Custom software development vs off-the-shelf solution: how can a business make the right choice?

The article was published on Medium. Imagine you are launching a new business line. For example, in addition to baking custom cupcakes, you plan to launch an online dessert builder with express delivery.

The market has been studied, the business plan is ready, and you want to start execution as soon as possible.

You want to simplify the ordering process for both your business and your customers by using some kind of automation IT solution.

Will a ready-made IT product with some customization suit you?

Or does none of the available options fully match what you want to achieve, making it better to commission custom software development from scratch? Many clients of IT companies, including KT.Team clients, face this dilemma. In this article

Andrey Putin, CEO of KT.Team, explains how to choose between custom software development and buying a ready-made IT product.

At first glance, development often seems justified in any case: yes, it will take more time and other resources, but the final result will meet all stated requirements.

However, software market trends point in the opposite direction. Fifteen years ago, 90% of tasks, including building a website, were solved by developing from scratch.

There are now enough low-code and no-code (or zero-code) apps that automate standard company processes and tasks.

The no- (or zero-) prefix means the app basically requires no additional development, like Tilda website builder, while low- means only minimal developer involvement is needed.

Building a standard corporate website or a standard CRM for the sales team from scratch is a waste of resources.

A website can be launched in a couple of weeks on a ready-made CMS, and for the sales team it is better to choose one of dozens of off-the-shelf systems with a monthly subscription.

Building an online store with a large product catalog looks like a more substantial task.

Even here, off-the-shelf e-Commerce platforms let you avoid reinventing the wheel.

All you need to do is choose a theme, customize the design, set up integrations with external services, usually by using ready-made and proven integrations, and launch much faster than with development from scratch.

First, let's look at the advantages of an off-the-shelf solution.

Relatively low upfront cost. On average, the price of an off-the-shelf product is not prohibitive: such software is built for mass sales and reaches profitability through volume. Of course, there are products on the market with licenses costing hundreds of thousands or even millions of rubles per year, but those are more the exception than the rule.

Most likely, the license will cost you 30,000 to 40,000 rubles per year.

There are also options on the market with a free basic version, such as the Community Edition of the Pimcore PIM system.

Fast project launch and employee training.

Buying ready-made software will save at least several months that would otherwise be needed to write code and test the product in a local environment.

In addition, users usually receive an operating manual and other necessary documentation with the product.

Access to other users' experience.

Information about the user experience of other teams is easy to find, for example on forums dedicated to the product or on third-party topic-specific platforms.

Reviews will help you learn more about the software's features, challenges, and benefits in use. Technical support. Paid licenses usually include support.

Technical support will help you quickly sort out difficulties and fix any issues that arise.

To implement an off-the-shelf solution and start using it, developers and analysts are often not needed at all - any employee with access to the user guide can handle setup.

The toolset of a ready-made solution is usually easy to use and helps reduce potential costs.

But you may face a number of risks.

Let us list the most serious ones.

Insufficient or excessive functionality.

A 100% match between business needs and off-the-shelf functionality almost never happens.

Important features may be missing, while features you do not use will consume resources and slow down processes.

If simple adaptation is not enough, the software will need to be modified to meet the requirements dictated by specific tasks.

But remember that in practice, customization can sometimes be just as resource-intensive as building from scratch.

Scaling challenges. As a company grows and processes become more complex, off-the-shelf software often loses effectiveness because scaling resources in such software can be limited.

Possible integration challenges.

A common problem for companies with unique processes that are hard to fit into the standard logic of off-the-shelf products.

Processes would have to be reshaped to fit the system, which is the wrong approach, unless the deviations from the standard are clearly justified.

If your product has few equivalents on the market and the software's main job is to align connections across many business processes, developing your own software may be the optimal solution.

Let's look at why in more detail. Customization. Software built around business needs solves specific tasks and has neither gaps nor unnecessary functionality.

The interface is designed for a specific team, allowing you to work in the system as efficiently as possible.

When you commission development from scratch, you think about product growth and build scalability into the requirements specification from the start.

As your company grows, or as the product or business line expands, you can add new features without losing efficiency.

You retain the intellectual property rights to the new IT product and can use it as you see fit, including monetizing it by selling or renting it out.

An off-the-shelf solution may become outdated or disappear from the market if vendor support ends. With custom software, the pace of feature updates and enhancements depends only on you.

Off-the-shelf solutions without configurations under a free distribution model can only be used after purchasing the relevant license, and its cost may vary depending on the product version you choose and the number of users allowed to operate it.

When developing your own software, you will not need to buy a license, even if the team grows many times over or there is a need for an advanced version of the software.

However, building from scratch is a more expensive and labor-intensive option than buying a ready-made product.

There is a risk that the money allocated to developing such a solution will ultimately be wasted, because using the resulting software will not deliver the expected business impact. For example, this could happen because of an incorrect description of business processes before development even starts, or because the company's business model changes before the software has a chance to pay for itself.

