Packaged vs. custom software: Pros and cons
In today’s technologically dependent world, having the right software to support your business and your customers is a must. In some cases, an off-the-shelf application is sufficient to do the job. But sometimes, the software you need simply doesn’t exist… yet.
Research firm Gartner projects that spending on enterprise software will grow by another 11.7% in 2022. Making a wise investment with your software budget is essential. How can you know when it’s time to build your own software?
Packaged and custom software each have relative advantages and disadvantages. The best option also depends on the specific context. Here we examine several of the top pros and cons of each to help you make the right decision for your business.
Advantages of Custom Software
Custom features. When you design and build your own software product, you have complete control over exactly what it does. Which means that you can create the precise features and functionality you need to support your unique workflows and processes. This in turn tends to increase efficiency and productivity.
Competitive advantage. Your competitors can’t just go out and purchase the same software. They’re still stuck choosing between the off-the-shelf solutions currently available to the mass market. With a bespoke application, you can position yourself better in the market and gain a competitive advantage.
Intellectual property. Owning intellectual property like custom software can improve your business valuation. It can also boost your brand and improve your reputation. Bespoke software creates unique value, for both your business and your customers. You can even license and sell it for additional revenue.
Advanced technology. Building your own software provides you with the opportunity to leverage new and advanced technologies. You’ll have the ability to employ tech like artificial intelligence, machine learning, cloud computing, blockchain, and more. There’s no need to wait for outdated packaged software to evolve.
Flexibility. With custom software, you have total control over the product roadmap. No more submitting feature requests and wondering if they’ll ever make the cut. When you decide it’s time to add a new feature, you can add a new feature. If you decide it’s time to go a different direction, there’s no one stopping you.
Drawbacks of Custom Software
Upfront costs. Building your own software product isn’t cheap. If you invest wisely and build something of great value, it can provide an excellent ROI over time. But you’ll need to have sufficient budget upfront to invest in a high-quality application. If you don’t have that budget, now may not be the right time.
Time to market. It takes time to build a great software product, often several months or more. If you need a quick solution, you may need to settle for what’s already available, at least for the short-term. It may be possible to shorten your timeline by building a simpler version of your ideal application and gradually enhancing it over time.
Advantages of Packaged Software
Available immediately. The only wait time you’ll typically have to acquire off-the-shelf software is the time it takes to compare existing solutions, perhaps complete a demo or a trial, and obtain any necessary purchase approvals. What you get may not be a perfect fit for your business, but it might be at least good enough to get by ok.
Lower starting costs. The financial investment required to start using a packaged software product is usually much lower than the cost required to start building one. The sophistication of your business needs and the number of end users you’ll have will typically impact your initial investment cost.
Drawbacks of Packaged Software
Fixed features. When you purchase an out-of-the-box solution, you have no control over the functionality. If the product doesn’t have all the features you need, you’re usually stuck waiting an indeterminate amount of time for them. On the other hand, if the product includes more features than you can use, you’re still stuck paying for them.
Additive costs. While the initial investment may be lower, packaged software products have costs that can add up substantially over time. For example, you may wind up paying recurring subscription or licensing fees that increase in proportion to a growing user base. You also won’t have control over the timing of upgrades or associated fees.
Lower value-add. When you use mass-marketed software, it gives you no competitive advantage. Your top competitors may in fact be using the exact same product. It’s not your intellectual property, you can’t control how well it supports your business processes, and there’s not much you can do when users aren’t having a great experience.
Is custom software best for your business?
There’s no one-size-fits-all answer to whether custom or packaged software is best. If you think it might be the right time to invest in custom software, Basecode can help. Contact us to discuss what building a bespoke software product can do for your business.