How Does Off-the-shelf Software Hinder Retail Business Growth?
Let’s assume you’ve finally decided to purchase and implement a new solution as part of your retail business software ecosystem. To make this complex decision, you likely spent days or even months analyzing and evaluating to choose the best option based on price and functionality.
The provider says that implementation will take a few weeks, and results will beat expectations. So, you wait. Finally, it’s time to go live, and from that moment, your business becomes 100% more effective, profitable, and just better, right? The off-the-shelf software has solved the problem and works just as you expect, doesn’t it?
Unfortunately, in most cases, it does not work this way. Generally, off-the-shelf software does not solve the problem. It ends up creating additional issues. You struggle with functions you didn’t ask for, no support, weak integrations to the rest of your retail business, and so on. These issues are not just a nuisance, but a hindrance to growth and therefore, revenue. This is where a custom solution takes place.
You might think a customer software is something sophisticated and expensive. Yes, it is. But it is the only option that delivers and achieves expected results. Don’t take our word for it. Let’s review how off-the-shelf software can hurt business, why custom solutions are not that scary, and what makes it the primary option for many organizations.
Custom vs Off the Shelf software: Overview
An important preface
It’s important to understand what we mean by custom and off-the-shelf software.
Off-the-shelf (commercial off-the-shelf (COTS), ready-made or prepackaged) software is a product made by a third-party vendor and available for sale to the general public. Usually, the product is distributed on a subscription basis with annual payment options. Great examples would be Quickbooks, Zoho CRM, or LightSpeed POS.
Custom software is a software product built specifically for your organization. It could be created from scratch or based on an open-source platform. For example, if you take open-source ORO CRM and customize its functionality for the needs of your business, this would be a custom solution. Custom solutions generally do not require a license fee and the organization is the owner of the final product.
1. Poor implementation
Planning and analysis are the backbones of a successful decision. It is important in almost every scenario. Take investors, marketers, or any other professional. Before taking any critical step, they go through the research-analysis-planning framework.
Software is no exception. Before implementing a solution, a deep investigation and analysis of the specifics of the business and challenges must take place. This discovery phase contributes to 90% of the success of the overall project. The better you prepare, the better result you get.
Off-the-shelf software vendors usually don’t provide effective business analysis. The mass-market nature of these products makes an individual approach impossible. The vendor simply lacks the time to analyze your challenges and make any corrections or recommendations. This results in a bad fit from the very beginning, making success almost impossible.
Let’s review a few examples from Maven’s experience that demonstrate the importance of preparation and planning.
- POS (Point of Sale) system for large kid’s products retailer.
Our client Babypark required an entire software architecture redesign to overcome the business’s inability to grow. The crucial part of the redesign was a legacy POS system that had been in use for the last 20 years.
First, Babypark tried to implement an off-the-shelf system. This attempt failed quickly. The vendor didn’t run any business analysis beforehand, so the software didn’t match the organization’s business process. Plus, the communication was difficult and ineffective.
To overcome it, we offered a custom POS system development. Custom software has saved the business. As a result, Babypark implemented an omnichannel strategy, saved money, and became 300% more productive.
- Service marketplace for bootstrapping startup.
We started to work with Skillsez in 2018. The founder had an ambitious idea, in-depth industry experience but almost zero technical or product management background. So, we started to work on both consulting and development simultaneously.
While consulting was a straightforward process of endless meetings, development became quite more complicated. To meet the bootstrapping nature of the startup and minimize unnecessary resources, we decide to spend more time on planning and analysis.
It resulted in a time and cost-effective product development and MVP release in 2020. We made everything right from the first attempt. Then, in less than 6 months, the freshly released product received a valuation of $5,000,000.
2. Useless Functionality
When you’re buying bread, would you pay extra if it’s barking like a dog? This sounds funny, but the reality is that in exchange for spending money on bread, you want to get bread. The story is less humorous when you’re paying thousands of dollars monthly for a solution with features that you don’t need. That’s what occurs with off-the-shelf software.
The vendor’s goal is to create as many features as possible for a product, so it works for the broadest possible audience. This is in contrast to the businesses’ goal of solving very specific challenges. These goals are usually not aligned. This means spending on unnecessary resources, driving up costs and potentially creating losses for a company’s income statement.
By contrast, there are many cases where there is not enough functionality. Vendors address this by offering tiered pricing packages with the additional capabilities, but it also doesn’t help. Products developed for the masses won’t ever meet your expectations on features. It’s about a time when your business will be affected.
Should you avoid issues around functionality, there is another challenge waiting around the corner. We won’t talk about the limitations of some features. This depends on the provider. What is more critical is the inability of off-the-shelf software to seamlessly integrate with the rest of the software ecosystem.
