The software you implement can make a real impact. Not only does it impact your internal processes, it’s just as important when it comes to the product or service you’re delivering to your customers. The software that your customer’s use, and their response to such software, can determine whether or not they’ll use you again, recommend you to others, or simply leave your site.
Some industries depend on software-led processes, especially if their core services are delivered via a website. Many organisations need a product or SaaS (software as a service) that helps them deliver exactly what is needed to deliver to their customers. This can be frontline services or can refer to internal processes too. One way to deliver this, while being completely assured you’ve got it right for your customers and your internal business processes, is through implementing custom-written software.
- What is custom software?
- What is off-the-shelf software?
- off-the-shelf vs Custom software
- Training costs
- Research and Development Tax Relief & Custom Software
- Flexibility for Growth: What to Consider
What is custom software?
Custom software, sometimes referred to as bespoke software or custom written software, is software that has been specifically written and developed with a singular organisation (yours) in mind.
Custom software has risen in popularity in recent years, as organisations are fast realising the necessity to be one step ahead of competitors, delivering unbeatable services that counterparts simply cannot match up to. This is one of the unique selling points of custom software – it’s completely yours.
There are various other advantages to using custom written software, too, which we will cover below.
We’ll directly compare this to off-the-shelf software, another popular choice for businesses.
What is off-the-shelf software?
This term refers to software that is widely available, and is pre-written as opposed to being custom written to your personal requirements. Off-the-shelf software (hence the term) is a more commercial, universally available choice, and has been developed for widespread use.
There are benefits to implementing custom software and off-the-shelf software, which we will touch on below. If you are considering investing in custom written software for your business, this article can help pinpoint whether it is right for you, by highlighting the key benefits and considerations to make.
Off-the-Shelf vs Custom Software Cost
off-the-shelf tends to be a cheaper option when compared to bespoke written software. As the name suggests, the nature of off-the-shelf software is that it is readily available, and can be ‘picked up’ / implemented by any organisation. You are purchasing the software, but are doing so via a licence fee, joining one of the many other organisations benefiting from the same software. However, the lower upfront cost of this can be a real plus for a company looking for a software which ticks the right boxes without costing them the earth. For a readily available, instantly accessible option, that will in the main part, deliver what you are looking for a reasonable cost, sometimes in the form of monthly pay packets, then off-the-shelf software may be for you.
Custom written software
Since this choice involves a team writing and developing a software that is unique to your businesses needs, there is, understandably, a much heftier cost attached. Custom software design should be considered an investment, and organisations should treat it as such. There will be an expert software development team working on designing your software, that is tailored to your exact requirement. It goes with the territory that this level of expertise will incur a higher upfront cost. The software being built is completely bespoke to you, and you will own the software once it has been developed, so expect to pay for such a service.
Paying for bespoke software will involve working with a software development agency, with a team assigned to your project, that will include:
- SaaS specialists
- Test engineers
- Business operators
With off-the-shelf software, you pay off a licence fee and that’s it.
As you might imagine, there’s a significant difference in the delivery time of these two types of software.
As off-the-shelf software is readily available, it’s pretty much packed up and ready to go, down to the directions of use and delivery. As it is universally available, it will likely be a far quicker process to attain off-the-shelf software, so if an organisation is looking for a quick and easy fix to solve a frustrating problem that’s affecting their short term success, then off-the-shelf software may be the answer. It will likely be easier to implement across your wider business network and processes, compared to custom software, too.
Custom saas development, meanwhile, will involve a longer time between initial contact and delivery time. The software is being specifically developed and designed to your exact ramifications, so expect it to take time. This will include testing time to ensure all features of the custom written software work, especially when brought together. Depending on the nature of the software and how it is being used by an organisation, development and testing stage can take months. A company should consider this when deciding what software they wish to implement, as bespoke SaaS is not the answer to a quick fix. It is a carefully considered decision, incorporating a precise and unique purpose in providing a final design & product that is utterly bespoke. This is why for some, it’s the ultimate solution. Those features that make you think, ‘ah that’ll be nice to have’ – they’re all yours. Nice.
The features of off-the-shelf software are often all encompassing and wide ranging, in order to meet the needs of such a variety of end users. Of course, you can find software packages that are tailored within an industry sector, or delivering a specific type of service, however within that there will still be a ‘blueprint’ the software’s features follow. For some organisations, this is all that is needed to effectively implement and run their business, delivering to the end user with ease and success.
The ambiguity of off-the-shelf software can be problematic for some, as software packages may not deliver certain aspects or specific features an organisation may be looking for, meaning compromises will have to be made. Some organisations may be able to oversee this, but there are many who don’t want to compromise. It is at this point that custom software is preferred or usually implemented.
Additionally, off-the-shelf software could be loaded with functionalities that an organisation simply doesn’t use, taking up valuable data storage and slowing down processes too.
Integration is something to consider when deciding whether to opt for bespoke or commercial software.
Bespoke software will likely be more time consuming to implement, at the potential cost of a decrease in productivity during this time. However, once the software is integrated, it will enable the organisation’s processes to be far more streamlined, simplifying the process for the end user.
off-the-shelf software will likely be easier to integrate, and there will likely be online forums, discussions and videos to help should people find it problematic. Due to the fact the software has been written for universal use, the integration will likely involve less phases and steps, as ease-of-use is one of the leading selling points for off-the-shelf software.
