The Hidden Costs of Off-the-Shelf Software

Building software with an off-the-shelf solution can seem like the most cost-effective choice, but these options often come with a long list of hidden costs. We'll explain where those costs come from, and why they may make a custom build the best choice for your enterprise.

Companies have long faced a daunting decision when considering how to develop software—to build custom applications, or to purchase off-the-shelf (OTS) solutions. The perennial debate of “build vs. buy” can be a challenging one to navigate. In order to determine what is right for their company, decision-makers must weigh immediate needs against long-term scalability, all impacted by their unique budget constraints.

For many companies, building customized solutions may seem like an unnecessary luxury. Building enterprise software can be expensive, and it is not unusual for the cost of such large IT projects to exceed initial budgets. Overspending can occur for a number of reasons, including delayed timelines or failed projects altogether. As a result, companies have historically seen off-the-shelf software as the default, cost-effective option.

OTS options are attractive to many enterprises because they claim to offer a comprehensive set of features with an upfront price tag. What initial estimates may not reveal, however, are the extra costs associated with out-of-the-box solutions. Companies who think they’ll avoid exceeding their budget by going with off-the-shelf software may be in for a shock. The seemingly safe “buy” option can quickly rack up a discouraging number of hidden costs—and leave you with cookie-cutter software that isn’t truly suited to your needs.

Adding Up the Real Costs

When choosing whether to build or buy, companies often fail to calculate the true total cost of implementation they are until knee-deep in the adoption process. To evaluate whether OTS solutions are really the more cost-effective option before you make any decisions, it’s important to consider all the costs that you may incur along the way. Here are some of the many costs that off-the-shelf vendors fail to disclose:

Licensing Fees 

These fees are the price you pay for the right to use and “own” the software. Price structures of license fees vary depending on your vendor, which can have a big effect on your total bill. Often, vendors charge based on the size of your projects and the volume of data you’re working with. Depending on the scale of your operations, you may be accumulating expensive license fees just to accomplish relatively basic tasks. What’s more, licensing fees recur annually, regardless of whether or not you are using all the features provided.

Features You Don’t Need

This brings us to the rigidity of OTS solutions. Off-the-shelf solutions offer a jack-of-all-trades approach to enterprise software. They are designed to target the widest market segment possible, which nearly guarantees that your software will come with features that you simply don’t need. For example, an organization may not need all the ERP and CRM capabilities bundled with OTS software, but an OTS provider can certainly charge more simply by offering these capabilities as part of the package. The cost of these capabilities will be reflected in the licensing fee, regardless of whether or not you ever use them.

Labor Not Included

Contrary to popular perception, enterprise OTS software is never truly a plug and play solution. Especially at the enterprise scale, OTS software still requires large and experienced IT teams for successful implementation. It’s likely that if you don’t have IT resources to dedicate to this project already, you’ll need to employ a regular team to carry out maintenance and manage users, elevating the overall cost of the software. Additionally, you may even need to hire expensive implementation partners for installation and setup, as well as the integration of the new software with your existing system. 

Time-consuming Customizations

In order to slot the software into your operations, you will need to make adjustments to the system. Often “configuration” becomes just another term for manual customizations. Getting your OTS software to perform the functions you need may require your IT team to implement costly workarounds. These customizations can be unnecessarily difficult and time-consuming, as they force the product to do something it wasn’t designed to do. Resources devoted to custom workarounds may then stretch your personnel and lead to delays to market. Simply put, this might be time and money that would be better spent on a custom solution.

Lack of Interoperability

Your company likely already relies on multiple systems and a wide variety of teams to complete a single project. But OTS solutions are not always compatible with the software you already use, meaning you’re simply layering on yet another siloed solution. Lapses in communication or file sharing can slow down operations, impacting productivity and team efficiency to eventually decrease total revenue.

Disruptions to Workflow

Similar to the lack of interoperability, pre-built solutions require you to adjust business operations to fit the software instead of the other way around. This may mean rearranging teams and resource requirements, adopting different software (or even additional software to fill workflow gaps), or relying on manual data-entry to make up for the lack of customization. Worst of all, this can contribute to a lack of adoption. If your employees or your customers find the user experience unsatisfactory, they may find their own ways to work. Your investment in OTS software then effectively becomes a waste, no matter how much money you may have saved by not going custom. 

Lack of Competitive Edge

If you are using canned software, the chances are that many of your competitors are working from the same templates. Lack of differentiation between you and your competitors could be dulling your competitive edge—customized solutions may be what you need to get your enterprise one step ahead of the competition. 

In Conclusion

When making such a big decision, it’s important to remember that enterprise software is a long-term investment that should support your overall business strategy—not create additional barriers to delivery. 

Companies may have their own unique hesitations when it comes to going down the path of custom-built solutions, but they shouldn’t make their decision purely based on the upfront price tag—adopting off-the-shelf software can be a much more expensive undertaking than it initially appears to be. 

No-code platforms offer teams the ability to build enterprise-grade applications without writing a single line of code. By ensuring that the apps you deploy have all of the exact features and capabilities that end users need, you can ensure your investments are worthwhile. No-code platforms can make this happen on time, on budget, and without the risk of failure traditionally associated with building enterprise software—no hidden costs included. 

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