Insights and perspectives from a custom software development firm.
Types of software under consideration
The vast majority of businesses need some form of software to operate, and many need multiple systems working together to run effectively. When selecting software solutions, organizations must choose between:
- Off-the-shelf (SaaS or on-premises licensed software)
- Custom
- Hybrid — a combination of off-the-shelf and custom solutions, or custom integrations between multiple systems
There are several common types of business software:
ERP (Enterprise Resource Planning)
The ERP is usually the software that runs core business operations — typically handling orders, inventory, invoices, accounting, and more.
Off-the-shelf examples: Oracle NetSuite, Microsoft Dynamics, SAP, Sage.
CRM (Customer Relationship Management)
CRM systems are heavily used by sales and customer service teams to track customer and prospect interactions. Contacts, transactions, and pending deals all live here. Ideally, any transactions recorded in the ERP are also easily accessible in the CRM.
Off-the-shelf examples: Salesforce, HubSpot, Sugar CRM.
Accounting / Financials
Accounting systems are sometimes part of an ERP, but they can also be standalone software the finance team uses to track and report on the financial health of the organization. Standalone accounting software should ideally integrate with the ERP to avoid duplicate data entry.
Off-the-shelf examples: NetSuite, Sage, QuickBooks.
Website
Your website software generally falls into one of three categories, depending on the type of business:
- Basic content-only websites. These traditionally run on a CMS (Content Management System). A CMS makes it easier to modify website content but usually has little to no integration with other business software.
- Portal sites. These let users track or request information related to their account, but do not handle ecommerce financial transactions.
- Ecommerce. These systems sell goods and services online and collect payments. They are usually integrated with other business software such as the ERP, CMS, or accounting system.
Off-the-shelf CMS examples: WordPress, Drupal.
Off-the-shelf ecommerce examples: Shopify, Magento, BigCommerce.
Marketing automation
Marketing automation software maintains and improves customer and prospect engagement through email, SMS, or social media campaigns.
Off-the-shelf examples: HubSpot Marketing Hub, Iterable, Active Campaign.
Human Resource systems
HR software manages Human Resource tasks — from basic demographic information and organizational structure to benefits and payroll.
Off-the-shelf examples: Bamboo HR, Workday, Paylocity, ADP Workforce Now.
Industry-specific software
Depending on your industry, there may be industry-specific SaaS (Software as a Service) or licensed solutions built to meet its particular needs. A few examples:
- WMS (Warehouse Management Systems) for warehouse operations
- LIMS (Laboratory Information Management Systems) for laboratory operations
- EMR (Electronic Medical Record software) for managing medical facilities
Chances are, if you operate in an industry with a decent number of competitors, there is a SaaS or licensed solution designed with your industry in mind.
Potential competitive advantages of custom software for small businesses
Software-driven competitive advantages come in four main categories:
- Increased efficiency / labor reduction
- Improved employee satisfaction
- Improved customer experience
- Increased sales or customer engagement
Increased efficiency / labor reduction
Organizations running multiple systems often struggle with disjointed data and redundant data entry. This:
- is inefficient,
- increases the opportunity for errors,
- and causes staff frustration.
A custom solution designed to replace a multi-system setup — or to automate the integration between systems — can reduce errors while increasing efficiency and staff satisfaction.
For example, an integration that syncs customer and contact records between a CRM and an ERP can increase efficiency and reduce typographical errors.
Improved employee satisfaction
Employee turnover is costly for any organization. The loss of experience, combined with the costs of hiring, onboarding, and training, drains both finances and productivity.
Many factors influence employee satisfaction — compensation, benefits, flexibility, and so on — but one lesser-recognized factor is logical, efficient processes. Employees who deal with inefficiencies and illogical workflows can burn out and grow frustrated. Well-designed, well-integrated systems reduce those frustrations.
For example, say a customer service rep needs to enter:
- address,
- demographic,
- and item information
into a CRM to prepare a quote for a prospect. If the prospect decides to move forward with the sale, that same rep has to re-enter the same information into the ERP. This duplicate data entry is a time-consuming, wasteful burden on your staff.
Improved customer experience
Modern customers have technology expectations for the companies they buy from — online shopping, account portals, reminder emails, online payment options, and other modern amenities. A custom solution that gives your customers ease of use and transparency can increase customer loyalty and improve efficiency.
Increased sales or customer engagement
Well-designed, well-timed marketing automation keeps your customers and prospects engaged with reminders, new product updates, sales notifications, and more. That engagement can lead to increased sales from existing customers — and new business from your prospect base.
