March 24, 2016
Balancing between the immediate needs and the long-term growth of a startup is as vital as it is challenging. That is why it is necessary to answer questions that arise such as if its better to invest in long-term strategies or embrace a less expensive approach. For instance, the critical buy vs build decision, is something that most companies face in the today’s world, where software needs are at the core of business building.
Off-the-shelf software may seem like a fast, cheap and readily available alternative, but eventually you’ll find that its is difficult to incorporate customizations based on the day-to-day operations, which ultimately leads to manual processes that are inefficient. As you grow, you will realize that challenges are much more significant and scalability becomes less attainable. This is when investing aggresively in proprietary software, becomes the only viable option to help scale effectively.
Even though developing a custom software brings about a ton of benefits, it is only recommended in the following scenarios: in case better software offers a relative competitive advantage over your competitors or when your business is large enough to distribute the cost of a proprietary system over to your significant number of clients.
There are a number of factors to consider when making a decision that’s fit for your business, which involves taking into account the advantages and disadvantages of both custom and packaged software solutions.
Custom Written Software
While developing a custom written software may be costly, the returns from the investment are well worth it. However, note that its development can demand considerable resources, time and energy from the company. These tasks related to custom software may at first make a packaged solution appear like an easier choice but here are some of the reasons you should reconsider:
1. The ‘one size fits all’ approach of off-the-shelf software may not fit your business needs. Packaged software may address the general needs of most companies, but if your business needs are specialized then custom written software may be a better fit. Custom software solutions are build based on the requirements and design of your business to operate specifically to your needs.
2. Packaged software solutions are rigid. A huge majority of off-the-shelf software do not allow functionality customization. This makes it difficult to add or remove its built-in features, which leads to either too many or too few functionalities for your business. On the other hand,custom written solutions allow for changes to be incorporated as your company changes and can even be altered for the purpose of performance improvement. Custom software is a flexible and dynamic option especially if you need to integrate it into existing systems or any other systems in the future.
3. Off-the-shelf software may be incompatible with other programs. Your company may depend on particular software to accomplish one task and another software to complete a different, related task. If these softwares communicate effectively together, it may impede the efficiency of your business. Developing your own software lets you incorporate a wider host of APIs from a variety of software and data proprietors.
4. Custom written software provides you only with all the functions you need and none that are unnecessary. Because of this, it optimizes the operation of the tasks that you are already used to, whick makes it even easier to use.
5. Custom software solutions give you a competitive advantage, by allowing you to perform tasks particular to your business that your competitors cannot do. This means that it can prove to be a valuable asset for your overall organization.
Packaged software solutions
For certain circumstances, it is more sensible to stick to packaged solutions rather building your own custom software. This approach may be more beneficial particularly for smaller companies, especially if they consider the following factors:
1. Limited budget
One of the understandable reasons that may cause a company to avoid employing the development of custom software, is the cost associated with it. Packaged software solutions are much cheaper and make for a more logical option in terms of financing, for a company with a smaller budget.
2. Inadequate technical proficiency
If you lack a capable enough software team with adequate skills necessary for building out a custom software, then the sensible thing may be passing off the chance to do so untill you do have a strong enough team. If you are unable hold your developer team accountable for this kind of project, then it will be difficult to build a great product.
3. Faster application
A proprietary software can take a long time to finish successfully. If your business lacks this sort of time then you should avoid immediately pursuing it.
4. Great off-the-shelf software is readily available
For businesses that are common such as restaurants, then it is very easy to find great packaged software solutions readily available that have already been proven to be effective for the purpose of your type of organization.
5. Your software would not be a competitive advantage
In a case where you own a retail business such as a furniture store, then the development of an awesome software is unlikely to make your business stand out from your competitors. It is also less likely to be factor in providing your customers with higher quality services, lower cost procucts, or even make them choose you over other stores.
Disadvantages of Packaged Software Solutions
- Off-the-shelf software solutions are not only complex, but are also generally incorporated with many features that you will never be made use of. Because this software is usually larger and more complicated, it may take a while to properly grasp it. In addition, your business operations may need to be altered to effectively fit in with how the software is designed.
- If the business operations of your organization are unique then the packaged software may require customization to accommodate them or the processes may need to be changed to conciliate the processes.
- Given that the same software system may be purchased and used by your competition, it is very hard to gain any sort competitive advantage from its application. Additionally, it is unlikely that it will be a factor that helps you provide better services or lower cost products that would attract customers to your store over your competitors.
Regardless of its initial development costs, custom software is genuinely worth all the resources invested if you are looking to build your business to a significant scale. Building a software of your own that is designed to meet the specific needs of your company, which focuses on efficiency and scalability, makes the difference between providing a service that has been commoditized and availing one that’s highly differentiated with better pricing.