Off the shelf vs. fully customized business applications: which is right for your business

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You know that business software applications will considerably enhance all aspects of your business, but what is the real cost of these to your bottom line? In a world where 63-percent of organizations have some customization or significant customization added into their ERP (Enterprise Resource Planning or business process management software), many companies turn to off-the-shelf options, but are they right for the business? Are there affordable alternatives?

Customized software has a reputation for being very expensive and, in fact, that was the case a few years ago. But times have changed and so too has technology. As a result, pricing models have adjusted too.

What goes in to business application development costs?

There are several factors that make up the cost of business software application development. Let’s take a quick look:

Implementation. Every business must be aware of the cost to implement new software. Even off-the-shelf software can be very complex and will need on-site or remote support from technicians and other experts to fully implement across your business.

Support. No business application comes error-free. There will always be a need for your super-users to have access to professional support. Service Level Agreements will usually include ongoing support if you have chosen a reputable developer to partner with.

Business processes design. New software will replace old, manual workflows. In time, your business will feel the impact of these efficiencies. But before then, the changeover process can be complex and time-consuming as the new workflows are installed and take effect.

Training. By the very complex nature of enterprise-wide solutions, your users (employees) will need to be trained. Depending on how widespread the use of the application in your business, this could be very costly. For example, a finance system that is used to log expenses, procurement, all third-party suppliers etc. could be used by hundreds of people in your business. They all need training on how to use the system correctly.

Upgrades. Business applications need to be kept up to date, otherwise they can quickly become out of date and a burden. Regular upgrades are a necessary cost to factor in to keep your software and your business running smoothly.

Maintenance. There’s the requirement to take care of your software. This issue includes hardware, network, and labor prices from the IT department to make sure that the system works properly.          

In the past, when it came to selecting between full customization or off the shelf solutions, most businesses found customization was not a financially viable option. Bespoke software was still incredibly expensive and time-consuming to design and implement. Instead, they chose off-the-shelf solutions, but because these tended to be rigid in their infrastructure, businesses often found they had to adapt their business processes to be able to successfully adopt the technology into their business.

Not the case nowadays. Software developers quickly discovered that many businesses require similar functions from their business applications. Plugging together reusable modules of technology, then customizing them as befitting the business needs is the new way of offering fully customized tech solutions.

Clutch surveyed representatives from 12 leading mobile application development companies to determine cost ranges of building an iPhone app and the key variables of cost.

But what does it cost to customize an app?

Naturally these costs can vary depending on any number of factors, including who you partner with, what kind of and how many standard modules you require and what level of customization is required on top etc. For example, an off the shelf solution, before any customization, for a small to medium business that needs up to 10 users will cost somewhere in the range of $25,000 - $75,000 for a cloud-based solution. When you increase to over 100 users a cloud-based system will come in somewhere between $250,000 - $350,000. Pinning down an average cost on these services is like asking ‘how long is a piece of string’, but customization is becoming more and more affordable.

At Coactive, our fully customized solutions vary in price from $40,000 - $250,000 and above, depending on the number of users, modules, complexities, plus many more factors etc. So, in fact, both options have suddenly become very comparable. Now that for businesses with more than 10 users, customization is a viable financial option, let’s take a look at the pros and cons of both.