With growing digitalization, using software has become necessary for running a business.
But, with so many options available out there, it can be challenging to decide whether to buy an off-the-shelf software or choose to go with a custom-made one.
This is what we’re here to help you with.
In this article, we will discuss everything you need to know about custom-built and packaged software to help you make an informed decision, including the pros and cons, costs, and optimal uses.
Custom software development means building software from scratch. This approach is useful when there is a need to develop software that caters to a company's specific needs.
Imagine this; you are a marketing company that constantly schedules meetings and events with clients. Now, Google Suite is a software package that includes Google Calendar to help you with this.
But what if you want software that not only helps schedule meetings but also sends an automated reminder for the same and takes notes of the meeting? In such a case, you will need custom software built for your specific needs.
In contrast to packaged software, custom-built software aims at solving a narrowly defined set of problems and requirements. Hence, such software is usually intended for internal use.
There are two ways you can go about building custom software. You can either have an in-house team or hire a software development company. The latter is also referred to as bespoke software development.
Regardless of your choice, there must be a strong use case for developing custom-built software. Once you have the use case, you should follow these six steps in the custom software development life cycle to build your software:
Like everything else, custom software has its advantages and disadvantages.
Here are the main pros and cons you must know before making a decision:
While there are certain disadvantages, the pros of custom software easily outweigh the cons.
This is probably why the demand for custom software is skyrocketing. According to market analysis from Grand View Research, the global custom software development market can grow at a Compound Annual Growth Rate of 22.3% from 2022 to 2030.
The cost of building custom software can vary vastly based on several factors, including:
Generally speaking, though, the average cost varies from £18,000 to £75,000. The cost is usually higher because, unlike packaged software that acts as a one-size-fits-all solution, custom-built software is tailored to your needs.
Custom-built software is specifically useful for businesses looking to keep up with the latest technology through quick upgrades, which are crucial to add functionality to the software. For instance, according to the 2023 State of Accounting & Finance Software Adoption Report, 44% of SMBs in the finance industry plan to upgrade software in 2023 to add more functionality.
Custom software is also useful for companies that have gathered a lot of data and want to personalize customer interactions or automate business processes. This also makes custom applications valuable for solutions with the potential to generate a lot of data.
Here are some practical examples:
Businesses with complex processes or startups with growth potential can use custom software. Such companies usually belong to industries like healthcare, FinTech, eCommerce, real estate, etc. However, businesses across many other industries can find use cases for custom software.
Here are some popular examples of custom software in 2023:
Off-the-shelf software (or packaged software) is commercial, ready-made software.
You can quickly buy and use off-the-shelf software without any delay. Unlike custom-built software, packaged software is developed to meet general needs and you can integrate it into your existing technology infrastructure.
It’s called packaged software because developers build most commercial off-the-shelf software into different package modules. Anyone can use any of these modules according to their needs.
Just like custom software, packaged software comes with its fair share of advantages and disadvantages too.
Here are some packaged software pros and cons you should take into account.
Advantages of Off-the-Shelf Software
Disadvantages of Off-the-Shelf Software
Off-the-shelf software is usually cost-effective, with prices ranging from as low as £50 to as high as £5,000, depending on the developers.
This is mainly because the cost gets divided among a large user base. Since many people use off-the-shelf software, developers can manage to offer it at a low price.
Some developers also offer a subscription model, especially for cloud-based software. Companies can rent the software’s license for months or even years, based on their needs. For instance, Zoom is an off-the-shelf software. Companies can subscribe to Zoom premium packages at a minimal cost.
Packaged software is mainly useful for small startups. Since custom software requires huge upfront costs, businesses that don’t have funding options are more likely to stick to off-the-shelf software, which usually has all the features that can help companies get started.
Hence, packaged software can help new companies optimize their business operations while saving money.
Additionally, packaged software is useful for institutions with limited requirements and minimal needs to scale based on customer demands. Educational institutions, for example, can usually do with simple, packaged software to collect students’ information and manage it.
Here are some businesses that should invest in off-the-shelf software:
Off-the-shelf software is a good alternative to costly custom software if you don’t need to meet some specific business requirements. Here are some real-life examples of packaged software:
Choosing custom or off-the-shelf software largely depends on your business needs, requirements, and budget. Suppose you are a small business owner with a limited budget who needs a tool to manage your accounting and finances. In this case, purchasing a commercially available accounting software package such as QuickBooks or Xero would be enough to meet your business needs.
So, unless your business is big enough and you are ready to scale quickly, packaged software is an ideal choice.
However, it is best to use custom-built software if you have the budget.
As competition across all industries has got fierce, making your business successful is all about getting a competitive advantage. And custom software can help you with just that.
For example, if you are a large corporation that needs to manage a complex supply chain that spans multiple locations, departments, and vendors, a custom software solution would be the best choice.
If you are still confused about whether to go for custom software or not, ask yourself these questions:
If your response to these questions was yes, collaborating with a software solution provider to build customized software is your best bet.
Now that you know the difference between packaged software and custom-built software, you can escape the “buy or build dilemma.”
It's important to remember that there are trade-offs with either choice. Custom software may require a high upfront cost and take a long to develop. But it will give you more returns on your investment in the long run.
If you are looking for a bespoke software development company, please get in touch by phone by calling +44 (0) 1905 700 050 or filling out the form below.
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