Custom software vs. standard software

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.

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. 

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.

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: 

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.

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.

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.

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?

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. 

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?

• Availability
  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.
• Scaling
  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.
  

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.
• Flexibility
  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.