BSI Newsletter: Off-the-shelf or made-to-order software solution?

Still unsure whether to use an off-the-shelf package or to commission a tailor-made application for your business? Or disappointed at having chosen one type and now considering trying the other?

The choice actually becomes more difficult when money is no object. Here's a listing of the pros and cons of both options, gleaned from our over three decades wrangling software applications and systems.

TABLE A. PACKAGED (I.E., OFF-THE-SHELF) SOFTWARE
	Advantages of packaged software	Disadvantages of packaged software
1) Development time	Zero development time (by definition, because package already exists); no waiting; can be installed immediately	Though ready to install and use, some may need further tailoring to user's exact specs. Solution: see if vendor has local market presence to support the product.
2) Debugging time	Typically zero debugging time needed; all important debugging has been done before product is released. Any bugs that escape the QA process are corrected via a software upgrade as soon as discovered.
3) Completeness of solution	Usually incorporates all basic accounting requirements, all classical accounting reports.	If a foreign vendor has no local market presence, offering the possibility of customization support, the application package may not readily yield the special MIS reports the user wants.
4) Cost	Relatively low cost to acquire because development cost is spread out among numerous customers. Cost overruns are not an issue.
5) User pool	Because an off-the-shelf package is meant to be widely distributed, there is usually a sizeable population of skilled users. A source of informal technical support. E.g., the case with Excel, Word.
6) Technical support	From experience with a wide user base, well-managed vendors already know the usual problem areas and have solutions at the ready.	Unless dealing with a local vendor or a foreign vendor with local market presence, technical support may be expensive to access, hard to reach, and/or involve robotic systems with no human touch.
7) Pace of product evolution	A wide user base naturally gives more frequent, varied, critical feedback; package vendors are thus able to improve the software product frequently and in the areas that matter to customers.
8) Ease of use	Some packaged software products can be very user-friendly. User must choose wisely.	Some packaged software products can be very difficult to use. User must choose wisely.
9) Tailorability	Some packaged software products can be highly tailored to the customer/user's exact specs.	Off-the-shelf software solutions that purport to be highly tailorable are usually difficult to implement and difficult to use, starting with the very act of "tailoring" them to the user organization's requirements.
10) Uniqueness	An installation of a packaged application is one of many thousands of identical installations. (May be viewed as an advantage or disadvantage. See #5 above.)	(See box at left.)
11) Responsiveness to changes in regulation	Vendors of packaged solutions are usually well attuned to government regulations, and respond quickly to new regulations with updates to their products.	A foreign-based vendor will need local market representation in order to be able to address regulatory changes in the Philippine market.
12) Customer-vendor power relationship	A wide user base puts constant pressure on the software vendor to maintain product excellence, fair pricing, and reliable technical support. This is to the customer's benefit.

TABLE B. CUSTOMIZED (I.E., MADE-TO-ORDER) SOFTWARE.
	Advantages of customized software	Disadvantages of customized software
1) Development time	The substantial waiting time inherent in customized software development projects gives the customer ample time to prepare his systems, procedures, organization for the coming computerization. In theory.	Made-to-order software requires significant development time and cost in the quest to tailor the application to the customer. Distinct possibility of missed delivery deadlines.
2) Debugging time		May require extensive debugging period, especially in the unique-to-the-customer aspects.
3) Completeness of solution	Because the user-customer determines the software specifications, the customized software solution can be as complete as the vision of the customer organization writing the specifications.	Requires that the developer be expert in both accounting and in software programming. Customers should beware lest they find themselves in the position of having to teach accounting to the programmer(s).
4) Cost	Cost of made-to-order software is usually high, but customer-users usually already know this going in.	(a) Cost is usually significantly higher than that of comparable off-the-shelf packages. Distinct possibility of cost overruns. (b) If cost is low, customer is probably dealing with a freelancer; reliability and technical support may then be questionable.
5) User pool	Since a customized application is by definition unique, only your employees will be familiar with the software. User-customers may deem this an advantage.	When hands-on users resign, training replacements can be time-consuming and expensive.
6) Technical support	If dealing with an established vendor organization, tech support is available, for a price.	Unless dealing with an established organization, technical support for a unique software may not be systematic or reliable.
7) Pace of product evolution	Product evolves as dictated by the user's experience, circumstances, and requirements.	Since the user organization dictates the pace of the application's evolution, its evolution is dependent on user organization's vision, initiative, and ambition - or lack thereof.
8) Ease of use	Because the customized application is tailored to the customer's own specs, ease of use is not an issue. If software is not easy to use, user accepts it as the result of his own specs.	In a customization situation, the application is by definition unique. Some problems will be first-time experiences for all involved, and therefore may be time-consuming to resolve.
9) Tailorability	Customized applications by definition are tailored to user organization's exact specs.	Tasks that ought to be reengineered out of current processes may survive precisely because of the custom-tailoring approach. I.e., inefficiencies may get institutionalized. Due to resistance to change, some user departments may succeed in retaining processes that actually ought to be re-engineered.
10) Uniqueness	User may get a competitive advantage if he has an application that no one else has.	Since accounting is (and needs to be) a fairly standard business task, it's difficult to think of any unique software features that could constitute a competitive advantage. It will be in computerizing other business processes - marketing, operations, purchasing, logistics, customer support, etc. - where unique capabilities will confer competitive advantages.
11) Responsiveness to changes in regulation	Users (customers) will usually be able to seek modifications from customizer-vendors in case of regulatory changes.	User-customers may have a problem if the original vendor (a) can no longer be contacted, or (b) has decided to get out of that software business line.
12) Customer-vendor power relationship		User is vulnerable to paralysis of operations if the customizer-programmer-vendor makes himself scarce at a crucial time, or if the big-corporate vendor decides to shift product strategy and discontinues support for that software solution.

CONCLUSION: Both the packaged and the customized approaches to computerization have their own advantages and disadvantages. It's up to you, the user whose business or career is at stake, to decide which approach will be the best for you. Here's what savvy business people look for in a computerized solution:

1. It must be reliable, so that I don't end up spending a fortune on technical support.

2. It must have locally accessible technical support, so that I get guaranteed relief if I ever have any problems beyond my staff's abilities to handle.

3. It must be easy to use, so that I'm not hostage to my in-house expert for any report outputs, and I'm not left dead in the water when my current user immigrates to Neptune.

4. It must have solid audit trails, so that I can continue to believe and trust my own data five, ten, twenty years from now.

The best of both worlds is a solution that contains the low-cost, easy-to-use elements of off-the-shelf packages, but with sufficient vendor support to make customization a real possibility if ever it's needed. In the end, you want to deploy a solution that will serve your needs reliably for many years to come. (Here are more insights on the experience of embarking on a software customization.) -rsr

Questions? Reactions? Write to balmori@balmorisoftware.com.

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