Custom Enterprise Software: Advantages and Disadvantages You Need to Know

Choosing between off-the-shelf or custom enterprise software shouldn’t come down to budget alone. Discover the pros and cons of each option and make a decision that better suits your enterprise.

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by Matias Emiliano Alvarez Duran

10/17/2022

It’s not Sophie’s choice, but it can be hard to decide between custom-built enterprise software or commercial off-the-shelf (COTS) products. 

Purchasing a license for generic solutions is usually the least expensive and fastest way to get enterprise software. But, those solutions may come with a steep learning curve, make you migrate your data to other compatible tools, and still not cover all your software requirements.

Custom enterprise software, on the other hand, means you develop tailored solutions that connect with your existing systems, enhance the company’s internal processes, and increase productivity and scalability. 

In this article, we’ve compiled the pros and cons of developing a custom enterprise solution—so you can make an educated decision that benefits your business.

Table of contents

Ready to build your own custom software with a team that cares about you and your processes? We’re not code monkeys, we care about you

Custom vs off-the-shelf software

Developing custom enterprise level software means building a native tool to answer your specific needs. Whereas purchasing a license for existing software, or buying it off-the-shelf, means using a generic solution made to appeal to a wider market of businesses. 

Neither solution is necessarily better or worse. For example, using commercial software is usually less expensive, but it might not be what your business needs in the long run. To choose one over the other you should ask yourself the following questions:

  1. Do you have the budget or in-house technical expertise to develop a custom solution?

  2. When do you need to use this software? Can you wait for a few months to start using it?

  3. Do you have any additional security requirements?

  4. Are you planning to scale your business? 

  5. Do you fear delegating your data and processes to a third-party solution?

  6. Are there other suited solutions in the market?


If you answered yes to all questions except for number six, you should go for a custom-made solution. However, if you got the opposite, or a mixed set of answers, you should try looking for an out-of-the-box software solution.

For example, HyreCar is a company that offers a two-sided marketplace for car sharing. It could’ve probably used a bunch of no-code and other tools to create an initial version of the marketplace. 

However, HyreCar needed greater control of the product and architecture that allowed scalability. So, it made sense to develop custom software instead. This customization also allowed HyreCar to provide top-notch service to customers.

Both off-the-shelf and tailor-made software can help you streamline your enterprise operations. Choosing one over the other mostly depends on your needs, budget, and urgency.

Custom-built enterprise software: Is it right for you?

Custom-built enterprise software comes with a large set of benefits and some drawbacks. Review them closely to determine whether or not going for a custom software solution is right for you.

Advantages of custom enterprise software 

Developing tailor-made enterprise applications for your business comes with a long list of benefits. Here are the ones you should take into account. 

1. It’s compatible with existing systems 

One of the biggest benefits of enterprise software is that it will integrate with different systems despite its programming language. With custom development, you can ensure connectivity to your tools without lags or bugs. 

By connecting natively with all of your systems, you can run all business processes and transfer data without any hassle.

When you purchase off-the-shelf software, it may not come with all the integrations you need—or may come with several you won’t use. And while some of these platforms offer APIs for you to build the connections you require, they might lack essential pieces for your specific use case. On top of that, using APIs can be a poorly-documented, lengthy process, and can cause bugs.

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“Enterprise software is connected to the company it’s serving, it needs to provide an immersive experience,” explained Julian D’Alessandro, Co-Founder of NaNLABS and Principal Engineer. And for software to be truly immersive, it has to communicate with the company’s day-to-day tools.

2.  Allows for more flexibility 

With ready-made software, even if you choose from the top enterprise software solutions, you’ll be constrained by its pre-existing features. You’ll always be adapting to fit your tools, rather than the other way around.

Building enterprise application software (EAS) from scratch means you’re in charge of what it does and doesn’t do, the integrations, and ease of use. Plus, you get to request changes as the business requirements evolve (which you won’t be able to do with a COTS unless you get an open-source solution).

 3. Enables you to scale your business

Building your own custom enterprise solution means you can prepare the system for future growth. You need to make sure that the code aims for low coupling and high cohesion. Hence, modules will be easier to evolve and maintain and will support growth without introducing bugs.  

An EAS should be scalable in nature. This means it offers high performance and high speed. An EAS is also able to manage large

  • data volumes, 

  • number of users, 

  • and a large number of daily transactions.

4. Gives you ownership 

Custom enterprise software development gives you ownership of the system. This means you also own the data, its privacy policies, and can come up with a backup system to avoid losing any information in case there are any bugs or server issues.

As the platform owner, you don’t need to pay for a license and are free to use it forever without putting information at risk. You won't have to worry about updates deleting functionality or the software provider going out of business.

5. Lets you be in control

With an in-house enterprise application development team that’s in charge of getting the platform up and running, you’ll be sure that fixing any bugs or server drops will be top priority. 

You can also be in control of the support response time. You can set service level agreements (SLA) with the custom software development company to define expectations in case you have an issue with the platform. But, relying on external software may cause you to lose control, time, money, and even data.

6. It’s cost-effective because you pay for what you need

Enterprise-level software could be a better use of your money long-term because you pay for the features that you need. Whereas, when purchasing ready-made software, you end up paying for functionality or integrations that you might not need to use.

With enterprise software, the small features make the difference because they usually tackle really specific problems. Out-of-the-box enterprise software often offers generic solutions. 

