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The Way Business Is Moving

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Issue Date: June 2008

The business case for custom development

June 2008

Bespoke development is still the only route to consider if you are dreaming of a business system that meets your company’s exact needs.

While business software is intrinsic to the successful running of any business today, most IT practitioners will agree that technology has become a commonplace element of every organisation's day-to-day operations.
With this in mind, most organisations have come to the realisation that they must rely less and less on their software to provide them with differentiation. This is especially the case, if they are buying off-the-shelf software. If however, companies look down the custom-development road in choosing a line of business solution; their software can indeed become a differentiator and source of competitive advantage and intellectual property.
They must however be prepared to brave the different mindset that custom-development entails, says Jason Lombard, custom development business unit manager at local Microsoft development house, 3fifteen.
Jason Lombard, custom development business unit manager at local Microsoft development house, 3fifteen
Jason Lombard, custom development business unit manager at local Microsoft development house, 3fifteen
Changing needs
Lombard says that it is somewhat of a given today, that the only way an organisation can gain access to a line of business solution that matches their needs perfectly, is if they commission a third party or in-house software development team to build the software from the ground up.
"While in some rare cases this is the only choice available to them, since they may well be in an extremely specialised market where an off-the-shelf solution does not exist yet," he says, "for the most part, having a solution that meets one's exact needs is a compelling enough reason to consider the bespoke route."
Lombard says, however, the benefits do not stop at 'meeting exacting needs'.
"Since businesses change and evolve during their lifecycle, the only way to keep a solution perfectly matched to the business's needs is to continually evolve its functionality. Furthermore, the process of custom development generates knowledge for both the client and the vendor and provides a common understanding of the business requirements."
This is something that can generally only take place if software has been designed from the ground up. There are deeper reasons to consider when making the decision between custom development and off-the-shelf software however.
Looking deeper
Lombard says that organisations need to consider whether or not they are able to mould their business processes around those prescribed in an off-the-shelf solution. If the answer is no, the business will in all likelihood only be successful in its endeavours if it takes the custom development route. The consequences of a wrong decision in a situation like this only grow in severity as time marches on.
A great deal of knowledge that is inherent to the successful running of the business resides in the minds of the various business unit heads. Integrating that knowledge into an off-the-shelf product is virtually impossible. This is not a problem while that knowledge still resides within the organisation, as the company's staff complement changes, so that knowledge can be lost forever.
If that knowledge and the organisations business processes are built into a solution from the ground up, the organisation will find that it is more resilient to staff turnover and can rest assured that the knowledge it feeds off is safely embedded in their line of business system.
Lombard says that another risk organisations face when looking at buying off-the-shelf products and customising them is over-customisation.
Once again, this comes back to how close a fit to the organisation's business processes an off-the-shelf product is at the outset. If it is not all that close a fit and a great deal of customisation needs to take place, customers should steer clear. Many companies fall into the trap of heavily customising and investing in an off-the-shelf product, only to find that when the next version of that product is released to the market, all of their hard work and customisation needs to be repeated. This is something that an organisation will never face in the bespoke development world, since it is in control of the software's direction.
More expensive, but better value
The custom-development road is not without its potholes however. Lombard says that companies must be aware of two major trade-offs before they embark on a bespoke solutions strategy.
"Those trade-offs are time and money. Traditionally, it takes longer for an organisation to have a solution built for it than what it takes for them to buy an off-the-shelf solution and customise it.
"And in most cases we have encountered to date, the custom route will cost more than buying an off-the-shelf alternative."
There is, however, no doubt about the value companies will derive from choosing a custom developed solution. When you license off-the-shelf software, the financial model employed by the vendor is premised on amortising the cost of developing that piece of software over many customers.
By definition then, the solution will never be a perfect fit for any customer - in order for it to be relevant to many customers, it needs to be as general purpose as possible. Additionally, the software never belongs to the customer - the customer simply has a licence to use it. That means that the customer is reliant on the vendor to add functionality to the solution as and when it deems it necessary and that the customer accepts that he has little, or in most cases, no say in what features the vendor decides to include in the new version of the software.
In the bespoke context, although the capital requirement is larger, the software will not only suit the business, but belong to it too. That means the users have direct control over the future direction and functionality the developers build into the system, are able to dictate how often new releases are made and are in control of what kind of support structures are put in place.
"Most importantly however, there is no incremental licensing burden to shoulder each time an upgrade comes along or additional users need access to the system."
As a last consideration, companies should not forget the potential revenue stream taking the custom development route can unlock. Nothing could prevent a company from repackaging their bespoke solution and selling it to peers and competitors, if it was so inclined. Whether or not this ends up simply contributing to the solution's return on investment or becomes a revenue spinner is for the company's leaders to decide.


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