Custom Software Development vs. Packaged Software
The "build vs. buy" question is one that stumps many organizations, especially those on the smaller side that are looking to grow their business in the short and medium term. On the surface, out-of-the-box software sounds appealing due to the supposed convenience and cost savings it can provide. However, it's not the right solution for every organization.
If you ultimately go with a packaged software solution, you have to come to terms with the fact that it almost certainly won't fit all your requirements and form a plan for how you'll address these shortcomings. Before you buy a ready-made software application, ask yourself the five questions below and compare the pros and cons of both alternatives — to make sure you find the best solution for your unique business problems.
Five Questions to Ask When Comparing Packaged Software with Custom Software
The prevailing question that underlies each of the concerns below is: Does the software fit well with your organization? Off-the-shelf software may be initially cheaper and more convenient, but it doesn't matter how easy it is to install if it doesn't help you resolve a pressing issue for your business.
1. Can You Integrate It With Outside Sources?
Very few software applications are an island; most of them exchange data with other software and systems. Ask yourself if there's a way to integrate the software with these outside sources. Can you open portals or communicate via an API?
There's little use in picking the best solution for each step in your workflow — accounting, ordering, shipping, etc. — if these applications have no way to talk to each other. In particular, you need to be able to quickly pull information from each of these solutions and generate a finished report for the benefit of you and your customers.
2. Do You Have Unique or Custom Business Needs?
Unless you're just starting out, you likely have other software applications you're already using for various business needs. However, there's no guarantee that the packaged software you're considering will play well with your existing solutions.
You might also have unique business rules or workflows that would be broken by introducing this new software into the mix. In this case, it would be wiser to work around the issue by using custom software, rather than trying to bend your rigid processes to work with the new application.
3. What Is the Problem You're Trying to Solve?
Consider whether the problem you're trying to solve is common or truly unique. If it's not an uncommon situation, you might have success using out-of-the-box software; otherwise, you'll likely have a difficult time trying to find the right packaged solution.
Nearly every business has something unique about it, whether it's the tech stack or the workflows and processes. If you're a small mom-and-pop store without a lot of moving parts, then out-of-the-box software will probably cover enough ground to be suitable for your purposes. As your business scales, however, you might start to experience growing pains that have you looking toward a custom-built solution.
4. Are You Going to Use All the Features?
Although most out-of-the-box software comes in two or more varieties, you may find that each option underfits or overfits your needs. It's very possible that you'll pay for more features than you require just because you need to have one crucial item.
Ask yourself whether you're really going to use all the functionality in your plan of choice — or whether there are too many features you won't use and that will mess up your workflow. If the answer is no, then will you really be saving money as opposed to a custom solution, where you only pay for what you need?
5. Will It Scale the Way You Need It To?
Undergoing a software migration is no small task; it requires a serious investment of time, labor and effort. It might be tolerable if you only have to do it every three to five years, but a migration every year or two is simply too often. Think beyond the immediate future, and try to predict when you'll need to update or replace the solution you're purchasing now.
Although some out-of-the-box solutions such as HubSpot are scalable, not all of them are. In addition, many of them make it difficult for you to export your data out of the system and into another application, which will require you to hire temporary data entry workers. Make sure that transferring information such as your sales data, invoices and payments between systems won't be an unnecessary pain.
The Pros and Cons of Packaged and Custom Software
As its name implies, out-of-the-box software has one big advantage: Getting started is as simple as purchasing and installing the application. Whether you'll actually begin using the software quickly, however, is another story. The answer depends on the level of technical knowledge you have available — you need someone on hand who can understand the software and who knows how to incorporate it into your existing IT environment.
Because it's a mature solution, packaged software is less likely to have the typical bugs associated with a new product, which means that you'll probably have a smoother transition. Another advantage of out-of-the-box software is that the costs are likely lower initially, since you don't have to make a big capital investment up front.
This flexibility means that you can use packaged software temporarily for a few months while you're building a custom software solution, just like working with a temp agency. Out-of-the-box software is also a good idea if you don't know exactly what you need yet. You can use the software to figure out the features you want and don't want so that you can create a better custom solution down the line.
Meanwhile, custom software gives you exactly what you require according to your specifications. There's no need to pay for extra features you don't want or use. Custom software is also easier to scale and can be modified to grow with your business.
In the long run, using custom software likely saves you money because you won't have to pay a recurring subscription fee or pay for a large organization to regularly do maintenance on a massive software package. Another benefit of custom software is "security through obscurity." Malicious actors likely won't bother to hack a single custom system when they could be hacking out-of-the-box software that would give them access to thousands of environments.
Finally, custom software has one major advantage over ready-made software: You can take your data with you. Many out-of-the-box applications require you to keep your data within their platform and don't make it easy to export your data when you move to another solution.
Ultimately, the best question to ask when comparing custom and packaged software is: Which one will serve your long-term goals the best? Making the decision isn't about just what's right for your situation now but also whether it can grow and scale with your organization.
The good news is that it doesn't have to be a binary question. For example, you can use out-of-the-box software to get most of the features you need and then supplement that with custom software that matches the unique parts of your business.