Standard system or custom build - what should you choose?

In this article, I’ll cover some of the questions we most often encounter at Illumi about off-the-shelf and customised systems. Hopefully, it will answer your key questions if you’re considering investing in a new IT solution and aren’t sure whether to choose a standard solution or a custom-built one.

Question 1:

Can't I just configure a standard system to suit my needs?

Maybe you can. And I would never recommend making things more complicated than necessary. Standard systems are already tried and tested, and if you can find a deep standard plate that suits your business, there's no need to reinvent it. My recommendation would therefore always be to research the market thoroughly and assess whether you can fulfil your business needs with a standard solution.

The success of your search will depend on how unique your organisation's processes and needs are. Off-the-shelf systems are designed to suit a broad common set of users, often within a specific industry. Therefore, if your company's core business processes are very similar to those of the market, it may make sense to go with a standard solution, possibly with minor adjustments.

However, if your core business is built on unique processes that have been developed and refined over time - and are crucial to your competitiveness - it can be difficult to fit them into a one-size-fits-all solution.

A standard system is rarely built to be tailored to any significant degree. That's precisely the strength of a closed and well-tested ecosystem. Starting to twist, screw and turn a standard system to get the fit right is therefore often associated with several challenges.

Firstly, the fit will never be as precise as if the system had been customised for your business from the start. This means you may have to compromise on functionality that was part of the reason for investing in a new IT system in the first place. Often, you will need to significantly adapt your processes to fit the system - and if those processes are central to your competitiveness, it can become an expensive compromise.

In addition, customisations to a standard system can make the system fragile and complicate future system upgrades - and in the worst case, cause the system to fall apart.

So the very first thing you should decide with yourself when choosing between standard and customised solutions is:

• What are your organisation's specific processes and needs

• How essential is it to maintain processes to stay competitive?

• To what extent does a standard solution support the processes?

I never recommend rebuilding a well-functioning standard system. However, this doesn't necessarily mean you have to build a large system from scratch. In some cases, you can easily use a standard system in combination with a smaller, customised system that has the functionality that the standard system lacks. With such a solution, it's essentially about getting the two systems to work well together so that you experience them as one system in your daily work.

Question 2:

Isn't it more expensive to choose a custom solution?

Yes, the initial cost is higher, because with custom development there is only one person to pay the bill.

With a standard system, on the other hand, the development costs are spread across several companies and thus many users. However, it is often the case with standard systems that:

• the cost of licences increases significantly with the number of users, the amount of data and purchased functionality.

• customisation is expensive or impossible

• business-critical requests have to wait for the supplier's roadmap - if they become part of the roadmap at all.

So while the costs in year 1 are likely to be lower by choosing a standard solution, the total cost of ownership over the lifetime of the solution can easily be many times higher - and the benefit you get from the solution may be less.

The financial benefits of choosing a custom-built solution instead include

• you only pay for the functionality that is important to your business

• you decide what to spend money on prioritising and further developing

• you get a solution that can grow with your business - without unforeseen licence jumps.

The bottom line is that if you don't have unique business needs and only a few of your employees need access, a standard system is probably the cheapest solution for you. However, if many employees need to use the solution and/or your business is characterised by unique processes and continuous development, a custom solution can almost always pay off in the long run. Especially if you consider competitiveness in the grand scheme of things.

Question 3:

Doesn't it take much longer to get started with a custom solution?

One of the most appealing things about standard solutions is that they can often be implemented relatively quickly - especially if the solution and your business needs match well and do not require major customisation.

Developing your own solution requires more work in the analysis and development phase, whereas the implementation time is often the same, maybe even shorter, because the solution is developed specifically for you and your system landscape.

But when we talk about time to market, it's important to emphasise that you don't necessarily create more value by getting started quickly. The benefits of custom-built solutions should be seen in a strategic and longer-term perspective and are mainly about

• you get a solution that hits exactly where the value is needed

• avoiding compromises that need to be "fixed" later

• you create a solid foundation for future digitalisation and value creation, because the solution is designed to grow and evolve with your business.

For many companies, it's not about getting there quickly - it's about getting there right.

Question 4:

Isn't it difficult and expensive to change suppliers if I choose a custom-built solution?

A standard system with many suppliers or implementation partners has obvious advantages if you don't want to continue with the same partner indefinitely. But whether switching suppliers on a custom-built system is a complicated matter depends primarily on three important factors:

• The agreement you have with your supplier regarding ownership of the codebase

• The quality of the code

• Whether the code is developed within some well-known standards.

If you have your software customised, it is important to secure the rights to this software. Typically, you will need to obtain rights that ensure independence from your supplier. Independence is especially important when re-tendering or outsourcing the custom-built software.

So always make sure to write into your contract with your supplier that you own the code.

