Episode 29

From time to time, an idea will pop into our heads that is just too good to pass up. Sometimes these ideas turn into a business. But what happens when an idea, now turned into a business, cannot find a productivity software solution that meets their needs? This blog will explore why some organizations choose to develop a custom solution and what to expect.

Why do some organizations choose custom software?

It is common, when iteratively exploring options, that off-the-shelf solutions are the first to be deployed. Software as a Service (SaaS) solutions can be quick and easy to deploy, provide powerful features, and require no upfront capital. In this blog series we have explored the challenges with SaaS solutions and the tricky matching game that is played when selecting and developing SaaS solutions. In short, applications developed to meet the needs of many organizations will not capture the niche requirements of every business. If the application attempts to be fully comprehensive and configurable, the solution will likely come with significant bloat for most users. Striking that balance is an impossible task requiring compromise but what if you are not willing to compromise? Organizations will go custom when their niche requirements are must have, and the comprehensive solutions on the market require too much configuration and learning resources to be successfully deployed.

blueprints

Novel ideas are endlessly generated and despite a mature software market, a solution does not exist for some ideas. At MERAK we see two common paths split based on the competencies of the entrepreneur that approaches us. First are organizations that can be considered technology firms, with the features of the application forming their core competencies, best thought of as an app-based business. Typically, they have in house development staff but require more resources or skills for a short period of time. Differentiation is captured through the custom application. The second would be considered a more “traditional” firm, like a lawyer, engineer, or accountant that developed a unique system for serving their clients better than their competition. Most commonly, the differentiation is captured through a spreadsheet that is taken to the next level as a custom developed solution. In this case the organization’s core competencies will likely be retained in their core business services but enhanced by the technology that is developed.

What are you getting into?

For organizations whose core competencies fall outside the “app-based” business model, the biggest shock to owners is the realization that they are creating a technology business. This is when a critical business decision is required as ownership will need to determine if the application requires development and maintenance to be done in-house or outsourced. Managing human resources is a tricky problem to solve as technology needs are typically not linear. Individuals with working knowledge of the underlying code and architecture are invaluable as learning a new environment takes time, even for the best developers. Contractors provide flexible resources, but availability can be a challenge.

The nice thing about purchasing off-the-shelf software is that the maintenance is managed by the developer; however, with a custom solution, the benefit provided is dependent on maintenance. MERAK has worked with organizations struggling with custom solutions developed many years ago as the application received no maintenance after the initial build. Even the best new cars do not last long without an oil change. A best practice is to allocate roughly 20% of the development budget as annual maintenance to ensure that the application remains secure and responsive to change. Ownership of the application is another key consideration when developing a custom application with a third party. Who will own the source code? Can the developer use the code for other clients? Once initial development has completed, what support will be provided?

Ultimately, custom development is a long-term play. If managed internally, congratulations you are now a technology company. If you decide to outsource, it is best to view your service provider as a strategic partner in your organization’s future success.