Custom Software Development VS Packaged Software Development: Points to Consider

Some questions always remain topical, and “Should I go with a custom or boxed solution?” is one of them. Custom development offers commercially unavailable software that suits the needs of a specific customer. In its turn, packaged software is a standard product that is targeted at basically anyone in the market. In this article, we’re going to access the pros and cons of both variants to help you make an informed choice.Custom Software Development VS Packaged Software Development: Points to Consider

The development of an own product is often the first thing that comes to mind when thinking about a company willing to digitize and automate its business. However, there is a lot of discussion going on concerning which of these two options offers more benefits. Here’s Vladimir Lugovsky, Akveo CEO on the matter: 

Both of these options can work pretty well, but it depends on the context. If the problem you’re trying to solve is not a part of your core business, I would go for a boxed solution. In this case, you can benefit a lot from the support and maintenance that is being provided with that particular solution. In other cases, I would go custom. I mean I imagine how much effort one may need to spend to integrate and adjust a package software in the future. Unless some off-the-shelf solutions could cover nearly 90% of the functionality you need.”

Pros and Cons

There’s no such thing as an ideal configuration at a low price. Given this, let’s talk about the essentials and compare these models. 

In terms of finances, the cost of a ready-made solution can be very attractive in comparison with custom development. At a fixed price, you get a product that is ready to be integrated with the company’s software and has all the necessary functions, services, and modules in place. If you don’t have an internal IT team to play around with the solution, this level of convenience offers a solid advantage, and many boxed applications capitalize on this. Plus, most of the boxed solutions effortlessly align with existing business processes within an enterprise. 

At the same time, packaged software may not entirely comply with the requirements of a business in the long term. So you’ll likely have to spend extra dollars in the future on upgrades and integrations, not to mention regular subscription fees. However, if you don’t plan to go beyond pure basic functionality, a boxed solution might be a good choice.

Let’s sum up the advantages of ready-made applications:

  • Affordable price;
  • Fast implementation;
  • Free upgrades;
  • Support services included in the monthly fee;

The disadvantages include:

  • May not align with the specifics of a business;
  • Lack of scaling;
  • Difficulties with expanding functionality.

On the other hand, custom development is a way to go for companies that want to own the code and have flexible customization possibilities. It’s a wise choice for companies with a high load of data (e.g, fintechs, or online retailers) or businesses that have unique business needs. Eventually, you get a nearly ideal product that’s been built according to the very essence of a business – talking about getting the main competitive advantage here. 

The pros of customized software are:

  • The ability to take into account the specifics of a business.
  • Full customization of parameters and features.
  • Convenient scalability of the application.
  • The ability to add additional functionality when needed.

The cons include:

  • Relatively high development costs.
  • Longer time to market.
  • Costs for maintenance and updating.

How to Reduce Time to Market 

Whether you decide to get a quick launch on a boxed solution or create a product from scratch, in most cases all it matters the most is the time to market. It’s quite common that customers want to go live as quickly as possible, say, in a month or two. 

Is it possible? With proper development practices, surely. Here at Akveo, we suggest starting by developing a Minimum Feature Product (MVP). The basic functionality of the product will help you tackle your most urgent business challenges. Over time, as your business grows, more functionality will be added to the solution. With MVP, you shorten the time to market so it’s possible to analyze the first results in a month or two. 

However, the next question is whether you have an internal team of developers or not. Let’s check both options. 

Internal Team Vs. Outsourcing

Internal Team 

Developing your own custom solution requires a high-skilled in-house IT team. At the same time, the employment of such a team is a serious burden on the company’s budget, and not every business can afford it. 

Nevertheless, the internal team has a lot to offer when thinking about involvement and understanding of a business’ specifics.

  • A full-time IT employee understands the goals and intricacies of the business.
  • Engineers understand their own product from A to Z and can customize it to any working process changes. In theory, this means that you no longer have to resort to external IT contractors.
  • Clear communication. An in-house team is more likely to have a similar cultural and social background that makes communication easier. 

Outsourcing Team

In case you don’t have an internal team, or you seek to optimize resources and focus on solely business tasks, it is advisable to transfer software development to a 3rd party. The benefits of outsourcing development include: 

  • Reduced time to market. An external IT team can quickly launch a new product to market: they don’t need to build a team and outline working processes before starting development.
  • Resources upon request. As part of IT outsourcing, you pay exactly for the resources that you need to implement the project.
  • Delivery is on time. By entering into an SLA with an external IT contractor, the company makes the development process more formalized. Plus, the tasks and terms are regulated by the contract.

A Hybrid Approach to Custom Development

If you have a team, but think that external talent may add something to the project, consider a hybrid model. A hybrid approach is a combination of effort by both in-house and outsourcing teams. 

It’s all about flexibility. The model creates a favorable environment for effective planning, in-depth analysis, and delegation of IT tasks. The company itself decides which services to outsource and which ones to perform by its own developers. It’s about optimal costs too as the hybrid approach results in better budget management. 

Wrapping It Up 

Selecting between an out-of-box solution and a custom one is a difficult task. The answer is always individual and depends on the goals, objectives, and resources of a particular company. Basically, the choice boils down to this: are we going to fix the short-term issues and save a buck or wait and invest more in a permanent solution? 

At first glance, off-the-shelf software may seem a good choice in monetary terms. However, in most cases, the custom software development costs are not that high as the general public would expect. They fully depend on customer requirements and the complexity of the software itself. Given this, while custom software development requires more investment and resources in the early stages, it proves to be more cost-effective in the long term.Custom Software Development VS Packaged Software Development: Points to Consider

Every company is unique in some way, and it’s only logical to use custom software to fully match ever-changing business demands. As custom software development advocates, we advise you to find additional funds and start with custom software. Not only will it help you be more productive in the short term, but it will also leave space for growth in the future. If your business looks for a convenient and effective tool, go on with a custom solution.

Finding a reliable technological partner is also vital. In compliance with the NDA, a seasoned IT team delivers projects within the planned time frame. As a result, a business receives a competitive product and gains a strategic advantage in the market.

Jitender Singh

Jitender Singh, the owner of this site, is a technical expert, SEO expert, YouTubber and a experienced blogger by profession. He basically belongs to a middle class family in Faridabad.

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