Off-the-shelf software won’t ever address the unique nature of your architecture. Integration is a complicated process and cannot be completed through simple API configuration.
Custom software makes these issues disappear. First, when developing your solution, you can choose which functions to include. You pay only for things you need. Second, custom software delivers custom integration. No matter your ecosystem, custom solutions will be integrated seamlessly.
Finally, there is predefined plan for extra functionality. Together with a service provider, you develop the plan of when and how you’ll implement new features so it fits your budget and timing.
3. High Cost
On the surface, most off-the-shelf software is indeed much cheaper than custom options. But that changes when you start to further calculate.
Prepackaged solutions hurt your business silently. By showing you an attractive low initial cost, the vendor hides the rest of the picture. Hidden costs like transaction fees, plan switches, extra packages, ongoing maintenance, updates, and individual support drive expenses through the roof.
What’s worse is that the moment you implement the software you are hooked. The vendor knows that you will pay any extra fees to make your business operate smoothly. They also know that you don’t want to go through the process of setup, implementation, integration, and training all over again, and use it to make a profit from you.
When choosing custom software the opposite happens. During the planning phase, the provider gives you all the information associated with the costs of the final product. Then, because of maximum flexibility in terms of time and scope of work, you can negotiate an appropriate cost and terms of payment without hidden fees. Everything gets negotiated beforehand.
To more clearly understand true costs from the very beginning, consider calculating the total cost of ownership rather than just an initial cost or a quote. Calculate this number for 5 to 7 years into the future. You will be surprised how different the costs are. In most cases, you’ll see that a custom solution is much more cost-effective in the long term. Here’s an example of such calculation:
4. Absence of Support
Support is the most important part of the customer experience. Whether this is your first implementation or you have been using software for decades, support follows you for every activity. The better the vendor can address and resolve your issues, the less harmful they become. In most cases, using a specific software is not about not having problems, it is about how fast those problems are resolved.
For most of the off-the-shelf solutions, strong support remains a dream that won’t come true. The history of these solutions makes an individual approach impossible because the more customers they have, the more support team members they would need. It means more expenses and less profit.
It is obvious how poor support hurts businesses. Issues that could be resolved within minutes take days, more complex problems take months, and critical challenges remain unsolved. This results in losses in efficiency, performance, and profit. Even buying more expensive plans with additional support hours won’t help. No matter how much you pay, the limitations remain the same.
The problem of bad customer service stretches even further. First, it blocks your ability to grow. How is it possible to grow the business with a backlog full of ongoing problems? Second, every update, bug fix, or any little change in a business process becomes an issue. Poor support kills the agility and flexibility of the organization.
The issue is so significant that if you check reviews on almost any off-the-shelf product, you’ll see people complaining about unreliable support. The solution is custom software.
What’s most important about the support of custom software is options. If you don’t like the service provider’s support team, you’re free to choose other teams for support. By building software using modern technology, you make it easy for developers around the world to understand. You can hire anyone you like, build an in-house team or even support the technology by yourself. The options are infinite and that’s what makes custom awesome.
5. No control over security
Last but not least is security. This is where the absence of control hits the critical level and could hurt your business badly. Not to mention the risks of lost customers’ data or sensitive business information. Reputational risks can be enormous. A security issue could drive customers away from your stores and products. You got hacked once, you lose trust.
By purchasing off-the-shelf software, you are not buying the software. You rent it. This means you don’t owe this software. So, what’s wrong with it? If the vendor gets hacked, you also get hacked. Small or medium businesses are less likely to be a target of some hackers, but big companies with thousands of users are a tasty target for them.
The fact of non-ownership also means you have zero control over the data flow, infrastructure, and other security-sensitive aspects. Think of all the years and resources you spent building your organization. Now they are in the hands of a vendor and your reputation rests on its ability to build a reliable infrastructure. Do you trust a vendor’s company?
The only way to overcome this issue is to take personal control. By building custom software, you’re able to set things up the way you know how they work, understand where the weak parts are, and in a worst-case scenario, uncover what went wrong. Of course, even a custom solution cannot guarantee 100% security, but it raises this percentage to the very maximum.
We cannot say that every off-the-shelf software hurts or will hurt business performance. There are numbers and numbers of reliable vendors who will perform business analysis, provide easy and fast integration, won’t charge extra, and provide 24/7 support. However, sooner or later, the need for a custom solution will become apparent.
Custom software is the only way to control processes, best the competition, and get into serious business. By choosing custom from day one, you’re not only saving time and money but also building a strong foundation for the future.
To make this future bright and foundationally strong, hire only those developers who know what they’re doing. Contact Maven and get superior code combined with critical, strategic business thinking, a proven development process, and deep technology expertise. We make reliable solutions that work.