When To Choose Custom Software vs. Out-of-the-Box (COTS)

One question that comes up frequently with new clients is when to go custom versus using out-of-the-box software, commonly known as Commercial Off the Shelf (COTS). If you need a software tool for your business, should it be built from scratch and fully customized, or can an existing product do the job? Here’s what you need to know when deciding between a custom or COTS solution for your business needs.

What are your software options?

Most of my clients come to me with an end goal and want to figure out the best way to get there. These are the software solutions I’m frequently asked about:

• Customer Relationship Management (CRM)
• Human resources
• Inventory
• Accounting
• Scheduling
• Reservations
• Communication
• Project management

When businesses have a software need, they can go in one of three directions:

1. Create a custom software solution that addresses unique needs they may have
2. Use an existing COTS solution that meets all or most of their needs
3. Start with one solution type, and add additional solutions as needs evolve

I've had clients come to me who’ve already spent a significant amount of money and training trying to adapt existing software to fit their business's needs. They quickly found in that process that they needed a custom solution as their business grew. We’ve had to help them start over and build a custom tool that would grow with their business.

On the other hand, during our discovery calls, I've talked with businesses that thought they needed complex custom software when a COTS software would do precisely what they needed in a shorter time frame.

How do you know when you need a custom software solution, if you can use an existing software, or you need to add on to your existing program? I'll break down the main reasons and use cases for going custom and for using out-of-the box, also called COTS software.

When to go with custom software

Whether you need internal software to make your business run smoother or customer-facing software to offer exclusive services, custom software can provide all the functionality you need without compromising.

When you develop software from scratch, you get to create something you own the rights to that is completely unique and adaptable to changing needs.

Custom software takes more time and requires a bigger budget, compared to COTS software, two factors to keep in mind as you decide what solution is best for your business.

Here are some of the main reasons I suggest custom software to clients.

Existing COTS software doesn't fit the need

Many of my clients choose custom software because the COTS software on the market doesn’t check all of the boxes for their business. They have an idea for new software and want to bring it to life.

This happened to a global company that we partnered with to develop a custom software. They were spending too much time on manual data entry and organization but couldn’t use an existing CRM because they didn’t want to risk exposing highly sensitive information. Together, we developed a completely unique internal software that streamlined their processes with automation and gave them the security they were after.

You need greater flexibility

One of the biggest advantages of custom software is that it can grow with you. You can add and remove new functionalities whenever you need.

Many new businesses want to go for an out-of-the-box software to save time and money. Sometimes a COTS software is nearly perfect, but it only provides some of the functions and integrations you need. Over time, as their company develops, they outgrow the software and find it no longer supports their business objectives.

We recommend clients needing flexibility, but who are concerned about time and money, start with a scaled-down version of the software they are developing. This is called a minimal-viable-product (MVP). You can go to market faster and add functions later based on customer feedback.

It’s common to want to develop software with fun bells and whistles. Starting with an MVP allows for time to do the right research and testing to avoid creating software that is overly complicated and spending money on features that customers don't want or need.

If a customer is paying for your business's services, typically, the software you are providing needs to be better than what competitors offer for free. For example, video conferencing software already exists. You can use Zoom, Google Meet, Microsoft Teams, and more.

One of our clients found that none of these virtual meeting softwares checked all of the boxes for a specific niche: events for luxury resorts and hotels. They wanted to create a custom video conferencing software that used data from Salesforce, an existing CRM with easy integration.

Together we created a user-friendly interface with all the unique functionalities their clients needed. As the business grew, we built in additional integrations with Zoom and Twilio. Custom software allows you the flexibility to add on features and grow with your business.

You have many users, and licensing budgets are a concern

When researching existing software, you may find one that fits your business's needs, but the cost, when factoring in licenses and users, could end up being more expensive than building your own. You may only use a few of the features but still need to pay for the rest. Some COTS software is expensive for enterprise-level licenses, and you may need to pay additionally per user.

Remember to factor in training, maintenance, and support. It could be quite costly if everyone in your business needs access to a certain software. Unless you need every feature of the software and it integrates perfectly with your other programs, you may decide that a custom solution would save time and money.