But even when you have secured the rights to your customised software in the contract, switching suppliers can be costly because the new supplier has to spend many hours figuring out the logic of the code base or, in the worst case, rewrite large parts of it if the quality is too poor.

Transparency and the customer's full ownership of the codebase is generally a good sign that a supplier can vouch for the quality of the code work. If you have a custom-built system with high code quality, it shouldn't be difficult or costly to change suppliers if the collaboration has to end for any reason.

Finally, it is crucial for your independence that the code is based on well-known standards (e.g. Microsoft .NET), as this makes it much easier to find a supplier who can take over and build on your solution. In short, before you commit to a technology or vendor, there are three important questions you should answer:

• How well does the technology fit into your existing system landscape? For example, if the solution needs to integrate with Microsoft environments, it often points naturally towards certain standards.

• How widespread is the technology?

• How big is the developer market? The more widespread, the less vendor-dependent you will be.

Question 5:

What type of solution is most sustainable?

An IT solution should not only solve the challenges your business faces now, but also support the business as it evolves. Many companies find that a system that worked well when implemented becomes a limitation after a few years - often because the business has changed and the system is not built to be expandable.

With standard systems, long-term development is largely governed by the vendor's roadmap and priorities. This means you often have to adapt new business needs to the system - and not the other way round. For some companies this is not a problem, but for others it can mean that over time the system can hinder efficiency, differentiation or new digital initiatives.

With a customised IT solution, you can think long-term from the start. Architecture, integrations and data models can be designed with both current and future needs in mind, so the solution can be expanded and customised as your business grows. However, this requires you to work in a structured way and make technical choices that match the evolution of your business.

All software systems need maintenance to last for many years. This applies to both standard software and customised solutions. The difference lies in how maintenance is carried out and who manages it.

With standard systems, the responsibility for development, maintenance and updates lies with the supplier. Generally speaking, you can just sit back and trust the supplier to manage it for you. This may seem safe, but it also means that your organisation has limited influence on the development and lifespan of the system.

The vendor of the standard solution makes decisions on their own - not only about ongoing price adjustments, but also whether to change or phase out functionality. This can mean that you lose features that are essential to your business or that integrations break down as a result of updates that don't take into account your specific business and processes. Over time, this can mean that the system no longer supports your business optimally - even if it is technically still "maintained".

With custom-built software, you are in control of the development - but you are also responsible for this development. New and improved functionality is only added if you decide to do so, and it's also up to you (together with your supplier) to keep the solution updated in terms of security. Keeping technologies, frameworks and architecture up to date requires ongoing effort, but in return, you have full control over both the functionality and lifetime of the system.

A customised solution that is continuously maintained can live for many years and evolve with the needs of the business. Conversely, lack of maintenance will quickly lead to technical debt, increased complexity and greater dependence on your supplier.

In short: Maintenance is not just a technical discipline, but a strategic decision. For customised software, it is a prerequisite for the solution to remain flexible, valueable and scalable - even if your company one day wants to change suppliers.

So what should you choose?

There is no single right answer that fits all businesses. For many, a standard system will be the right solution - especially if the needs are well-defined and the system can be used without extensive customisation. In these cases, standard software often provides a fast, stable and cost-effective route to the finish line.

For other companies, choosing a standard solution may mean that internal work processes and procedures have to be bent and stretched so much that job satisfaction and, not least, competitiveness are compromised. Adapting a standard system to complex, business-critical needs is often risky because it can be difficult to predict the systemic consequences of these changes. The system can easily become 'fragile' and require disproportionate maintenance. In the worst case scenario, the system can become so unstable that it jeopardises operations and revenue.

If your business processes, workflows or integration needs differ significantly from what a standard system is built for, you should clearly investigate the possibilities of developing a solution on your own business terms. A solution that can be customised and further developed as your business changes - and that creates real value where you need it.

Your customised solution may "just" be a smaller system that you combine with a standard system, where the two systems work together to deliver the functionality and value you want. This way, you utilise the out-of-the-box functionality of the standard system while getting the specific functionality that's important to your business - without the risk of rebuilding the standard system instead.

Whatever you choose, you shouldn't base the choice between standard and customised software solely on price or functionality now, but on an overall assessment of risk, maintenance, ownership, vendor independence and the role the IT solution will play in your business in the long term.

Key points to consider when choosing between standard and custom software

To summarise, these are the main points to consider when you are faced with investing in a new software solution:

• Always check first whether a standard system can meet your needs without extensive customisation.

• Be aware of the pitfalls of customising standard systems for non-standard needs.

• Customised software can be more expensive to set up, but cheaper in the long run.

• Vendor switching is possible - if ownership, quality and standards are in place.

• Ongoing maintenance is crucial for both longevity and agility.