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April 15, 2024

Custom software vs. standard software

Best practices for deciding for or against individual software. Including a free whitepaper (German language) to support your informed decision.

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Sometimes in organizations, software creates more obstacles than it removes. This article addresses this challenge and provides you with best practices to prevent this from happening in your company. Choosing the right software is crucial. And at the beginning of the software selection process is the question: "Is standard software enough or do we need something of our own, i.e. custom software?"

Although standard software may initially appear attractive for central business areas, many companies are faced with the dilemma that these solutions do not meet their specific requirements. The question is: "Is there an alternative?" And the clear answer is: "Yes." This article provides guidance to help you decide whether custom software – i.e. software developed specifically to meet the needs of a company – makes sense.

At the end of the article you will also find a free white paper, which offers you a more detailed decision-making aid including a checklist.

The decision for or against custom software

A certain amount of preparatory work is required to decide for or against custom software. 

Many factors play a role and influence the decision. Below, we have compiled a structured list of the questions you should ask yourself. This way, you won't be making a gut decision, but can be sure that you have taken all factors into consideration in order to find the right software solution for your individual company workflow. Like so often, it all starts with the users. 

Identify the needs of future users of the software

The design of digital solutions requires a user-centered approach. Before a decision is made, it is essential to understand the needs of everyone involved. Take a moment to note down all the people involved, whether they are customers, employees, managers or admins.

In the next step, open interviews and standardized questionnaires with neutral questions will give you a variety of insights into the working methods, challenges and goals of interest groups. Group workshops and moderated discussions allow you to bring together different perspectives and ideas. Observe users in their familiar environment, for example in the workplace, to better understand their needs. Document the insights gained in as-is scenarios that reflect the current situation and challenges and serve as a basis for discussing requirements for a digital solution.

Define your requirements for the software

Once you have found out what the users of your software need, you can use this information to define the requirements for your software - whether standard or custom software. The following principles will help you to formulate the requirements: 

Focus on the "what", not the "how"

  • Emphasize the challenges that the new software should solve.
  • Avoid describing how this will be achieved.

Requirements should be possible and verifiable

  • Ensure realistic and verifiable requirements.
  • Avoid unrealistic expectations and vague formulations.

Write actively, concretely and clearly

  • Use clear subjects and concise predicates.
  • Use clear and concrete formulations so that third parties without insight can also understand the requirements.
By taking these principles into account, you create a solid basis for defining requirements and help to ensure that the choice of software meets the individual needs and objectives of your company.

Prioritization of requirements with the MoSCoW method

The defined requirements can be prioritized using various methods such as a ranking, points voting or a prioritization matrix. A helpful and simple method for prioritization is the MoSCoW method, which provides categories for prioritization.

Must have

Mandatory requirements - Essential requirements 

Should have

Should have requirements - Important but not critical requirements 

Could have

Could have requirements - Desirable requirements that cannot be considered in case of doubt 

Won't have

Not yet implemented - requirements that do not currently need to be considered, but may become relevant at a later date

Inclusion of non-technical requirements

Now that you have created a prioritized catalog of requirements, we are getting closer and closer to deciding whether custom software or standard software makes sense in your case. But first, a few non-technical aspects should be considered, which are no less important than the technical ones.

Budget for the software

  • Take into account costs that may increase with the increasing complexity of the software.
  • Clarify your maximum budget and preferred payment model (one-off payment or license model).

Time frame and urgency

  • Think about when you will need the software.
  • Plan the useful life of the software.

Flexibility and change requirements

  • How flexible does the software need to be?
  • How quickly do your processes or responsibilities change?

Further general considerations

  • Do you want to be independent of the software manufacturer?
  • Do you want to own the software?
  • Do you have requirements for data processing and storage?
  • Do you need training?

To ensure that your application not only meets your technical requirements, but also fits your needs in terms of budget, timeframe and other requirements, you should carefully consider these non-technical aspects. Once you have taken this step, the selection of your software can begin. Now the question arises: custom software or standard software?

The decision between custom software and standard software

In most companies, around 90 percent of all core processes are mapped by standardized systems. These are core business processes that have been tried and tested over many years and are mapped by standardized ERP, CRM and similar software systems. Examples include tasks such as composing e-mails, creating texts or spreadsheets. Even in niche industries, companies rely on common IT standards to work efficiently and compatibly. In this context, the use of standard software makes sense.

However, standard solutions cannot be used successfully and efficiently in every area of application. Some business processes are unique, whether due to their historical development, their unique structure or the company's special data protection requirements. Surprisingly often, processes are individually tailored to a company and are very difficult to map using off-the-shelf software. In these cases, decision-makers are faced with the choice of whether to adapt the processes to the off-the-shelf software or whether it is better to opt for a customized solution. 

Off-the-shelf software

The use of off-the-shelf software is usually the most common solution for many processes in day-to-day business that require little customization. But what are the advantages of this standardized approach?


Off-the-shelf software offers the advantage of immediate availability, but for companies looking for a long-term solution, this quick access may be less relevant.

Predictability of costs

Off-the-shelf software offers good cost predictability thanks to its license model, which is based on the number of users, modules, maintenance and training requirements, although its cost-effectiveness compared to custom software depends on factors such as the period of use and long-term costs.

Training and documentation

Off-the-shelf software providers offer documentation and training materials as well as proven training procedures to facilitate implementation.

Maturity level

Off-the-shelf software that has been used over a longer period of time has reached a higher level of maturity, which means that typical initial errors have been eliminated. However, the extent of this advantage depends on the extent to which the software needs to be adapted to specific company processes.


Off-the-shelf software often has a modular structure and enables quick and easy expansion. While custom software can theoretically be expanded indefinitely, standard software offers time and cost advantages when adding additional modules.

Custom software

The fact that company processes can be precisely mapped with customised software is an obvious advantage. But customised software offers more.

A perfect fit for individual requirements

Custom software can be tailored exactly to a company's specific requirements, optimizing operational processes and saving money by increasing efficiency. In contrast, off-the-shelf software is often paid for unused functions, even though only a fraction of them are actually needed.


Custom software can be adapted to growing or changing company needs. In contrast, off-the-shelf software can often require expensive updates or add-ons, whereas with customized software, scalability is built in from the outset.

Easier implementation and acceptance

As custom software is tailored to a company's specific processes and needs, it is often more intuitive and user-friendly than off-the-shelf software, which reduces training costs and increases employee productivity. Furthermore, involving users in the design process significantly improves the acceptance of the software.


The decision between customized and off-the-shelf software is crucial to a company's success. A user-centric approach, clear formulation of requirements and sensible prioritization provide companies with a solid foundation. Non-technical factors such as budget, timeframe and flexibility should also be taken into account. The choice between standard or custom software depends on the nature of the business processes, with a balance and customization often promising success.