Choosing the Right Software Approach: Custom Software vs Commercial Off-The-Shelf

All businesses will face the dilemma at some point in a software project of whether they should either buy any one of the many commercial off-the-shelf solutions that are out there, or engage a software developer to build a custom software product to act as a solution to a specific business or project need.

This decision should not be made lightly as both options have their benefits and pitfalls.

In this article, we are going to explore and compare the competitive advantages and the risks in both methods of procuring the software solutions needed to run your business successfully.

Understanding the differences in Commercial Off-the-Shelf and Custom Software deliverables

Before we go any further, let’s take a closer look at custom software and commercial, off-the-shelf software individually.

Custom Software solutions

A custom software solution, as the name suggests, is a bespoke software solution. The software engineering team works to create a custom-built software for your business and hence will accommodate all of your organization’s specific needs. You don’t have to find alternative products or manual workarounds to meet your requirements, and if you are after an edge over your competitors, this is the solution for you.

Commercial Off-The-Shelf Software solutions

Commercial Off-The-Shelf Software (COTS) is ready-made software that is purchased from a vendor to deliver the business’ or project’s core functionality and will meet most businesses needs, or enable work-arounds to meet those needs.

COTS solutions are mass produced to a wide market across multiple business industries, and are most likely used by your competitor as well. Modern COTS solutions are generally digital or cloud-based solutions and managed under a Software as a Service (SaaS) model.

SaaS models are often subscription based and provide access to ongoing upgrades and support, a very different model from the past practice of purchasing packaged software that provided a usage license and had to be updated or replaced with every new version release.

Pros and cons of COTS and custom solutions

Let’s take a closer look at some of the key business decision areas that businesses need to consider when trying to decide between custom and off-the-shelf software.

Cost

• Custom software solutions: Often a higher upfront cost is required in order to define (scope), design, develop and deploy (install) the solution to your specific business needs.

• COTS solutions: Lower upfront costs as the vendor banks on recouping the development cost from the volume of sales and ongoing maintenance. This costing method makes COTS software solutions cheaper upfront but in many cases they can be more expensive in the long run due to ongoing license fees, usage costs, and any customization costs.

Timeframe

• Custom software solutions: Require a project to be established and often go through the full project spectrum of scoping, design, development, testing, and deployment, and therefore will take longer than a COTS solution as they are built to meet your business requirements specifically.

• COTS software solutions: Can usually be installed and configured quicker than a custom software solution as the software is already built and you just have to configure the features and functionality to your business needs.

Complexity

• Custom software solutions: Built to meet your business requirements and will be supported by the development team. As you have a hand in the development of the user interface and workflow, a custom software solution is generally more intuitive and user friendly for you and your staff.

• COTS solutions: As COTS solutions are mass produced, there are usually a number of ways you can get support if you or your staff are having difficulty with the product, including community forums, COTS help and support services, and even personalized training.

Ongoing relevance

• Custom software solutions are updated after consultation with you. This means that if, for example, a security exploit has been identified, you and the software developer will discuss and agree on the best solution for your business to remove it. Any additional functionality and features that are developed will be based on your business and its evolving requirements.

• COTS solutions will be updated by the vendor when they deem it is required. Updates may be issued frequently, rarely or never depending on the popularity of the product. The vendor also may introduce or remove functionality at any time. This may disable a needed feature for your business, or introduce a new workflow requirement that forces you to change your business processes.

Ownership

• Custom software solutions: Depending on your agreement with the developer, you may have full ownership of the software and IP. This means if—for any reason—you need to change development partners, you don’t have to start from scratch and can continue to use your custom developed software. This could result in a huge cost saving in the long run.

• COTS solutions: You don’t own it, the COTS provider does. This means if you want to move away from this system or provider, you can’t reuse anything from the build and may not be able to migrate the data to another solution due to issues with compatibility or data exporting limitations.

Security

• Custom software solutions: Security is implemented by the developer to meet your business needs. This means that the code and hosting environment can be “locked down” as much as possible to ensure your business and customer data is highly secure. In the event that a security exploit is identified, you and the software developer will discuss and agree on the best solution for your business to address it.

• COTS solutions: The COTS provider is responsible for implementing and maintaining security. In most instances you will have little or no visibility of the security measures implemented and therefore have to take the COTS provider’s word that your business data and client data is safe.

  If the COTS software has a security exploit, it is up to the COTS provider to release an update to resolve the exploit. There have been many instances where COTS products with thousands of customers have had the product compromised and data stolen due to insufficient security on the hosting environment or within the code. Also, as COTS products are mass produced and marketed, they are often targeted by hackers as the effort to identify and use a security exploit may be more rewarding due to the larger user base.