay for off-the-shelf versus custom software differs substantially.
SaaS Subscription Model
In general, off-the-shelf software is appealing for its pricing structure. Since the software is pre-built, you’re only paying for “access” to the software usually through a subscription fee. Your fee could be a flat monthly or based on per user or volume of data used. Your subscription fee covers the software provider’s ongoing maintenance, hosting, and upgrades to their solution.
It’s also common for off-the-shelf tools to use a “freemium” pricing model. They’ll offer a lightweight version of their software for free. You can use the tool free forever, but you can upgrade to a subscription plan to add more features or users.
Off-the-shelf software can vary from anywhere from free to a couple of thousands of dollars per month. It all depends on the solution and how it’s being used (number of users, data, features, etc.)
Custom Software Services Model
The payment arrangement for custom software is more traditional. The scope and complexity of your project, like the cost of most services, will influence the ultimate cost. Your scope will be divided into individual line items that will each require a set number of development hours at a set hourly rate. Hourly prices vary depending on expertise and experience. Some service providers would charge a premium for a top-tier software developer as opposed to an entry-level one.
Furthermore, like with any program, you should continue to pay for continuous maintenance and upkeep of your solution, whether performed by your team or a development partner. SPARK suggests considering maintenance costs at 15 to 20% of the entire project cost.
Custom projects can have a wide range of overall expenses. You can spend anywhere from a few thousand dollars to hundreds of thousands of dollars. It is determined by the scope of the project.
6. Return on Investment
When purchasing a vital piece of software for your company, you should ask yourself, “What will the return on my investment be?”
These costs are changeable and less hazardous with SaaS software. They are often billed monthly on a pay-as-you-go basis, and you can cancel at any moment. While this may be advantageous in the short term, it may cause you to miss the long-term value of the program you’re considering purchasing.
Fees can build up as you add features and users, especially if you multiply these charges by the dozens of additional SaaS platforms you utilize. And if you decide to remove the platform after a few months because it isn’t performing well enough, you’ve lost both time and money.
Planning For the Long-term
Custom software, in general, will demand a larger initial expenditure than utilizing an off-the-shelf option. Furthermore, the initial dollar number on your complete scope may induce sticker shock. But don’t let that deter you from taking on any custom project. Custom software is sometimes neglected as a long-term investment that grows in value over time. You are not penalized (in terms of payments) for using the software more frequently as you would with off-the-shelf software. Instead, you’re more likely to make incremental changes over time, allowing the software to evolve with your company - and you’ll be able to expand on your initial investment for years to come. It is not a “quick fix” for your problem, but rather a change in the way you do business.
Best Practices For Custom Software Development
Creating custom software is a time-consuming and labor-intensive endeavor. Here are some recommended practices to follow to ensure that everything runs properly:
- Create a realistic plan with milestones. Collaborate with specialists who can design a realistic roadmap for your project and ensure that it stays on track.
- Implement code effectively. Hire skilled developers to ensure that the code is implemented correctly and efficiently.
- Carry out appropriate testing. During the software development process, test the fundamental elements. When the software is finished, beta testers should perform user testing.
Who Needs a Customizable Software Solution?
A perfect match Doesn’t it sound fairly good? But don’t forget about the preceding car analogy. Custom-built software solutions not only cost a lot of money to construct, but they also necessitate extra care for maintenance and upgrades. Pre-packaged software solutions, on the other hand, are often built on a subscription model. That is, the cost of maintenance is included in the monthly or annual fee.