Are custom applications more expensive than commercial-of-the-shelf (COTS) products? It really depends on how you calculate “expense”. If you purchase a COTS product that is relatively inexpensive but only accommodates 50% of what your staff need to do, there is certainly a labor cost involved which can become significant over time. On the other hand, you can hire a company to build a custom application that supports 100% of your staffs workflow. Labor costs over time will be less but custom software normally requires a larger up-front investment in money and time. In my career, I’ve worked on many custom application projects but I’ve also been part of committees that have chosen a COTS solution. From the committee meetings I’ve participated in, similar points are raised for the pros/cons of both COTS and custom applications.
- Fixed purchased price with defined support costs. Easier for budgeting and no cost overruns.
- Can get reviews and experiences from other organizations using the software.
- Generally comes with comprehensive documentation and a support desk for assistance.
- Does not fully support all of the organizations’ business workflows. Internal process re-engineering may be required.
- May require costly custom modifications to meet an organization’s needs such as integration with existing internal systems.
- Extra features that your organization may not use. Package software is designed for many businesses.
- Updates are on the vendor’s schedule and not yours.
- You can design a system to support current and future workflows.
- A custom application can be implemented to fully integration with existing systems.
- Implemented with the latest technologies. Not purchasing legacy.
- Time spent in selecting a vendor to implement the custom application. A bid/tender process is generally required.
- Staff time will be required to participate in the project is areas such as requirements, analysis, and testing.
- Requires full-time project management to oversee timelines and milestones are met.
- One-off system resulting in dependence on the original vendor for customization and defect fixing.
The decision to go COTS or custom development depends on factors specific to the organization. Realistically, a cost analysis will need to be done for a minimum 5 year period to forecast the overall costs to be a determining factor. However, in the overall decision making process, cost is not necessarily the primary factor. In my next article, I will present a process that will provide guidance on choosing between custom or COTS.