7. Gives you a competitive advantage

Enterprise applications allow you to automate processes and simplify the way your team works. If the match between the software and the company is correct, it can lead to

  • Making faster data-driven decisions

  • Building automation on ineffective workflows

  • Getting more reliable results

  • Offering a unique selling proposition (USP)

  • Using software as a competitive advantage. 

The more business-specific software that you can build, the more leverage your business will have over similar competitors. 

8. Improves information security

Generic enterprise software often does a really good job at protecting data; but if your business needs to follow additional security measures, going with a COTS might not be enough.

If so, building a custom-made enterprise system becomes the only way to protect business and client information on your servers.

9. Provides return on investment

Both COTS and custom enterprise software have some upfront costs. The difference with COTS is you’ll always need to pay someone else in order to use the system that enables your team to do their work. For example, if you use a software package, you’ll have to pay for onboarding fees and license, plus you’ll never own the solution. 

Building custom-made software allows you to make an initial investment that will come with a high return over time. Once you finish the development process, you’ll only need to pay for maintenance fees that might be costly, but will grant you full control and flexibility. 

Disadvantages of custom enterprise software

There’s another side to this golden coin. Building software from scratch also comes with a list of disadvantages that you need to take into account before making a decision. 

1. You need internal expertise 

There are many no-code tools online that allow you to create simple software solutions, but if you want to develop software with enterprise-level quality, you’ll need to hire developers.

If you don’t have a technical team with the spare capacity or knowledge to build one of these systems, you can look into augmenting your data engineering team with a software agency. While an agency like NaNLABS will provide high-quality results, it’s a more expensive and time-consuming alternative to purchasing ready-made software.

2. It can be expensive 

Off-the-shelf software isn’t necessarily cheap. Most SaaS businesses will tailor some part of their software to ensure it runs smoothly on your business or charge a high onboarding fee. 

However, developing custom enterprise software can be more expensive because you’ll need to get a team of people to work on the project. You’ll also need to hire someone that can maintain and work on changes through time. You should consider your budget when it comes to making a decision regarding enterprise systems.

3. There’s more risk of bugs 

Since you’re building software from scratch, you can risk incorporating bugs because it’s the first time the software is running with real data. This happens with every software, the more you try to streamline it and make it better, the higher the risk of developing bugs.

However, if you augment your team with a pool of talented software developers like the ones from NaNLABS, you can be sure that the code will be easy to debug and more robust every time there's clunky functionality.

4. You may suffer from scope creep

Scope creep happens when changes are requested but the project boundaries aren’t considered. It can lead to the product not being ready on time or costing extra money due to poor planning. This often happens when the product owner isn’t fully aware of their needs. That’s when the NaNLABS team rapidly changes hats to software development consultants and proposes an alternative time-efficient solution. 

5. It can be a lengthy project

If the scope isn’t clear or keeps changing, the project can take longer than expected. That doesn’t only mean that you’ll get to use the solution later, but you’ll incur additional development costs. Meanwhile, buying software implies that you can start using it right away.

Do you gain a competitive advantage with custom enterprise software?

Using software to automate most of your enterprise operations will inevitably give you a competitive advantage. But the software you choose must solve your core needs.

You should develop custom-made software if:

  • You have a business need that can’t be fulfilled by the out-of-the-box market solutions

  • You need the software to integrate with other native or not-as-popular tools

  • You need to pay extra attention to information security

  • You want to own your product and make changes as the business grows

  • You have the time and budget 

You should use an off-the-shelf solution if:

  • You don’t have the budget to invest in long-term ROI  

  • You need the solution fast

  • The available COTS options suits your business needs

Enterprise software has to be high-quality, so going for the least expensive solution, or hiring a cheap developer or agency isn’t always the best choice. Even custom software, if it’s low quality, can be made in a way that isn’t modular or cohesive, making it harder to maintain and edit in the future.

If you’ve decided to outsource your software development, you should consider augmenting your team with expert software engineers like the ones from NaNLABS. You’ll be guaranteed a high-quality product and additional expert advice when needed. 


Ready to build your own custom software with a team that cares about you and your processes? We’re not code monkeys, we care about you

Frequently asked questions about custom enterprise software

What is custom-made enterprise software? 

Custom-made enterprise software is built to allow a specific business to manage and automate most of its operations.  Custom software usually solves a business need and is designed to be useful to that particular audience. 

What are the advantages and disadvantages of custom software?

The advantages and disadvantages of custom software are: 

Advantages 

  • You become the owner of your software, which means you can solve bugs faster and make adjustments as needed.

  • It allows for more flexibility for you to add or remove functionality as you grow

  • You tailor-make your software to solve your inherent needs

Disadvantages

  • It can be more expensive to hire a team of developers to build and maintain your software

  • You can fall into scope creep because the delimitation may not be clear at first

  • It can take more time to develop software vs purchasing it

How do you know if you need custom software? 

You need to build custom software when:

  • There aren’t any suitable options in the market

  • The available software is too expensive or too specialized for what you need

  • Your product is software (i.e., SaaS businesses)

What is an advantage of custom-built enterprise resource planning (ERP) software?

The biggest benefit of custom-built ERP software is that you get full visibility over your processes and data to improve productivity. 

With ERP you can manage the business information and actions of different departments in one place. That means you can handle and automate operations from: 

  • HR

  • Logistics

  • Compliance

  • Finances

  • Sales

  • Research and development (R&D)

  • Manufacturing

  • Asset management

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