Anne Jenkins, VP of Product Management @ Leasepath
For many years people purchasing software have been faced with the binary choice of bespoke vs. COTS (custom off-the-shelf). While a bespoke product is built for you or heavily adapted from a base to suit your needs, a COTS product is designed to be configurable to handle most eventualities but won’t support every single requirement.
There are pros and cons to both approaches. Bespoke is significantly more expensive and takes much longer to implement (often years depending on the complexity of what you’re trying to do). If you build it yourself you have the headache and expense of supporting and maintaining it going forwards. It is worth noting that the cost of maintaining software for its lifetime in an organisation is on average 3 times the cost of implementing it in the first place.
You may also struggle to keep the right skills and experience in an in-house team, particularly post go-live, and then face challenges and bottlenecks adapting it to your changing needs and coping with the loss of knowledge when one or more of your developers leaves the business. While bespoke will be tailored specifically to your needs, the length of time to implement and the potential effort and costs in responding to change often more than offset the benefits.
So is COTS generally better? Buying a software product from a vendor at least means that the pains of maintaining the software are being handled by the vendor. They get economies of scale from having multiple customers on the same product so should be cheaper and the fact that there is base functionality which can be configured rather than built from scratch means a shorter implementation. You should also get regular, tested updates with new features from the vendor, although historically while a lot of software providers promise this, far fewer actually deliver and leave customers stranded on old code branches with an expensive project required to ‘upgrade’ (basically migrate or reimplement) to the latest version. The other challenge with COTS is that you will either have to compromise on functionality or pay for expensive enhancements to the product. Also, the software vendor experiences all the same challenges as you would with bespoke code – key developer dependencies, increasing costs, lag in being able to respond to change and those problems inevitably get passed on to you.
But there is now a third way – the next generation of software providers are taking a platform based approach. Rather than building products from scratch, they are utilising platforms like Microsoft Dynamics, Power Platform, Appian and others as a base for their own products. This delivers a lot of benefits in that these platforms are already designed to be easily configurable and extensible – even new screens and features are more config than code and make for high performing applications that can be tailored to your needs far more specifically and more quickly than a traditional COTS product, giving you the benefits of bespoke for less than the implementation cost and timelines of a COTS product.
As changes can be made more rapidly and more cheaply, this enables you to respond to change and the availability of people with skills for some of these more well-established platforms means you can have in-house resource able to adjust your solution to handle whatever the world might throw at your business.
The last few years (Brexit & COVID in particular) have shown how important it is for businesses to be able to pivot and adjust to changing circumstances and agility is key to surviving and thriving. Platforms generally come with a larger array of connectors to other systems than a traditional product driving down the cost and effort of interfaces too and because the platforms themselves are constantly being updated, they are able to quickly incorporate new features like AI to help you stay competitive. Also from a stability perspective, big platform providers like Microsoft aren’t going to be purchased or go out of business giving you confidence the software you buy today will still be there for as long as you need i
According to Gartner, by 2025, 70% of new applications will use low-code or no-code platforms.
So if you need a new software application and your shortlist of options to consider doesn’t contain a platform-based vendor, I would definitely recommend widening the net.