The digital world is ever-evolving, and the way companies do business has changed drastically since the beginning of the information age. As a result, many companies are turning to custom software solutions to help them gain a competitive edge in their industries. Building custom software has risks and uncertainties that many are unfamiliar with, but it also has upsides that SaaS (Software as a Service) providers can’t produce.
What is custom software? Why choose it? What services do development companies provide? In this post we’ll answer these questions so you can decide which approach to digital transformation is right for your business.
Custom software is a program or application explicitly designed for a business. It’s built from the ground up, taking into account the customer's specific needs and utilizing their preferences throughout its development process. Custom software solutions are tailored to meet the company’s requirements and objectives while also accounting for the company’s timeline and budget.
What is “Software as a Service”?
Software as a Service (SaaS) products are software solutions you can purchase “off-the-shelf.” They are built in a generic fashion to allow multiple businesses to use them, usually for a subscription fee. SaaS providers work hard to build solutions that work for as many of their customers in a target market but can leave a lot on the table since every business runs a bit differently.
In the SaaS model, a business pays for the rights to use the software tool but never owns the rights to the intellectual property (IP). SaaS provides businesses with the benefit of reduced costs of development for similar custom software, with the downside of being at the mercy of the SaaS provider's contract terms.
It’s important to remember that SaaS companies cater to the lowest common denominator when building their products. Their goal is to build a solution that will be “just enough” for most users, but not great for any single user. This approach does not serve businesses on the cutting edge of their industries looking to redefine the status quo.
Who owns the rights to custom software?
Many people assume that a business paying to have software built by an outside firm retains the right to intellectual property (IP). Surprisingly, this is not always the case with custom technology. We advise anyone considering custom work to triple-check their contract to ensure the development firm can’t hold their software hostage.
At Steelhead Software, our partners always retain the rights to their intellectual property.
We strive to keep our relationships honest and transparent every step of the way and believe our customers should own what they pay for. This approach empowers our clients to take their assets in-house or to other firms in the future.
Why choose custom software?
Custom software provides organizations with several advantages over off-the-shelf programs. First, it allows companies to create a solution that fits their needs and goals rather than adapting their operations to match an existing product. This saves the business time and money as custom software solutions include only the features a business needs without the expensive fluff.
Additionally, since the solution is precisely tailored they have greater flexibility and scalability than SaaS software programs or apps. When an organization chooses to develop a custom software solution, they have taken control of when and how its business processes change rather than conforming to changes based on its SaaS provider.
Some other benefits of custom application development include:
Owning the source code and can make changes or add features as required.
The application can be integrated with your existing systems and processes (including 3rd party systems).
Scaling the application as your business grows.
Maintaining your competitive advantage over any rivals using generic solutions.
You’re no longer paying costly monthly software subscription fees.
Custom software application development qualifies for the R&D Tax credit, which can be a substantial tax savings opportunity.
Custom applications are often easier to maintain since they have been developed with your organization’s unique needs in mind from the start.
What services do custom software development companies provide?
Companies providing custom software development services typically offer end-to-end development services, including:
Project Discovery and Documentation
UX Research and Design
Software Architecture and Development
Steelhead provides all of the above services and specializes in legacy software modernization with 3rd party integrations. We excel at helping your business digitally transform its processes, reducing overhead and improving margins without compromising and adapting to a generic SaaS tool. Check out our services page to learn more.
What are the different types of software applications?
Many software applications can either be custom-built or bought off the shelf. Here is a list of common types of software that Steelhead has successfully built and maintained for clients:
E-commerce platforms with content management systems (CMS) for online retailers
Marketing websites that vary by industry
What makes a custom software solution a better option?
In some instances an off-the-shelf product may be adequate for your needs - in others, a custom solution will be a better option. Some situations where you might choose bespoke software development include:
You want a relationship with the software provider - Many people are tired of feeling like a faceless customer in the eyes of a huge tech company. Custom software allows you to maintain a relationship with the people building the software your business depends on.
When you require unique functionality – If you need an application to do something that no off-the-shelf product can provide, you will need to develop it specifically for you. For example, if you are in a niche industry and track the movement of products through your supply chain from farm to table, then you might need a custom software solution.
When you have outgrown off-the-shelf software – As your business grows you may find that an off-the-shelf product can’t keep up. In this case, it may be time to consider developing a solution better suited to your organization’s needs. For example, if you start out using QuickBooks for inventory management but realize you need more extensive lot tracking than they can provide, you may be ready to graduate to a more sophisticated custom system.
Automating business processes – If you have manual processes that are time-consuming and error-prone, custom software can help by automating them. This will improve efficiency and accuracy while freeing staff to focus on higher-value tasks. This is common in businesses with many repetitive processes like taking orders, generating invoices, printing, and sending shipping labels. Here's a success story where Steelhead helped solve a similar problem.
Driving customer experience – To offer your customers a better experience than your competition, custom software can help by providing them with self-service portals or mobile apps to access information or perform tasks in real-time. If you are a retail store, you could develop a mobile app that allows customers to view stock levels and place orders from their smartphones. Industry trends show that customer loyalty grows substantially with customer experiences like these.
Substantially increase revenue – If you want to increase revenue, then custom software can help by providing new ways for customers to buy from you or by automating processes so that staff can sell more products/services in less time. Here's an example: An owner/operator of an HVAC company looking for an opportunity to grow your recurring revenue may want to develop an online marketplace that allows customers to purchase a new filter for their HVAC system regularly - without calling them or setting up another appointment. Here's a case study where Steelhead partnered with a client to build this ecosystem.
