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Build, Buy or Cusomize

Written by:
Zann Hemphill

Whether you're getting your company off the ground or have grown to a point where the infrastructure needs an upgrade, deciding on what kind of software solution to implement can be a daunting process. This is especially true if you're aware that operations and information management are not your forté. Depending on what kind of business you're running, you may be looking for one or several types of software systems: point-of-sale (POS), content management (CMS), inventory, data, backup.

To help you decide what software solution to pick, we're going to look at several basic options. Generally, there are three ways to go:

Option 1: Build From Scratch

In this scenario, business owners hire an external software development team (or perhaps task the internal IT department) to analyze the company's needs and devise a solution completely tailored to their needs.

This process can take months or longer depending on the scale and needs of the company, but in the end, the business owner has complete ownership of the proprietary software. Some of the advantages also include the freedom to set parameters of your solution so that you're not paying for features you don't need. In addition, a high level of customization is available.

However, the downsides include the high cost of development. This includes budgeting enough time for developing, testing, QA, and deployment. The possibility of missing project milestones exists. Lastly, it may be challenging to upgrade your software or integrate it into newer systems down the line without shelling out more money.

Option 2: Buy Off-The-Shelf (OTS) Software

This is probably the most common route that business owners take in trying to solve their software needs. Off-The-Shelf software is any commercial application that has been developed for the mass market. It's a common practice to look at the various software vendors on the market and compare their product offerings.

Because these products were created for the mass market, their advantages are evident. They are initially the much cheaper option, especially compared with developing your own proprietary solution from scratch. They are usually quick to implement, so your company can keep running with little downtime. The best OTS software has more valuable features than you may presently need, so there's room to grow. Lastly, a level of ongoing customer support is usually included, with the option to upgrade to higher levels with an annual subscription.

The drawbacks, unfortunately, can be just as numerous as the advantages. The first problem with commercial software is that although it is the cheaper option initially, it can cost you more long-term. This is due to ongoing fees for using the product, such as licensing and the cost of additional users. Secondly, companies will have a limited ability to customize the software to their needs beyond what the manufacturer has allowed. Third, since you do not own the source code, the product could be changed in the future that may not suit you. Features that you once depended on may be removed later on. Lastly, because OTS software may not have all the features you need, you may have to integrate it with existing systems that are already in place. This may be much more work than originally intended.

Option 3: Customized Software Solutions

There are now emerging software vendors who are at the forefront in trying to combine the best of both previous options. They offer a mix of their standard OTS software with the option of deep customizations of their product in order to create a tailored solution for every customer.

Imagine Maggie, a business owner who does not want to front the costs of developing his own proprietary system. She is also in the position where the best product on the market only covers 70% of the features she needs to run their company effectively. Maggie wants to add real-time inventory tracking, the ability to map liabilities, as well as a customized dashboard to her solution.

At this point, Maggie has two options. First, she could purchase the best OTS software option before her now and integrate it with additional software to try and create a comprehensive solution for her company. The second option has Maggie approaching one of these cutting-edge software vendors on how they could provide customizations to their standard OTS software to create a custom-tailored solution that exactly meets her requirements.

Let's do a cost-benefit analysis of both options:

If Maggie picks the first option, she will save money, as purchasing OTS software is generally cheaper than any custom-built software solution. A complimentary level of customer support may be included with that OTS software; however, in order to ensure her purchase integrates well with additional software she may need, Maggie will need to purchase a high level of ongoing support or bill for additional outside development. Third, the time it takes for her to actually integrate her purchase as part of the infrastructure of her company needs to be recognized and carefully considered.

If Maggie chooses a blend of OTS software coupled with deep customizations, her initial costs will be higher. However, she will be working directly with the software company to design a solution that meets her company's specifications, or in software parlance, something that's feature fit.

Maggie also has the assurance that there will be continuous updates when she needs them. In addition, this solution is future-proof; unlike other OTS software makers, she has the confidence that this software developer will not unilaterally remove any of the features her company depends on because of market demands. Lastly, Maggie can start using the software solution she's chosen from the get-go while the software vendor works behind the scenes to add those custom features she's requested.

Any software you get will fit into one of those three categories, and all of them have advantages and drawbacks. Pick wisely.

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