In practice, the cost of building from scratch often becomes an argument in favor of buying a ready-made product.

At the same time, building your own software can indeed be necessary: for corporations automating complex or unique processes, and for small companies operating in highly specialized industries.

If the software is needed to automate the basic needs of your business, which are not very different from those of other market players, it makes sense to choose one of the ready-made solutions and adapt it to your product configuration. For example, you launched a small online clothing store.

Your managers track orders and update warehouse stock information using spreadsheets, which stretches order processing times and increases the likelihood of errors, and therefore the rate of cancellations and returns. With conditions like these, it is hard to grow market share.

To solve the problem described, you need a dedicated order management system that will automate order processing and set up rapid generation of detailed sales reports.

This task is not unique, and the market offers a huge number of affordable ready-made options to solve it.

If you need to refine secondary features, it will not require significant time or other resources, and the ready-made software will handle its core task perfectly well.

To perform an effective analysis, assess the priority of the business functions the software must perform.

Some companies focus on how much of the required functionality an off-the-shelf solution covers, but even with a 90/10 split, a critically important feature may remain uncovered.

A KT.Team case study: an electrical engineering company needed its sales managers to be able to quickly and easily find catalog analogs for any product.

She approached KT.Team with a project to implement an off-the-shelf PIM system.

Since the PIM system stores information about product attributes, it seemed that its tools would be enough for the client's needs, but during operation it became clear that the lack of a built-in search function was slowing down all other processes, which meant custom development was unavoidable.

If the off-the-shelf version includes the business functions that matter most to you, and the missing ones can be added easily and relatively quickly, that solution will be sufficient.

Recall the dessert builder from our example at the start of the article: it lets you choose the type of base, cream, and topping for the confectionery item, but it does not let you adjust the color of each of those three components; however, enhancing such a mechanism would not be difficult.

If a set of functions critical to your business cannot be automated by ready-made software even halfway, you should definitely consider development from scratch.

If you understand that you need a product that will help you stand out from competitors and scale internal processes, consider development from scratch. For example, you plan to launch a ride-hailing app and win your share of the market among a huge number of other aggregators.

There is no point in choosing an existing platform, since its standard logic will give you no competitive advantage.

A taxi service has a better chance of success if it offers a unique set of features, design, and interface that can be developed and changed at any time depending on market conditions and business goals.

Product IT companies that build unique software should choose custom development nine times out of ten, regardless of industry.

This lets you manage the backlog yourself and decide how the product evolves, make it more customer-oriented, and introduce changes independently of the vendor.

A company's internal development team does not have to be the one building software from scratch. As a contractor, it is better to choose a full-service integrator capable of developing and implementing unique services.

A tandem of outsourced developers and strong in-house product owners can also work well, as they can gather and structure requirements, build a roadmap, and understand how to connect the processes.

The straightforward cases are clear.

But what if the product is unique, resources are limited, and you need to launch in the market as soon as possible?

An off-the-shelf solution will not fit; it is too generic for your needs.

A custom build will take too much time.

But there is a way out: adopt a Lean approach to development. For example, you understand that there is no perfect off-the-shelf option.

But if you take four different products and refine a few features, you can launch in MVP mode as soon as tomorrow.

It will not be a perfect solution, but it will be acceptable for a start. Once you have validated the hypothesis, you can improve the software at a calmer pace and add new features.

This approach works regardless of how much time and money you currently have for developing your own software.

The product will launch either way, and new features will be added later based on market conditions.

So, the choice between an off-the-shelf solution and custom software development directly depends on the tasks the chosen software must solve. Within a single product, you may encounter a situation where one set of tasks calls for an off-the-shelf option, while another requires a custom solution.

Identify the main tasks the software must solve and map them to the features available in ready-made products in the relevant field, if any.

An off-the-shelf solution is the ideal choice for standard tasks and processes.

Choosing an off-the-shelf solution for these goals saves you the time and money you would otherwise spend on development from scratch: small improvements require far fewer resources than writing code and testing software from scratch.

Custom development is suitable either for unique products with complex business logic or for automating unique processes that make up the product's competitive advantage.

If this is not a standard CRM system for the sales team, but a software solution that will compete in a crowded market, a custom approach is unavoidable.

Take into account the roadmap and the pace of subsequent changes.

Customization options for an off-the-shelf solution are far more limited than with custom development.

At the same time, with custom development you gain the ability to manage changes independently and free yourself from the system's internal limitations and unnecessary features.

If there is no time for development and off-the-shelf software is definitely not an option, the Lean approach may be a fit.

Consider how to launch an MVP using ready-made products and improve it gradually.

This approach saves time and lets you start testing hypotheses right away and refining the software based on real changes in both product strategy and the market as a whole.