What is The True Cost of a Customized Software Solution?

Customized software is a popular choice for many businesses because of its ability to be 100% customizable to your business’ processes and operations. But, the biggest hesitation for companies is the myth of the high cost associated with custom software.

This isn’t always true. The bottom line: custom software solutions do not always cost more than packaged, off-the-shelf, shrink-wrapped solutions. Inevitably, off-the-shelf solutions require a lot of adjustments to be a valuable resource for the company. That can be very costly. In fact, those solutions can turn out to cost more than a custom software package.

One concern of companies who decide on a custom software solution is the maintenance costs.

What do software maintenance costs cover? Why do they exist?

  • To prevent bugs that could interrupt service
  • To improve performance to make tasks faster and more efficient
  • To upgrade features to meet future processes, operations standards, etc. Remember that as your business’ processes improve (as they should), so should your software.
  • To perform data-back up and disaster recovery To cover hosting costs

What is the estimated amount for maintenance costs?

Maintenance costs for customized software usually run a reasonable 15-25% of the project cost. Don’t forget that maintenance fees must also be paid for package software, though it is often worded differently. For off-the-shelf solutions, you will pay for an upgraded version, new licenses, and anytime that you need support.

Custom software is the ideal solution when you have very specific needs for software to fit unique aspects of your business, like a process for selling and tracking those sales which is better than existing off-the-shelf application.

Additionally, keep in mind that when the software project has been well-defined, managed well during the development life cycle and well-tested, you will have minimal maintenance costs.

Lastly, when the project is completed by a professional, knowledgeable company, where the project is on-time, on-budget, and on-spec, the whole solution can provide a very significant ROI, often far in excess of the maintenance costs.

The Custom Software Question: To Build or To Buy?

If you’re like most businesses, you use software on a daily basis for critical functions: managing projects, sending invoices or tracking inventory. The plan for most businesses is to buy a mass market, shrink-wrapped off the shelf (OTS) application, like Quickbooks or NetSuite. And that is a huge mistake. Often OTS solutions only meet 30% of your business’ needs. When the functions are vital to your business and deal with core processes, it is important to use a solution that you are in control of. As software is essential for your business, consider the distinct advantages that custom software has over an OTS solution: Custom software is:

  • A customized glove fit for your business’ specific needs: Before the building begins, the software company sits down with you to understand your processes and then develops the software specifically to your day-to-day functions. In OTS solutions, it is the other way around: you are forced to conform your processes to the software. With a custom solution, you monitor and control the entire process.
  • A solution that comes with local, personalized support: Do you currently have 1 or 2 technical software staff members that support your custom software solution? If one of those team members were to leave, how would your current custom software system be maintained? You’re currently completely dependent on their knowledge of your system. When working with a professional, reputable software company, you have access to an entire team of developers who understand your system and are ready to help.
  • A lower cost than other options: You may be under the impression that custom software is costly. However, on a per-user basis, or when calculating the ROI of the custom software, it turns out to be much more cost-effective than limited OTS solutions. Additionally, once you have hired a company to develop the software for you, you reduce the need to pay for costly individual licensing.

The bottom line? It’s better for your business to create a custom software application, rather than continue to have frustrations, high costs and limitations with your current system.