(why custom software solutions are more expensive, but also a lot cheaper)
If you have a common business, like a restaurant, there are generally canned software solutions available that are really good, quick to set up, and yield long term usefulness.
If that’s the case, then you can stop reading now. You have your software.
For everyone else…
The time has come for you to automate one or more of your business processes.
You’ve decided to take your company into the digital age, and you go looking for software.
Google returns 472 million results.
What’s your Pain Threshold?
You look at 50 of those 472 million results seemingly at random, and then you realise that you have no idea what any of them do, how they work, what the features mean, let alone how to decide which ones will do what you want.
Is Ukrainian software better than something from Delaware?
Even if it is, maybe the company registered in Delaware is just a holding company for developers in Mumbai, Melbourne, or Moscow?
In the end, you grab a few free 7 days trials out of your short list of 50, and poke about until you find one that doesn’t suck.
Then you spend a week or 2 putting in information, trying to encourage your people to be excited about this disruption to their daily routines.
You pay the license or subscription, you make it work, and then you hit a wall…
The other ‘off-the-shelf’ solution that you bought into last year, cannot integrate with this new piece.
Your people still have to type everything in twice, or copy/paste till their fingers bleed, or worse, they fall asleep or forget which one they last pasted the info into.
If you add a 3rd ‘off-the-shelf’ software package into the mix, it doesn’t double the trouble, it’s 4 times the complication.
Add one more, and it’s 8 times the number of interactions that can break down.
Your business automation project has ended up making life more complicated, instead of simpler, for everyone.
What’s the Alternative to this Pain?
Off-the-shelf solutions are enticing. They are usually exceptional at what they do.
Most of them solve a set of problems, and they solve the problems elegantly, simply, quickly, efficiently, and cheaply.
Off-the-shelf solutions generally address many of the needs of most companies.
They are built to “scale” – so that the software can be delivered to a large number of customers who have similar needs.
It’s a delightful model. You write the software once, deliver it to thousands of paying customers, all of whom share the regular costs of maintenance, new features, backups, etc etc etc. It is a very very enticing model for software development.
Off-the-shelf solutions are generally not flexible.
This is the flip-side of scale. In order to efficiently service (and generally please) a lot of customers, software vendors must decide on a fixed set of features. That means that if your company does things a little different, or you can’t exactly do what you want, or get the reports you need, then you have to start improvising. You start using “work-arounds”. People share their logins, and you lose track of who’s doing what. The vast majority of off-the-shelf software will not allow you to modify its functionality in a meaningful way. It may be difficult to add or subtract built-in features, leading to either too many or too few functions for your company.
Ahah, you say, I’ll use “open source” software instead.
Yep, you can modify open-source software.
CRM, HRM, ERP, BI, BPM… you name it, open source handles just about every possible acronym you can think of — and it does it very well. With the likes of Pentaho, Collabtive, and SugarCRM, open source can keep up with closed source tools any day.
The best open source packages have thousands of developers working around the clock, improving and perfecting and upgrading, and changing, and improving, and setting off in new tangents, creating versions and alternatives daily.
So, if you choose the FOSS (Free Open Source Software) route, then you can choose to “snapshot” the current version, use it as a springboard for tweaking and customising it for your business. You’ll need to find someone who is intimately familiar with the software, but it can be done.
There are also special software packages that can “glue” various bits together, making integration between FOSS systems moderately practical.
These usually work with the major packages like Xero, SugarCRM, SalesForce, etc, so if you have chosen something a bit more suited to your niche, then you are probably out of luck on that.
Then of course, there’s the “old-fashioned” route.
Find a “custom software developer” who can assess your needs, feel your pain, and build something that solves your immediate problems.
In other words, someone who can automate YOUR business processes.
They don’t have to solve all things for all people. Just for you.
If you have any specialized needs, custom software may be better qualified to meet those needs.
What are you actually trying to achieve?
Automating your business with software can definitely reduce your costs, increase productivity, and make your workforce more efficient.
You need to bear in mind that an automated business system is more than just crunching numbers.
It is the whole process, and includes people doing stuff with computers, and people doing stuff without computers.
