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Industry Insight: Bespoke Software versus Packaged Software

12th February 2013

As another year closes and a new one begins the minds of business leaders around the UK are quite rightly questioning their future; strategizing and planning new-year activities for success. For some it is a time for entrenchment, but for many in the recycling and environmental sectors it is a time for expansion, diversification and investment. Never before have we seen so much change, and so much opportunity, it is the true leaders who will capitalize, whilst others ponder and procrastinate.

Business success can be put into a very simple formula; provide what the market demands, at a profit, and invest some of the profit in growth. Of course, 21st century business is not that simple, in fact it is very complex. In the waste and recycling sector often low margins and high transaction volumes can easily push a business into a loss making position. Where prices are controlled by external forces, companies need to look at adding greater value to their customer proposition, whilst maximising efficiencies and minimising overheads.

Few companies have in-built spare capacity, but many are still very wasteful. In my previous blogs I commented on the inefficiency (and risk) of running your businesses on Microsoft Excel – these companies are in danger of extinction! So, for those who are planning a strategy for success (or even survival) they should consider implementing business software to support their lean processes from one end to the other. In planning to implement a software solution to meet those needs you have a fundamental decision to make: Do we develop a bespoke solution or implement an off-the-shelf package?

Bespoke or off-the-shelf

Bespoke software has been seen as the ultimate in meeting a company’s most exacting needs and is considered to give you control of your future destiny, as it is you who determines its future development. Since the genesis of computing, people have been developing bespoke software. In business, if the specific needs of a company are to be met, it was often the only choice available. In the short history of computing we can look back at a time when even common business requirements were met through bespoke development. But today, why would a company develop its own payroll system when there are so many off-the-shelf payroll packages available? Whilst I have not recently come across a company developing its own payroll solution there are companies who have previously, and who are still using them quite effectively. That is one of the strange phenomena with bespoke solutions – they tend to stay around for a very long time. The thing here is that as a company develops its own solution to meet its very precise requirements why would you consider curtailing that investment in favour of a package that you will still have to pay for, but does not meet all your perceived needs? I say perceived because often companies and individuals believe they have specific requirements, or that they should perform certain tasks, but the question that should be asked is does fulfilling that need add value to my customer? Human nature causes us to become quite attached to systems and processes, but standardising can be good, and taking out the non-value add steps can alone make us more efficient with no negative impact on our company or our clients.

Bespoke development can be very costly, and high-risk. Simple economics apply; the cost of writing software code for one company is always going to be greater than if it is developed for ten, a hundred, or a thousand companies. Careful management is critical whether the development is being performed by internal resources or by an external provider. Bespoke solutions require a good technical design, documentation (technical and user) as well as a plan for future development and support.

All too often, particularly in small companies, we see bespoke development outsourced to one man bands. This is often a decision based on initial cost. Some companies have been tempted to place larger bespoke development projects off-shore. Both routes present challenges and a great deal of due-diligence should be performed before entering into such an arrangement. I recommend taking a blank sheet of paper and writing down 10 what-if type questions – starting with the one about the double-decker bus. If you are confident you have answers to these questions then proceed, but if you proceed without sound answers a visit to the doctor for a course of sleeping tablets is required, as you may need them.

Scope Creep

Scope creep is where the requirements and the solution expand, often over the life of the development project. This is a huge risk but one that can be pretty much mitigated if good management (and a dose of previous bad experience) is applied. The key to this is agreeing, in writing, the scope of the project at the outset – it should be done in a way that all parties are 100% confident of the scope of the project and the composition of the solution is to be delivered. However, dynamic businesses are often a moving target – if the development is to take a number of months or even years, will the end solution meet the needs of the day?

Another key area, where bespoke projects seriously over-run, is in the hidden or unappreciated complexities – what we thought was a simple requirement to program becomes a minefield. This is the danger of a top-down approach taken to software design development – it looked simple on the flipchart but it is only when you get into the minutiae that the real complexity is understood. It’s not uncommon for development estimates to increase 10 fold.

With both scope creep and hidden complexity, what is the impact on the project in terms of time, cost and final deliverables? This is where the transition from sleeping tablets to anti-depressants can take place.

A package solution could be the best option

Over a relatively short period of time the software industry as a whole has developed a huge number of off-the-shelf packages for a very diverse set of business sectors. From Architects to Zoos you can find a packaged software solution, if you Bing/Google hard enough. And yes, packages exist for waste, recycling and secondary commodity trading companies such as Prodware adjust Waste and Recycling)  which are based on Microsoft Dynamics. Some solutions are more functionally rich than others, so a good assessment process needs to take place to ensure that the package will meet your current AND future business needs. The challenge is that often a business may not know exactly what their future requirements are. It you are confident your business is not going to change or if you have a very clear crystal ball then it is easy, but if not then invest in a package that meets the whole needs of the industry, rather than the specific needs of the segment your company operates in today.

Again, with the packaged solution path you need to perform due-diligence; understand what will happen if the software author goes out of business, or if they discontinue the on-going development or support of the solution you are to invest in. Implementing a packaged solution is not just about the software, it is also about implementing industry best practice. This can in effect cause you to question everything you do today and can make a real positive impact on a company’s performance. Of course, there is a downside to implementing a standard packaged solution – you can become the same as your competitors and perhaps lose your USP (Unique Selling Proposition). Whilst some packaged solutions are fixed, others are flexible and have an in-built development environment that can support the enhancement of the solution to include your USP’s. This will ensure you have all the cost, low-risk and best-practice benefits of a package whilst continuing to allow you to differentiate your customer offering from that of your competitors.

Overall, bespoke development projects still have a place but only where a packaged solution is not able to meet current and future needs. For companies already operating bespoke solutions some hard questions need to be asked and possibly some emotional ties cut. A good business software package can create a high level of efficiency, allowing profits to increase. Creating a business based on best practice is an essential part of a platform for growth. I say bring on those new opportunities and bring on 2013. Have a prosperous year.