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Grow Your Business Technology

What Is Custom Software Development?

image for RossHelen / Getty Images
RossHelen / Getty Images
  • Custom software development is the creation of unique technology solutions.
  • Custom solutions are typically more expensive than out-of-the-box software options.
  • Custom software development requires a detailed plan.

Custom software development is the designing of software applications for a specific user or group of users within an organization. Such software is designed to specifically address these users' needs better than more traditional and widespread off-the-shelf software can. Custom software is typically created just for these specific users by a third-party or in-house group of developers and is not packaged for resale.

Off-the-shelf software consists of a packaged software application available to a large audience with varying, albeit fundamentally similar, needs. For example, Microsoft Word is designed for the mass public as a solution to the diverse needs of its users. However, it does not cater to a specific group or need as custom software would.

Customized software development entails the commissioning, development and release of a software product tailored to a single entity. For example, an application created for JPMorgan Chase would be used only by that company and the department for which it was designed. The software is designed with the company's infrastructure, branding and implementation needs in mind, so it works only for that organization.

The biggest benefit of custom software is that it provides features that off-the-shelf software doesn't. Designing an application with your organization's needs in mind typically leads to an increased level of productivity once the solution is implemented.

If you have a software application designed to increase productivity or address an internal need, its cost is offset by the promise of increased efficiency. If your organization has a need that's specific enough to warrant custom software, then customizing a solution becomes a smart course of action.

The cost of an off-the-shelf software application ranges from a few dollars to a couple thousand dollars, depending on the type of product. However, many applications cost less than $100.

The designing of customized software requires significant resources, increasing the cost. When a business decides to begin development on custom software, it has to cover all of the costs associated with the development process. In the end, the cost can reach five figures for some products.

Off-the-shelf-software creators can afford to offer their products at a low price because the cost is distributed among many users. Custom software, by contrast, is created for one user: your company.

The risks associated with custom software vary. You must have an in-depth understanding of your company's needs and be able to communicate how you want the product to address those needs.

It's fairly common to discover new needs during the development process, and this results in added costs and development time. Frequent changes can result in a loss of project scope and a product that's insufficient or different from what you originally intended.

It's not easy to pick a company to create a software application for your business. You must search for companies to bid for the work and select the company that promises the right price and level of service. These companies typically meet with the requesting organizations to assess their needs and determine the total amount of work required to create the custom software.

Then, the companies bid based on how much development time the project requires and how much it costs. These bids are not set in stone, as some projects may require additional time and costs. Don't just pick the cheapest company. Instead, choose the company that will best meet your needs.

To build anything, including software, it's critical to define your current process, your expectations and your measurement of success. Defining these things is so important to the overall project management process that methods such as Six Sigma give "Define" its own phase.

Make sure you know the following:

  • What the current process is. Don't make assumptions; ask subject-matter experts who handle the work daily.
  • Why you want to make changes. Again, don't assume something will be better. Test the theory, or at least get stakeholder feedback from all levels.
  • What the desired state is. Sketch out desired workflows and other processes that the software is meant to support.

Custom software can be developed by the following people:

  • Your internal IT team.
  • People you hire or contract specifically for the job.
  • Software development vendors and companies.

It's tempting to say you'll handle everything in-house to save money. But using your own IT team for this purpose has drawbacks. First, your team already has obligations; pulling them from daily work could cause slowdowns for the entire business. Second, your tech personnel may not be trained or experienced in development.

Outsourcing this process often makes the most sense. You can work with teams that have successfully designed and implemented other customer software. You may even be able to find a company that specializes in products for your industry.

Create a team that includes your developers, some subject-matter experts, and someone to lead and direct the overall initiative. Together, create a road map for the project. Ensure it's realistic; you can't create a complex workflow and shipping system in a week, for example.

Plan for milestones to keep the project on track. These are various stages of the development that should be completed at a certain time and budget amount. You can review the work at each schedule milestone to understand if you need to make changes to your planned timeline or budget.

Before you implement the new software across your entire business, test it. Testing usually occurs on two levels:

  • Technical testing is conducted by the developers and IT professionals. It tests that the foundational elements are working.
  • User testing is conducted by business beta users. It tests that the software works as expected and desired.

Documentation is important for all stages of development and implementation. You know you have to define what you have and what you want. Your project plan documents who is responsible for each piece, and sets dates and expectations. But you should also have the following:

  • A test plan and checklist to ensure the software is fully vetted.
  • A statement of scope to ensure you don't end up trying to solve too many problems with the software.
  • An implementation plan that defines who begins to use the software, and when.
  • A training plan and detailed user documentation so that people aren't left frustrated and with questions when you roll out the new resource.

Custom software development lets you use technology to solve specific problems for your business. When you know how to determine whether custom solutions are right for you and how to implement them, you can support growth and success.