It is easy access to information as well as simply updating databases.
It is overviews, useful reports, management insights and recognising historical and seasonal trends.
Great software which reflects your company process can provide a competitive advantage.
If you commission custom software, you can create a simple solution that addresses your real needs, giving major efficiency gains since all the data is in one place and integrated under a single staff login.
When built with the input of management and possibly more importantly, staff who will use it daily, there’s no need to learn a half dozen different software platforms, or constantly switch between them.
Work out what are your ‘must have’ and ‘nice to have’ features — create a list of the features you’d like it to have and then split those into two categories – ‘must have’ and ‘nice to have’.
Compile a list of all the tasks.
Ask everyone who will use the solution to make a list of their top 10 tasks.
Be specific: Weekly Sales Reports by City, print invoices or e-mail receipts are specific features.
And make sure you know what’s going to be important to track (so that you can start recording it immediately) – who did what and when, how much did we spend each month, when did this customer become that salesman’s responsibility… and so forth
Scope creep — the deadly side of having freedom to dream big.
One little change, another little tweak, and before you know it your project has morphed into something you barely recognize.
This is costly and confusing and guarantees delays.
Make sure your project’s objective and scope are clearly defined and agreed to by everyone.
Especially by the people who are going to be using this.
Second, but kinda important, by the ones that are writing the checks.
What’s your Primary Timescale?
You need to constantly balance your company’s immediate needs with long-term growth.
Both are important, but there’s likely an ebb and flow to those priorities.
If you need to preserve cash and make some rapid changes right now, then buy software off-the-shelf.
It will be mass-market, will almost fit, but not quite.
You’ll outgrow it, and have to start again at some stage, but it will get you through for a while.
When your main priority is long-term business growth, definitely start developing a custom solution that will grow with you, and meet your specific needs along the way.
If you run your business using off-the-shelf software, then you can only offer commoditized services to your customers.
If you run your business on custom software you may be able to offer a highly differentiated service at a better price.
By designing your own technology that is ideally suited for your specific business operations, you can garner a competitive advantage relative to your competitors. That advantage grows as you invest more heavily in your proprietary systems.
The ROI can be immediate, and it can be huge.
Any office task you might think of can be completed more quickly with a well-designed, integrated solution.
Rooming lists can be generated with a button click instead of editing or typing a document.
Accounting reports can be automatically updated if a reservation changes, and invoices or receipts can be automatically queued and delivered.
Tours or a series of tours can be “set up” in the system ready for booking with no more effort than creating the first one.
Custom software is supposed to deliver specialized unique user interfaces, workflow, and system interconnects that provide the buyer with more benefits and resultant value than off-the-shelf applications offer.
Implementing a range of software packages all at the same time can seriously mess with your day-to-day business.
Change can be challenging for your team.
With custom software, you can start small, and build out a little at a time.
You can have the user interfaces reflect the culturally consistent wording and naming that you already use.
Why would you want everyone to be forced to start calling your customers “actionable profit centres” now, instead of just calling them “customers” like you always have?
Attack your PRIMARY CHALLENGE first. If it’s well chosen, then your new software will solve a lot of daily problems.
Your team sighs in relief, and they decide that this new initiative is awesome. They are on your side.
So the next little iteration, where you solve a smaller but also important pain point for them, is embraced quickly and positively.
Break the big picture into pieces that will demonstrate progress and allow people to track it.
Work closely with your software provider and allow them to suggest changes and best practices.
With each new improvement, you will also have the chance to inspect, question, and hopefully improve, each of the little activities that make up your company’s total business process.
Building proprietary software takes a great deal of time to complete successfully.
- Understanding your current process.
- Discovering best practice and improvements.
- Codifying your business logic.
- Matching to your company culture and history.
- Allowing all nuances and hidden dangers to be taken into account.
- Getting buy-in from all levels of stakeholder from CEO to mail-room.
It can also cost a lot of money.
For example, $20,000 for software will take approximately 200 man-hours or five weeks to implement using a certified consultant.
If you plan to self-implement with minimal assistance, DOUBLE that time and cost.