Ease of use is another leading selling point of off-the-shelf software. It is tried and tested, trusted by other organisations, and depending on what you’re opting for, it may be a well-known name in the industry. Occasionally, with CRM systems or email, there is little point investing in custom software as the leaders in the industry offer unmatchable services and software solutions (Gmail, Salesforce, Microsoft Outlook, Accounting Software such as Xero or Sage).
On the other hand, investing in bespoke software can similarly result in simplicity, as you may be simplifying systems, and solving what was previously a problem setting your company back. Bespoke software can be designed to solve those individual problems, meaning the initial upfront investment is worth its weight in gold later down the line.
There are naturally fewer training costs when you invest in off-the-shelf software, users will likely have access to, or easily be able to find, a video to follow/an online resource on how to use or integrate the software effectively. Off-the-shelf is ready to use from the beginning, as the product has been developed for the mass market. It is expected to meet the needs of as many users as possible in one go, and resources will be in place to make sure everybody’s on the same page.
Meanwhile, with bespoke software, the SaaS developers will need to train those who are using it specifically. The more complicated the software, the more time and resources will be needed to train everybody up. Additionally, any new employees will have to be similarly trained. For a company with limited time and resources for such things, a handbook or online resource from their off-the-shelf software provider will likely be the answer to all their problems.
off-the-shelf software can be easier to maintain as it is universally available, meaning, depending on the popularity of the software as a product, you’ll likely be able to find forums or online community spaces to get to the root cause of any issues. Any software updates, meanwhile, will be implemented automatically and across the board. As the software is used by a wider audience, updates may occur more often than custom software. This keeps the multiple users happy, and ensures the software’s longevity. One possible downside, however, is that getting to the root cause of an issue that is particularly complex may take longer than if you were to go directly to the software engineer, as you would with custom software.
Bespoke software gives you the possibility to report a bug directly to the SaaS engineer or software agency that built the software, meaning you are far more likely to get the result you want. If your issue needs to be resolved quickly, with custom software you may find it easier to get to the root cause, rather than trying to contact a helpdesk that’s serving multiple users who may also have issues – this can result in frustrating delays that won’t do anyone any favours.
Research and Development Tax Relief & Custom Software
Another benefit of implementing custom software is that you may be eligible to receive tax return on the costs involved. This is because such custom written software may fall into the bracket of research & development that is recognised by a Government scheme that rewards innovation within businesses.
What is R&D (Research and Development) Tax Relief?
This relates to a Government scheme rewards companies for investing in innovation – in particular, those that spend money developing new products, processes or services that fuel growth.
This can fall under any industry, and can result in up to 33% percent of project costs being claimed back as tax credit.
Under the scheme, companies can claim for a proportion of a companies following expenditures:
- Class 1 National Insurance Contributions
- Pension fund contributions
The money will be subtracted from your corporation tax bill, and can be claimed by a company who have made significant steps in innovation. The scheme can provide a great amount of scope to businesses, with companies able to claim the tax relief up to two years after initial research began.
Defined as ‘attempting to resolve scientific/ technological uncertainties’, if your company are developing custom software with an overarching aim of improving processes that are of significant benefit, R&D Tax Relief can certainly apply to you.
What’s more, if the research and development stages proved ultimately unsuccessful, it can still count as R&D as it involved seeking a solution. A company can claim money back once the research and development stage is complete, with appropriate designing, testing and implementing also carried out. If a feasible solution is found, a company can also claim.
Am I eligible for R & D tax relief?
To claim R & D tax relief, recipients must:
- Have an SME of less than 500 employees
- Put in a claim within 2 years of project initiation
- Have a turnover of less than £90m
It’s worth noting that aesthetic improvements do not count and will not be valid; the custom software developed must be of significant value in improving processes, so, for a company seeking bespoke software solutions regardless of the R & D tax relief scheme, this can be a real bonus. You can read more about research and development tax relief here.
Flexibility for Growth: What to Consider
A major consideration in deciding what software implementation will be due to the position your company is in, and what the future of your company looks like. One of the main drives for bespoke software is to aid in futureproofing and expansion, as bespoke software is a completely flexible framework to work on. This is because it is owned by and managed by you, meaning you can adapt and alter to fit with your business’ needs. Bespoke also offers complete flexibility which can be extended to the number of users, as you officially and legally own the intellectual property. This means there is no need to pay for each user, differing from commercial, which will likely involve a licence fee for each employee. However, the initial software design must consider business expansion and room for growth, as, once written it can be impossible or very expensive to make fundamental changes to the core framework. For this reason, some businesses may actually alter for off-the-shelf, as expansion options are available at a much reduced cost, that will allow for unforeseen expansion and change.
There would be nothing worse than investing heavily in bespoke, one-off software, to find that 7 months down the line, you alter some core processes and find the software you paid an arm and a leg for isn’t adaptable or susceptible to the integration necessary.
In this case, some could argue that investing in bespoke software forces a company to look inward and develop a business strategy, outlining their goals to such an extent that the software they design is future proofed. This can be an advantage and disadvantage of bespoke software – it can make companies consider the big questions and the bigger picture.
You need to know your business and its specifications very well if you decide to implement bespoke software. There is little wiggle room to change your processes later on in the process, due to the fact the software is specifically being built – you need to know your goals, your outlines and be clear in the final user experience you are wanting to provide your clients/ end users, in whatever capacity this might be.
The decision to use custom software or off-the-shelf software is a decision that will involve a lot of factors. Depending on your business processes, and how you best operate, both have their strengths.
For more information about implementing your own bespoke, custom written software, contact one of the team today.