Should Your Company Develop Its Own Software?

So, you have identified a need for new software within your organization. If you’re like most companies, you know what you want the software to do, but you’re not sure how to get the software you need.

At one end of the software spectrum is commercial off-the-shelf software (COTS), offering a ready-made solution that may satisfy most of your needs and is ready for quick deployment. At the opposite end of the spectrum is proprietary software development. Proprietary software development requires more up-front time, effort and money than COTS, but the final product will satisfy all your needs with no unwanted bells and whistles.

Let’s look at the pros and cons of COTS and proprietary software to help you better understand your options.

Commercial Software Development: The Advantages

Lower up-front costs. It’s likely other companies have software needs similar to yours and that an off-the-shelf solution is available. Microsoft Word is a good example of an off-the-shelf application designed to satisfy the needs of a majority of word processor users. Because the development costs are spread over a large number of installations, COTS can cost significantly less than custom software.

More robust technology. COTS undergo significant testing before product release, helping to minimize bugs in the resulting software.

Better documentation. Because COTS software is distributed to a broad user base, vendors invest significant time in developing comprehensive product documentation and support offerings.

Commercial Software: The Drawbacks

Reliance on the vendor. When you purchase off-the-shelf software, you depend on the vendor to provide continued product support. If the vendor discontinues or stops supporting the product, you may be forced to port to a new system and incur the resulting frustration and expense.

On-going subscription fees. Subscription models and/or recurring license payments are becoming the predominant model for commercial software. These costs quickly become significant when you need a large number of licenses.

Sub-optimal solution. In trying to be everything to everyone, commercial software may include unwanted features that overly complicate the user experience.

Proprietary Software: The Advantages

Meets your exact needs. Because the software is developed to according to your needs, you don’t have to accommodate the software—it accommodates you.

Lowest total cost of ownership. Aside from the up-front development costs, the cost of operating proprietary software is minimal. When installations across a large user base, or when the software has a long life cycle, proprietary software can offer lower total cost of ownership compared to on-going subscription fees with commercial software.

Integrates with existing systems. Custom software can ensure seamless integration with legacy systems. This degree of compatibility across a variety of platforms is hard to guarantee with commercial software packages.

Adds value to the business. Proprietary software development costs become capitalized on the balance sheet, adding value to the business. The software can also be a source of competitive advantage if it allows you to do something better or faster than your competitors.

Proprietary Software: The Drawbacks

Cost, time and effort. Proprietary software does require a large up-front commitment of resources. Besides the cost, extensive employee effort is required to properly map out processes and define software requirements.

Documentation and support. If the original developer is no longer available to support the program, it is hard to find someone else who can update the program or add new features. Also, documentation and training resources are more readily available with commercial software packages compared to proprietary software.

Carefully consider where your software needs fall on the development spectrum. If you can’t satisfy your needs with available software, or simple customization, then don’t despair. Despite its high up-front costs, proprietary software can offer years of trouble-free operation, eliminate your reliance on vendor support, and provide the lowest total cost of ownership.

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Have any questions about nearshoring or offshoring your software develop? Don’t hesitate to contact us.