Competitive Advantage

In cut throat industries it becomes more attractive to build custom solutions. This is particularly true if the providers of off-the-shelf solutions do not really understand your industry and the capabilities of existing service providers. Software companies are attracted to entering into large markets to the detriment of their customers after realizing the real needs in these large markets are often complex and specific.

In regulated industries with unique processes and layers of compliance, the advantages of agile, custom-built solutions often outweigh the benefits of using commercially available solutions. Companies that get this right dominate their industry. Off the shelf products can be slow and expensive to update because development costs are often only justified when it benefits enough customers.

Integration

The ability to manage end-to-end processes with efficiency can save tremendous money and time while ensuring accuracy.

Consider how much functionality is needed across the company for a particular task and what other products would need to integrate to fully complete a task. As a company grows, their manual functions become frustratingly difficult to manage when their tools are not built to scale. Off-the-shelf software is sometimes limited in its ability to integrate because the vendor that supplies it has not maintained good relationships with other vendors. This is more pronounced when the vendor does not understand the industry they are serving.

Internal Capabilities

Understanding your technical expertise and limits are critical. For small companies with limited staff the option to buy software has attractive cost and delivery benefits because it often comes with technical support and expertise that is not available internally. Off-the-shelf software is more attractive in industries where functional requirements change frequently that would require constant, ongoing development. An alternative is shared development software technology that a vendor develops to address a core need for a large client whose base platform is then used to reduce the development time and costs to build software for another client.

Conclusion

It is likely your company has faced, or will face, the decision to buy versus build software. Before your company chooses a solution, carefully weigh the pros and cons of buying an off-the-shelf solution or developing a custom solution. What makes the most sense for your business, your goals, and your bottom line is unique to your industry and company.

Common Traps Where Companies Fall

• Relying on their vendors to show what products are available in the market to address their core problems.

• Looking at a narrow view of the project goals versus how it is a critical piece to the holistic process.

• Using vendors who don’t understand your industry.