Often, people assume that custom software is more expensive than a commercial-off-the-shelf (COTS) product. While that can be true at times, it is not always the case. When deciding between the two, a wide range of factors need to be considered, foremost being what function(s) are being automated. If it is something straightforward, such as the Accounting department, there is probably an off-the-shelf product to suit the needs of any business, including the corner Deli, a government contractor, an international company, and everyone in between. For an accounting package, it is most likely more time and cost effective to find an appropriate COTS product.

For other business needs, even some standard business functions such as job tracking, workflow management, and customer service, there are COTS solutions available, however, many factors should be considered when determining the cost to purchase and implement. The obvious ones include purchase price and annual maintenance fees. These are usually fixed costs based on features included with the various versions, number of licenses needed/concurrent users, and installation locations. These ‘direct costs’ are easy to identify and budget.

However, there will always be ‘indirect costs’ associated with implementing a COTS product that are often overlooked or not considered when evaluating a COTS solution. The indirect costs will rapidly increase if major functionality is missing, the product is counter to the organization’s established work flow, or is not integrated with existing systems. In that case, the organization will need to implement one or more of the following:

• Customize the COTS product
• Change the organization’s work flows
• Customize other systems to work with the COTS product

Customization of a product, with even relatively minor changes, renders the COTS product, as no longer “off-the-shelf.” As the vendor releases new versions, or even in-version upgrades/fixes, they need to incorporate those customizations into every future release, and at additional cost to the organization. Extensive customization can drive those costs exponentially higher when associated with every release.

Changing the organization’s work flows can have wide-spread impacts, both internally and externally, to an organization. At a minimum, staff must be retrained and learn the new system/work flows. While that is not necessarily a negative factor, there are costs associated with it. Other factors include when functionality is missing or counter-productive. People will start to develop their own ‘systems’ for dealing with the deficiencies. This might include off-line paper files, adjunct spreadsheets/databases, duplicate data entry/record keeping, etc. All of these will impact and reduce the overall efficiency (which the COTS product was supposed to provide) and drive up the costs associated with the product.

Most software systems do not operate in a vacuum within an organization. They almost always need to exchange information with other systems internally, externally, or both. For a COTS product, that interface may be limited to importing or exporting certain data. Furthermore, the formats for the import/export files can also be very limited, forcing extensive modifications to other systems or even entirely new ‘middle-ware’ solutions to be developed in order for the various applications to properly interface.

Custom application development allows an organization to consider its unique structure, work flow, products, or services and have an application that is tailored specifically for them. It allows for capitalizing on the aspects that differentiate the organization from their competitors, increase efficiency, and make the organization more productive. It often helps to sustain, or increase, the investments made throughout the organization by offering new capabilities or extending existing capabilities. It also allows an organization to only pay for the functionality that it needs. COTS products are designed to appeal to a wide audience and often include features that are rarely, if ever used. For example, of the 400+ functions in Excel, the typical user uses less than 5% of those functions.

Software development projects are analogous to construction projects. You need to know what you’re going to build and have a good set of documentation (e.g., blueprints). From this documentation, you can develop a sound time and cost estimate, manage the project, and ultimately, measure the final product as compared to the plans for evaluation and completeness.

Finally, even if a custom application is more expensive, it can still be the right decision for an organization. The return on investment can be much greater with a custom application than with a COTS product. It can be easier to integrate into the organization from a work flow, people, systems, and customer perspective. And, the organization, not a vendor, can define what functionality is necessary and warranted.

Before dismissing a custom built application as not worth the investment, consider having a discussion with E-ware and exploring all the possible options. We will help you make an informed decision for your organization.