Off the shelf software: A broader picture

8 minutes reading time
  • Attitudes to the procurement of web and IT services have changed radically over the past five years. Organisations have outsourced non-core functions and many are increasingly embracing generic cloud-based solutions to drive down costs and refocus on the core operations that underpin their business.

    When to buy

    In many circumstances this makes sense given the ready availability of off the shelf solutions allows organisations to simplify business processes and quickly and easily extend the scope of their activities.

    For example, problems with budgetary control and reporting can be tackled through the adoption of an appropriate software package. Similarly control of cost and cost reduction can easily be achieved with an off the shelf solution by automating very simple, routine processes.

    One step further, off the shelf software has also reduced barriers to enter certain marketplaces. For instance, accounting software now allows organisations to accurately and quickly comply with legislative changes - such as the way Value Added Tax is calculated and accounted for - an area where an accountant would traditionally be required.

    As such, it is without doubt off the shelf solutions have improved a wide variety of business processes and reduced barriers to entry into certain marketplaces.

    When to build

    But this “one size fits all” approach to software can become problematic when extending beyond basic business operations to underpining essential core aspects of a business - the heart of competitive differentiation.

    At a time when differentiation is a major indicator of success in the global market, every company is looking to offer competitive and highly differentiated products and services. However, gaining advantage over competitors becomes more difficult when an organisation's core product or service is delivered by off-the-shelf solutions common in the marketplace.

    As a result, competitive advantage has to be sought elsewhere, for example: in after-sales service, quality, price or in the competencies of the employees of the organisation.

    The next issue is whether an off-the-shelf solution will actually deliver all the capabilities and features an organisation needs and wants? Or will they have to bend and change their business operations to the suit the software’s ‘vanilla’ configuration?

    Being constrained in this way by an investment that fails to support real business needs and cannot deliver the scalability required to support business growth is a real and all too common trap organisations fall into today.

    Being constrained in this way by an investment that fails to support real business needs and cannot deliver the scalability required to support business growth is a real and all too common trap organisations fall into today.

    And then comes the biggest problem of all. Organisations then try to use such software for tasks that are not routine, or worse yet, decide to tailor to make it fit with the way the company does business.

    If a company acquires an off-the-shelf package and then decides to tailor it, the value of buying an off-the-shelf application diminishes rapidly. The usual benefits of reduced cost, speed to market and high quality are rapidly undermined by the cost of adapting and maintaining the tailored solution. In effect, they are investing in a bespoke solution after all - but now with all the disadvantages of ongoing license fees and upgrade costs. The result can be the worst of both worlds – functional compromise and no future proofing.

    Cost

    Of course, the biggest reason why most organisations choose off the shelf solutions is the perceived lower cost when compared to following a bespoke path. However, undertaking a three to five year total cost of ownership comparison can be revealing. Whilst the bespoke development investment is loaded towards the beginning of the cycle, there are no on going licensing costs to consider - so things tend to even out, if not tilt in the favour of bespoke as time passes. Moreover, for any organisation planning expansion, adding in the costs of additional licenses and training for each new employee can further decrease the appeal of an off the shelf solution.

    Conclusion

    Of course, for the majority of deployments, off the shelf works – there is no need to recreate the wheel. But at some point, most organisations are likely to require a piece of software with functionality and features that are simply not available off the shelf. 

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