Are Custom Applications More Expensive Than COTS?

Are Custom Applications More Expensive Than COTS?

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.

COTS

Pros

  • 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.

Cons

  • 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.

Custom Application

Pros

  • 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.

Cons

  • 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.

Mike Chow

A 18+ year veteran in the IT industry with a penchant for 80's video games, science fiction, cute small animals, and binding it altogether with the Dark Side of the Force. I'm a co-founder of Atmist Inc. and have helped many researchers, non-profits, and private companies with web-based and mobile solutions.

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