What to Choose: Custom Software or Packaged Software?

February 21, 2019

What to Choose: Custom Software or Packaged Software?

When it comes to business software, there are two main options: custom software or packaged software. Both have their own advantages and disadvantages, which can make it difficult to decide which one is right for your business. In this article, we will discuss the pros and cons of both custom software and packaged software, so that you can make an informed decision about which option is best for you. Keep in mind that the decision depends on your budget, requirements, and time constraints.

The Pros and Cons of a Packaged Software

Packaged software is a type of software you can simply signup and start using right away. They have generic or niche features that they focus their marketing efforts too. The business model of the packaged software is to keep it general enough that people of all kinds can use it or specialize in one aspect of the business operation and completely dominate it with features tailored to the niche market.

The advantage of packaged software is that it’s ready to use right away and you don’t need to worry about customizing it or building it from scratch. It’s also usually more affordable than custom software since you’re not paying for the development costs. The downside of packaged software is that you might not be able to find a package that perfectly fits your business needs. If you have specific requirements, you might have to compromise and use workarounds which can be time-consuming and frustrating. In addition, packaged software usually has less flexibility than custom software since it’s not built specifically for your business.

Pros

  • Easy to implement
  • Ready and out of box product
  • In-expensive to the business
  • Can review users' experiences as it is not custom
  • It's a try before you buy a model
  • Some options have a freemium model
  • Usually, a set and structured customer success team supports customers
  • Usually have a community support function such as knowledge base or forum

Cons

  • Priced usually based on the number of users (this can be a con while you grow)
  • There is no flexibility with the product
  • You will end up using multiple packaged software for your different divisions
  • lack of integration and source of truth among the different packaged software
  • Price starts building up over time and as you grow, which causes people to make concessions to avoid the higher fees
  • Zero control over the product roadmap and being an influencer on how the product can further your business
  • Due to the niche or specialization of the product, you need multiple systems that can handle your entire operation
  • Generic features that are based on the masses
  • Support can be slow or significantly less personalized due to the volume sales strategy of the packaged software business model

The Pros and Cons of Custom Software

Custom software development is building a software application for a specific set of users, companies, or organizations. The custom software is designed to meet their unique needs and requirements that are not met by the off-the-shelf or generic packaged software solutions. This is important as most businesses are all unique in the way they handle their day-to-day operations, rarely are they the same. Take software development, there are multiple ways to build software, and there are different platforms and software that tailor to each model, but as a software development company, we would have to spend thousands of dollars a month just to have each specialized package.

In order to make the business efficient and create a single source of truth of data, you would need to focus more on the custom application development. The advantage of a custom solution is that it is tailored around your needs and steps in your operation, making your team significantly more fluent and efficient with the application.  Another advantage of custom software is the ability to scale, as your company or organization grows, the software can be easily modified to reflect that growth. The last primary advantage of custom software is data security.

With a custom solution, you have full control over how the data is stored and accessed making it much harder for hackers to get ahold of your information.

The disadvantages of custom software are the high upfront costs and the time it takes to develop and deploy a solution. For small businesses, this can be a make-or-break decision as they might not have the budget to invest in a custom solution. The other disadvantage is that you will need to find qualified people to maintain and support the software, which can be difficult to find and retain.

Pros

  • Scalable as you grow the system will grow with you at minimal cost
  • The software works for you, thus you can utilize your current workflows and processes
  • A faster on-boarding process with a business as usual functionality to custom development
  • The software is designed around you
  • It can become incredibly cost-effective over time
  • A fully integrated system that works seamlessly without the required human intervention
  • You control the support and ability to train your team on the new platform
  • It can be feature-rich based on what you need versus what the general public needs
  • You control the roadmap of the system
  • The system can be incredibly agile in adapting to the business needs (depending on the system you end up choosing, at Koridor, we can make adjustments to systems within months)

Cons

  • A higher up-front cost to the system typically includes an implementation fee with an ongoing support package
  • You cannot try it before you buy it
  • Hard to find reviews on a specific system
  • Longer implementation leads to delays in execution
  • With bad management, it can lead to over budget and delays which can be costly
  • Hard to find good executors of custom application development
  • Reliance on the partner who developed the system
  • Can lack customer success

Considerations for Custom Solution

There are three major considerations if you are considering the custom software development route.  The first is your budget, as these solutions are not cheap, and you need to make sure that you have the financial resources available to invest in a custom solution. The second consideration is your requirements; you need to know exactly what you want and what you need out of the software. This will help narrow down your search for the right development partner. The last consideration is time; custom software development can take months or even years to complete, so you need to make sure that you have the time to dedicate to the project, and if you don't have the time, consider the resources to hire someone that can manage the project.

In conclusion, packaged and custom software are quite different from one another and have opposite pros and cons in most cases.  It is important to evaluate what your needs are as a company and which system will set you up for success. If you have the budget for it and know exactly what custom software development might be the right for you. You'll have a feature-rich system that is tailored to your company specifically. However, keep in mind that it will be more expensive and take longer to develop custom software. At Koridor, our average implementation is 3 months, but most other providers range from 8 to 18 months depending on the size of the project. On the other hand, packaged software is an off-the-shelf solution that you can try before you buy. It might not be as feature-rich as custom software, but it is usually less expensive and can be implemented more quickly.

So, which should you choose?

It depends on your specific needs as a company.

If you need help making this decision, reach out to us and we would be happy to chat with you about your specific needs here.

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