What size of company will benefit from custom software?
Custom software benefits any business looking to improve processes, increase efficiency, and save money. Smaller companies can benefit from custom software because they may have different strategies than a SaaS provider's generic workflow.
Another significant benefit to custom software is the reduced cost over the useful lifetime of the software. It’s inefficient for SMBs to build an internal software team that can deliver value from day one. At Steelhead, we love working with SMBs to align on their direction over the next five years and help them leverage technology to reach those goals.
Similarly, larger businesses may find that custom software helps them scale up quickly and provides more complex features than pre-built solutions. Larger enterprises may need expert help on a specific project or initiative. Steelhead Software regularly partners with enterprise IT departments to provide expert-level development at a reasonable cost.
Sound like you could benefit from custom software?
A well-designed, well-built custom software application will last for many years. According to industry studies, the average software system lasts 6-8 years. However, actual software lifespan depends on several factors, including:
Craftsmanship – If corners were cut during development or poor technology choices were made, then the lifespan of the application will be reduced.
Industry-standard technologies – If proprietary tools & technologies were used, then it may not be possible (or cost-effective) to maintain/upgrade the application in the future.
Scalability & future proofing – If the application architecture took into account future features the business may need, the system may be able to be more easily upgraded and supported.
At Steelhead software, we deeply understand the importance of keeping a custom software solution operational for as long as possible. We regularly design systems with an expected lifetime of 10 years or more and always provide KPIs that show when our clients should expect their ROI.
How much does custom software development cost?
As you might expect, there is no simple answer to this question. Costs depend on a variety of factors:
The size and complexity of the project
The technologies used
The location of the development team
Larger & more complex projects will cost more than smaller & simpler ones. An essential website could be a small project, while an ERP system that integrates with multiple 3rd party systems will be a more significant investment.
Some technologies are more expensive than others (AWS vs. Azure vs. Oracle). When Steelhead implements systems, we aim to find a solid middle ground where operational costs are minimized and utilize free and open-source tools whenever possible.
Developers based in North America tend to charge more per hour than those in Eastern Europe and Asia. Ultimately, you get what you pay for when it comes to bespoke software, so investing in good quality software development will save you tens of thousands of dollars in the long run through increased productivity & efficiency gains. Investing in quality upfront avoids costly reworks down the line. It takes skill and experience to build great software that stands the test of time. The Steelhead Software team is located in the United States and takes pride in keeping our developers close to home.
When should I use off-the-shelf (OTS) software?
There are some circumstances where it makes more sense to buy an off-the-shelf product rather than invest in a custom software solution. Note that this always assumes a generic solution is available in your space; many industries do not have sufficient software solutions in the market.
Here are some scenarios where buying off the shelf may be the right decision:
The problem has already been solved – If an off-the-shelf product is available that meets your needs, why waste time and money reinventing the wheel?
With that said, you may be an exception to this rule if you’re interested in building an asset for your business rather than paying subscription fees.
The hard part is identifying whether off-the-shelf software will actually solve the problem. SaaS marketing often obscures or omits key details about their capabilities. Always keep an eye out for “vaporware” when making a purchasing decision. During discovery, Steelhead Software will evaluate the marketplace to help you determine the best technical direction for your business.
You prioritize speed over customization – If you need something quickly and don’t mind compromising on functionality, it is usually faster to buy an existing product than to have something developed from scratch. For example, if you need accounting software for your small business and only have a few weeks before tax season, buying QuickBooks will be quicker than having something developed specifically for you.
That being said, custom software projects can start realizing ROI shortly after the project begins by using iterative deployments. At Steelhead Software our goal is todeliver value as soon as possible and produce working software within weeks of the project kick-off.
You prioritize short-term cost over long-term gains – Developing bespoke solutions can be more expensive in the short term. If you’re in this scenario and don’t mind compromising on functionality, using a SaaS product may be the best option.
However, it is essential to remember that just because something is available “off the shelf” doesn’t mean it will be cheaper than developing a custom solution in the long run.
In fact, OTS products often cost more over time due to inflexibility and lack of features holding your business back. Like any industry, there are always trade-offs between speed and quality in software development.
Your business can conform to a generic process - One of the most valuable traits of custom software is that it tailors to your business processes, not the other way around. If a company wants to change its process (and risk losing its competitive edge) to fit a SaaS tool, that may be easier than investing in a custom software application.
Before purchasing, it is essential to take the time upfront to ensure that any technology solution meets your current and future needs.
Curious about whether an OTS software solution solves your organization’s problems?
There are a few key things to consider when determining if buying vs. building is cheaper in the custom software space. If you need something simple that can be purchased off the shelf, purchasing it may be more affordable than building it. However, suppose you need specific features that require customization and development. In that case, building custom software might be more cost-effective in the long run as it will be tailored precisely to your needs and won’t require extra splurges on support or maintenance costs.
The SaaS industry is experiencing an epidemic of non-transparent pricing. We regularly encounter companies signing a multi-year contract with a SaaS provider who then tacks on additional “custom implementation” fees that the business was unaware of. These hidden support fees can increase the project price tag substantially above a custom-built solution without the benefits of custom software.
Will you support my existing custom software?
Steelhead Software offers ongoing support for existing custom software applications, so you can be assured knowing that your application is always up and running with minimal downtime. We also provide regular maintenance updates (when possible) based on customer feedback to ensure maximum performance and optimal security at all times.
With so many questions related to custom software, it can take time to decide whether it's right for your business. Hopefully, we have clarified what custom software is and how it can benefit your organization. If you found this interesting or helpful, we’d love to hear from you.