As part of Solutions Review’s Premium Content Series—a collection of contributed columns written by industry experts in maturing software categories—Paulo Rosado, the CEO and Founder of OutSystems, shares some insights on why custom-built software is often a better investment than off-the-shelf alternatives.
With the massive adoption of smartphones and tablets over the past decade, alongside the spread of remote tools during the pandemic, businesses and consumers are more tech-savvy and dependent. This poses both an opportunity and challenge for corporate leaders and CIOs. In this new hyper-digital reality, every company needs to deliver exceptional technical experiences through online and mobile platforms. And if CIOs don’t have a digital strategy that prioritizes developing custom-built software the right way, their business will lose customers and fall behind.
Off-the-shelf software isn’t the answer. It offers the same solutions to all customers in a world where every company has a tech-savvy consumer base that expects unique, personalized experiences. Major software vendors that churn out products at a massive scale cannot offer products and services that allow for that level of customization—it’s not profitable or feasible for them to do so.
Off-the-Shelf Software Fallacy
Unfortunately, the pressure to launch new digital apps quickly leads many businesses to buy layer upon layer of off-the-shelf SaaS products designed for a mass audience that isn’t tailored to the needs of any specific audience. This prevents companies from optimizing for and adapting to changing customer needs and new business opportunities while creating a host of new problems:
- Adopting off-the-shelf solutions limits customization and leads to a lost competitive advantage. Your competitors are buying the exact solutions, remember.
- Deploying multiple off-the-shelf solutions from different vendors is a complex nightmare, with entangled architectures, code, and processes that increase maintenance and management time and crush productivity. The more time spent maintaining your architecture means less time developing outstanding customer and employee experiences.
- Integrating disjointed systems takes unique time and talent all on its own, which is costly, hard to find, and not a scalable resources model.
- Vendor end-of-life solutions burden the customer, who has to rethink their IT strategy down the line and often undergo complex and expensive migration projects.
These problems will worsen as time goes by and undermine innovation by consuming scarce resources and leading to burnout in IT departments. These vulnerabilities won’t go away on their own; in fact, they will continue to rise to the surface at a time when speed and differentiation are critical to survival. By contrast, when businesses use custom-built software for the long term, their IT teams can make changes as needed to respond to evolving customer needs and market opportunities. This offers a massive competitive advantage.
For example, Portuguese energy company Galp Energia created an app in the first year of the pandemic that allows its customers to switch energy providers at gas station kiosks in under three minutes. With a small team of developers, they harnessed the power of optical character recognition, machine learning, Adobe Sign digital signature, OneTrust to record customer consents, Galp’s custom CRM platform, and Azure Active Directory B2C for digital identity authentication. The team integrated these technologies into an intuitive application that minimizes data entry and removes most friction in their customer onboarding process.
Additionally, consider the case of Humana, an insurance giant that built COVID test finders in a fraction of the time it expected using in-house resources and a modern application platform. It replaced a cumbersome spreadsheet with a web application that allows customer service reps to pull up test location information and rolled out a public app that helps people locate testing sites. Developed in a month, both services proved incredibly valuable to employees and customers alike during a difficult time.
By ditching solutions that limit differentiation, Galp and Humana kicked off a new approach to build for the future they want, not a future imposed on them. Many business leaders incorrectly think it’s too expensive or too complicated to do something similar, so they overlook the power of modern approaches to application development. But only businesses that take ownership of their software innovation will survive and thrive in this quickly evolving world.
- Why Custom-Built Software Beats Off-the-Shelf Every Time - March 30, 2022