Custom software vs off-the-shelf: how to decide

Because the most expensive mistake in this area is building something a product already does well.

With a packaged product, your business adapts to the software's assumptions. With custom software, the software adapts to your business. Neither is inherently better. Adapting to a well-designed product can improve a process. Adapting to a poorly fitting one creates workarounds, side spreadsheets and re-entered data.

• Your process is standard. Accounting, payroll and email are well served by products.
• A product fits most of what you need. A 90% fit with minor adjustments usually beats a custom build.
• You need it quickly. Products are available now.
• You value vendor support and updates more than control.
• Your team is small and per-user costs are modest.

• Your process is part of your advantage. Unusual pricing, sales models or operations that products don't support.
• Workarounds have become the process. The team maintains spreadsheets alongside the product because it can't do what they need.
• Several tools don't share data. Information typed into three systems, none of them the source of truth.
• Per-user costs keep rising. As the team grows, subscription costs compound.
• You need to own it. Control over the data, the roadmap and the code.

Off-the-shelf:

• Per-user fees that grow with the team
• Paid add-ons and higher tiers for features you assumed were included
• Customization and implementation consultants
• Time spent on workarounds
• Migration cost if you outgrow it

Custom:

• Upfront development
• Hosting and maintenance
• Your team's time in discovery and testing
• Future changes

Compare both over several years, not just the first.

Many businesses don't need to choose one or the other. Common hybrids:

• Keep the products, connect them. Integrations remove the re-keying between good tools.
• Buy the standard parts, build the specific part. Use accounting software as-is; build the part of the operation that's unique.
• Start small. One custom module solving the biggest problem, extended later if it proves itself.

1. 1.What would we have to change about how we work to fit the leading products?
2. 2.How many spreadsheets does the team maintain alongside our current tools, and why?
3. 3.What will per-user costs be in three years if the team grows as planned?
4. 4.How much of our advantage depends on doing things differently?
5. 5.Do we need to own this system and its data?

If the answers point toward a product, buy the product. If they point toward custom, start with the smallest phase that removes the biggest problem.