Business software: tailor made or off-the-shelf?
Andy Rogers, Co-CEO of software development organisation, Amdaris discusses the key considerations for business software solutions.
What do suits and software have in common? Both are used in business. And both can be ‘off-the-shelf’ (COTS – commercial off-the-shelf) or tailor made. So how do you decide? The decision comes down to cost, usage and needs.
Defining your needs
It is easy to start looking into COTS solutions and comparing features, but it is important to invest enough upfront effort in defining your requirements. Once you have properly established your requirements, it will start to become clearer if a COTS solution will adequately meet your business needs. You may have some key needs that are not supported by standard solutions. While it is worth establishing familiarity with the features that COTS solutions have to offer, it can be easy to be taken in by a sales pitch for features that you never truly needed.
For example, when considering a COTS or tailor-made solution for enterprise resource planning (ERP) software, it is necessary to think about the way that your business processes work and then consider how well these would be supported by a COTS solution.
Functionality for simple systems (e.g. tracking employee time on a project, or monitoring customer interactions via email) is unlikely to need to deviate from the norm, so COTS products are likely to provide the most cost-effective option. On the other hand, COTS supply chain management systems may be insufficient for a complex supply chain and a custom solution may be preferable.
When setting out requirements it is important to consider scalability as well as your current requirements. Some cloud-based COTS solutions are reasonably adaptable as business needs evolve. But if expected growth is not considered at the requirements stage it can be easy to be caught out and you will find that what was previously a good solution can be outgrown within as little as two years.
In the worst-case scenario, the COTS solution will turn out to be unsuitable going forward and a switch between systems will be required. The necessary migration usually works out to be significantly more expensive than a custom, scalable build would have been. As well as adding disruption long after a working model should have been in place.
If your business needs are going to evolve, custom software can be adapted, modified and updated quickly to meet changing business needs. These updates can also be made incrementally in small stages, minimising disruption. However, if your business offering is established and unlikely to morph in the near future, then an off-the-shelf solution that meets your needs may be sufficient.
Price vs Cost
On the surface COTS will always appear cheaper. The basic software development work has already been done and the vendor is usually already investing in continued system development. The development cost of core systems is shared by all of the companies using the software.
However, once you consider the extra time your employees will potentially need to spend using a system which is not tailored to your business, it may not represent the better investment. Missing features or inefficient processes can result in quietly losing years in lost worker productivity.
A tailored solution is likely to be leaner, providing you with precisely the functionality you require and avoiding the need to pay for unnecessary features. It can work exactly as your business does and meet the needs that you set out. A custom-built solution gives you total control over the build process, allowing you to specify your own software requirements and develop bespoke functionality that can evolve and adapt in-line with your business.
COTS will pretty much always require a lower upfront investment which can force the hand of some businesses lacking capital. But the ROI may be worth it when all factors are considered. When investigating in large software projects it is worth remembering that the IP ownership of a custom build can add intrinsic value to the business.
A Third Way
For complex systems the choice between COTS and bespoke does not need to be a binary one. Often the most cost-effective solution will be to blend the two, using COTS elements for business areas with standard functionality and custom integrations and dashboards to tailor the systems when they need to fit custom processes.
As well as representing a middle ground for required capital, this represents a third way in upfront time investment. COTS with a custom integrations or dashboards are usually going to be significantly quicker and cheaper to implement than a complete build. This can also help to reduce disruption and may have the advantage that your staff already have experience using some of the software.
Taking the best route for you
Fundamentally the decision should revolve around analysis of your business needs and whether a suitable solution is already available. At Amdaris we always work with our customers to really understand their unique business needs and advise on if it would be better to design and build custom software or if there is a commercial solution that can be used or adapted to work well for them.