Custom vs. Packaged: The False Binary That’s Holding Enterprises Back
June 4, 2019
While there are use cases for both custom and packaged solutions, the real answer for truly differentiating software options lies somewhere in the middle.
Much of what’s been written about the differences between custom and prepackaged software solutions implies that you have to choose between one of these two options. But it is important to clarify that this is not, in fact, a straightforward, binary choice. Between the prepackaged end of the spectrum (lower-risk, lower-cost, faster to deploy, limited flexibility) and the custom end of the spectrum (high-risk, capital- and time-intensive, but highly flexible), there’s a third option: A hybrid solution called application platform as a service (aPaaS).
As time goes on, I believe we will see more and more businesses use aPaaS solutions that allow them to build and customize their user experience and workflows while leaving the rest of the development work to an application platform vendor.
How We Got Here
Prior to the pre-built software market taking off in the 1990s, most enterprises were hiring large development teams and building custom applications in-house. But while this made for highly-tailored solutions, it was also a slow process that carried a lot of risk. For example, a software hiccup in Nike’s custom-built systems upended the company’s fortunes in 2000, causing a loss in sales of $100 million and a 20% drop in their stock price.
Failures like these led to the prominence of pre-built software (and now SaaS) solutions. This turn towards pre-built software reduced much of the risk involved in custom development. But I would argue that this shift represents something of an overcorrection. The choice isn’t just between in-house, custom vs pre-built software — aPaaS solutions can offer the best of both worlds.
Don Sharp is a respected innovator with more than 25 years of tech experience working at companies ranging from startups to Fortune 50 companies. A graduate of Notre Dame University, Don currently serves as Chief Executive Officer of Coolfire Solutions, a technology company focused on transforming data into actionable intelligence for major enterprises.