Packaged Software Vs Custom Application

In an organization, business teams require certain functionalities to run their operations. IT (Information Technology) team needs to fulfil the business requirements – this is usually done either by building a custom application or by implementing a packaged software.

Custom application is designed and developed from scratch to fulfil certain business requirements. It may follow agile or waterfall or hybrid development methodology. Custom application is usually hosted on-premise or on cloud.

Packaged software is a prebuilt application by OEMs (Original Equipment Manufacturer) whose license to use is sold in multiple models – On-premise / Public Cloud / Private Cloud / SaaS (Software as a Service)

IT team needs to compare and decide between custom application and packaged software. Here are some important points those should be considered while comparing custom application and packaged software to fulfil business requirement:

1. Functional and non-functional requirements should be documented and approved by business

2. IT team need to add their preferences and constraints to business requirements as per enterprise architecture and other enterprise, industry, and geography specific standards

3. Non-functional requirements should also capture regulatory requirements, interface requirements, how soon the system is required, how long the system would be used etc.

4. Create a high level solution architecture depicting the features that potential application  should offer along with interfacing systems

5. Select a few custom application options and few packaged software options for comparison

6. Compare each of these options on how they fulfil the functional and non-functional requirements.

a. Timelines: Packaged software has advantage over custom application when it comes to timelines as packaged software is already built and tested whereas custom application is to be built and tested from scratch and hence takes longer

b. Required Features: Packaged software has many features, and organization may not need all of them. Also, at times, packaged software requires customizations to meet exact functionality and business rules that business wants. Cost of making customizations also needs to be added to the overall cost of software package. Custom application, on the other hand, could build functionality and rules exactly as per business requirements.

c. Making changes: Custom application has advantage over packaged software in terms of making changes to the software. IT teams are free to make any changes to custom application whereas packaged software allow limited changes to their software, and this vary from on-premise Vs Cloud Vs SaaS options

d. Updates: Packaged software is regularly maintained and updated by OEM and regular updates are sent / applied whereas custom application is to be maintained by respective IT team

e. Infrastructure Management: Companies offering SaaS option manage the underlying infrastructure as well whereas in case of custom application, organization needs to manage the underlying infrastructure

f. Support and Maintenance: custom application has to be maintained by respective organization, whereas packaged software offers multiple support options depending on On-premise vs cloud vs SaaS options

g. Cost: Since packaged software is built once by OEM and sold to many clients, one time cost of packaged software is generally lower for clients compared to if a client wants to develop the entire functionality as custom application. Organizations should compare overall cost of both the options, custom application and packaged software, covering one time cost and regular cost of support and maintenance over a period of time.

7. Basis the comparison results between custom applications options and packaged software options, organization IT and business teams select the most appropriate option considering the business and IT requirements, preferences, and constraints

The idea of this article is to mention the important points that IT and business teams need to keep in mind while comparing between custom application vs packaged software and selecting the best option to fulfil business requirements