The Developers : Support
The promise/illusion of FOSS or off-the-shelf software is that there are “thousands of developers” working on it, and they can be found in a few minutes, and can solve your problems or fix issues for $20 on demand.
The reality is sometimes that this software HAD thousands of people interested while it was the hot new thing, but they have moved on to the next shiny object.
Just because 200,000 people downloaded something, and ignored it a week later, does NOT mean that there is active support available.
The only support you might have available is $200 an hour from a commercial vendor who has leveraged their own unique version of the open-source code base.
Save the trailblazing for your business, not your software upgrade.
If you find someone to build your custom software…
Is the company comprised of a thousand employees and your project is set to the back burner?
Or is your product a priority have you seen a timeline that has exact breakdowns of each step of the process.
Weekly updates are standard, and you should have a contact person that you are easily able to reach.
Time is money and the longer they take to drag out the project, the more expensive it’ll be.
After the project is complete do they cut you loose, or are they interested in installation, implementation and training?
If you are unaware of how to work the product or there are consistent problems, what was the point of investing the money!
You need to see your return, and the company should value their clients (and if they will recommend their name to others) to make sure follow up is integral.
The “It’s an IT Only Project” label is a big trap.
Dispel the perception that an upgrade is conceived, led and delivered solely by Information Technology.
Executive sponsorship is crucial, of course, but something as momentous as an upgrade affects everybody, so all stakeholders need to be involved and consulted from the outset.
Moreover, every user is a potential source of excellent ideas for making the upgrade a smooth, painless exercise.
When changing business software, you need a solution that can run independently from day one, while causing minimal disruption to business workflow.
Total Cost Versus Value
While small business software can help in many ways, investing in too many random or uncoordinated applications can complicate your work and increase your IT support costs significantly. The best approach is to buy only applications that enhance the systems you already employ, that save your business money over the long term or that make your life easier.
Set a realistic budget by speaking with other, similar companies who have recently implemented a solution.
Don’t forget to consider required hardware upgrades, customization of the solution, training and support.
Custom software development is often considered expensive compared to off-the-shelf solutions or products.
This can be true if one is speaking of typical challenges and typical solutions.
But custom software development by a reputable supplier is often a matter of building a house upon a solid foundation – if managed properly this can be done quickly and to a high standard.
In many cases, COTS (Customised Off The Shelf) software requires customization to correctly support the buyer’s operations.
The cost and delay of customization frequently adds up to the same cost of developing custom software.
Additionally, COTS may come with high upfront license costs (frequently running into thousands or even millions of dollars).
Only big corporations are able to absorb such high costs upfront.
Additionally, the big software houses having COTS products revamp their product frequently – a particular implementation needs to be upgraded for compatibility every 2–4 years.
Given the cost of customization, such upgrades also turn out to be expensive as a dedicated product release cycle will have to be earmarked for it.
Custom software will generally produce the most efficient system.
- it can provide support for the specific needs of the business, which might not be available in an off-the-shelf solution
- it will provide greater efficiency or better customer service.
- it will produce the best or most well-targeted service improvement.
- your business can tailor the software to what your customers want instead of having to choose a package that caters for a generic market.
The initial costs, and ongoing development and maintenance costs will often make custom software infeasible for smaller businesses.
These higher costs might be insignificant in larger businesses where small efficiency increases can relate to large labour cost savings.
Consider what exit strategies you have
For example – are you able to drop your software provider at any time?
How easy is it to migrate to an SaaS service provider or will you easily be able to return back to an on-premises software infrastructure?
When starting out on a custom build, make sure that these exit options are built in to the solution.
Make sure that your bespoke software assumes that it will be superseded, and make sure your coder knows that she has a place in a bigger corporate life-cycle.
If you cannot extract your data with a few minutes notice, then don’t continue paying for development until that’s possible.
If you have a cookie-cutter business, then use cheap or free cookie-cutter software.
If you do anything out of the ordinary, then custom business software can amplify your unique process, and enhance your market positioning.
Upfront costs are only one side of the equation, so consider the total long-term benefits of bespoke solutions.