You require exclusive ownership

Many businesses in industries like healthcare, finance, and real estate typically use custom software to be competitive and adhere to legal regulations. When the software is the service (SaaS), clients often want it to be custom.

Building custom software gives you exclusive ownership over it. It's proprietary. If another company wanted to use your software, you would need to provide them with a license and approval.

I worked with a client to create a custom solution that they could white-label for other companies to purchase and rebrand as their own. They wanted to offer it to similar businesses in their industry with the goal of being acquired. A custom solution can increase your value proposition because it's an asset that your company owns.

One of our clients noticed a gap in the home buying process; communication between realtors and loan officers. They came to us to create custom software that they wanted to offer as a service. Together we built a custom real-estate platform with a CRM designed for all the key components of buying a home—buyer, seller, realtor, loan officer, and lender.

When to go with COTS software

When looking at a company's overall goal, COTS software may help them get there and be the quickest and most cost-effective route. I've helped companies integrate COTS software and create user-friendly internal and customer-facing solutions that help them achieve their goals while saving time and money.

While creating custom software may seem fancier and more impressive at first, certain COTS software are popular because they can save you time, money, and are effective. Some of the biggest companies in the world, like Amazon, Apple, and Google (and even Upwork), use COTS software for some of their internal processes like:

• Salesforce
• Microsoft Office
• Google Suite
• Autodesk
• Oracle
• Adobe
• Asana

I've helped many clients take full advantage of COTS software, specifically Salesforce. A client may think they need custom software, but when they realize the capabilities a software like Salesforce has, for example, they just need our help implementing, configuring, and integrating their other platforms and programs.

You need a solution fast and low cost

Companies, both big and small, choose certain COTS software because they're well-designed and quick to implement. Time is money, and sometimes it's not worth it to build a custom CRM or project management tool. You could buy a license and have the out-of-the-box software up and running in a week. Why reinvent the wheel if you don't have to?

You need support services

Popular COTS typically have built-in integrations and are user-friendly, so onboarding and training are simpler. Many of these softwares include maintenance packages, tech support, free training, and are continually updating to meet the demands of their users. Name-brand softwares commonly have 3rd party training and support, and you can often find online forums for more help.

You don't need complete software control

If you're okay with taking the software as-is and don't see the need to make future changes, then an out-of-the-box software can do the trick a lot of the time. When you use an existing software, you aren't the owner and typically can't make changes (unless it's open source).

Sometimes you need software to do something simple like project management or scheduling, and you're happy with the different COTS options available. Many popular softwares publish new product updates and integrations, which can help existing users. If you need a specific feature, however, you have to wait until it's released; you can't modify it yourself.

Advantages and disadvantages

Custom software

Advantages

Custom software is tailor-made for your business. You get to tell the agency and developers exactly what you want. If none of the existing softwares integrate with the different tools you use, you can build your own. You can add on functions, integrations, and make changes along the way. Custom software is scalable; you can add or take away whatever you need, giving you and your business greater flexibility.

Disadvantages

Because custom software is built for your business, it takes time and can be more expensive. When clients come to me for custom software, we start with a 30-minute discovery call to go over their goals and discuss what they want in their software. The process of creating a new custom software takes communication and time. Like any software, you'll need support and maintenance, but because it's not commercial software, the developers or agency will need to provide this service.

COTS software

Advantages

Many out-of-the-box softwares are the quickest solution and may save you money. Licenses and access may even include support and maintenance. Software companies often have a library of resources, from training tutorials to troubleshooting common problems that you can access on your own.

Disadvantages

The major drawback of an out-of-the-box software is that it's not designed just for your business. If you have a specific problem you need to solve, it may not be possible with the software's current capabilities, and you either have to work around it or find another software. You may run into problems with integrations and scalability. Because it's not uniquely yours, you can't make changes to the code and have to accept it as-is.

Custom vs. COTS: Select the best software option for you

Hopefully, you now have a better grasp of when to choose custom software and when to use a COTS option. Choosing the right software can simplify internal processes and help you serve your customers.

Please send an inquiry through my Upwork profile if you’d like help figuring out the best software solutions for your business. We’re a top 1% Agency on Upwork with over $2M in completed contracts and have outstanding customer feedback. We’ll be able to help you sort through your options and determine the best course of action for your business.