When custom software can provide a competitive advantage over SaaS or licensed software
To answer this, you need to perform an in-depth evaluation of your business processes and the SaaS solutions available for your market. Ask yourself:
- Does this software address all of our operations and functions? If not, what percentage does it cover?
- Can this software be integrated with other software to provide an end-to-end solution for our operations?
- Does this software give our staff all the functionality and transparency I would like?
- Does this software give our customer base all the functionality and transparency I would like?
- Does the monthly or annual cost fit our budget?
In the end, you want to determine whether the software allows you to run your business:
- the way YOU want to,
- and as efficiently as you can.
Sometimes software does not entirely address a company’s needs. It is important to:
- identify these situations,
- confirm that the missing functionality is acceptable, and
- if a workaround or additional software is needed, determine what that looks like.
Here are a few examples where a system may not do exactly what is needed, and a workaround or additional software could be beneficial:
CRM with an insufficient quoting model
We have worked with a client that offers a variety of solutions during the quoting process for a new prospect. If the prospect decides to accept the quote, they select the subset of solutions that best suits their needs — not necessarily everything that was quoted.
However, the client’s original SaaS CRM only allowed an all-or-nothing quote acceptance process. As a result, the client had to settle for a less automated workflow. To fully automate the process, a custom solution that integrates with the SaaS CRM could be developed to address the unique quoting needs while keeping the rest of the CRM’s functionality intact.
ERP with pricing limitations
Another client we have worked with manufactures custom products with an almost infinite number of combinations, and each combination can have significantly different costs. Traditional ERP systems cover most standard pricing models, but the complexity of this client’s pricing required a custom pricing calculator for quoting and ordering.
How small businesses can leverage their size to compete with larger enterprises
Custom software solutions can be expensive, and larger companies generally have an advantage in the financial resources they can invest. But that does not mean small businesses can’t still harvest a competitive advantage from custom solutions. Here are some ways small businesses can outrun larger organizations:
Being nimble
Running a large organization is often like steering a large ship: you have to turn early, and it takes effort from multiple teams to make adjustments. Larger organizations often:
- have multiple large departments,
- have ingrained operating procedures,
- and require significant training efforts to roll out change.
These and other inefficiencies can significantly slow the development of custom business software — and even cloud the scope of the solution. Small businesses, on the other hand, can make decisions, execute, and roll out changes much faster.
Multiple existing systems
In today’s business environment, companies of all sizes run multiple software solutions, but larger businesses tend to use more systems than their smaller counterparts. Those additional systems expose problems with disjointed data and duplicate data entry, and they increase the complexity of custom software implementation — more system interactions, more data flows to account for. Smaller businesses with fewer applications in play can often develop systems or integrations faster.
Priority identification
A small business can often gather its key stakeholders in a single meeting and identify priorities — and the impact across departments — far quicker than a larger organization with many stakeholders spread across geographic areas.
Knowing their customer base
Smaller businesses often have more intimate relationships with their customers. The same staff member frequently works with a customer throughout the course of the business relationship, and that tight relationship gives the small business team real insight into the customer’s needs and desires.
Larger firms with larger teams, by contrast, tend to have less repeated interaction with the same customer, so they rely more on surveys to gather customer sentiment. When used in decision-making and prioritization, the relationships small business teams have with their customers can be a big advantage.
Common gotchas when having custom software developed
Scope creep
When laying out what you need from custom software, set clear expectations and evaluate every decision on functionality. Without being deliberate about what needs to be done, projects can drag on in both time and budget.
Over-prioritizing less valuable functions
When identifying what a system needs to do, identify the priorities. Some desired functionality impacts multiple departments and creates significant efficiencies for all users; other functionality may benefit only a handful of users a negligible amount of the time. Be sure to prioritize the functionality with the greatest benefits.
Always choosing the custom route
Custom solutions have their place, and when implemented properly they can be extremely beneficial. But they are not always the right choice. Whenever new functionality is needed — or improvements need to be made to existing software — evaluate the available SaaS or licensed solutions to see whether they provide what you need. If so, they can be a quicker and more cost-effective option.
ROI (Return on Investment) of custom software for small businesses
Many projects have an ROI, though it may not always be financial. For example, the ROI on a kitchen renovation for your home is traditionally more about:
- improved organization and workflow when cooking,
- more comfort in hosting,
- and increased pride and enjoyment of your home,
than it is about the increased value of your home when you sell. The same can be true of software solutions. Here are some thoughts on software solution ROI:
1. Identify your ROI metrics, such as:
- Increased sales
- Reduced costs
- Labor efficiencies
- Improved brand recognition
- Improved customer satisfaction
- Improved customer engagement
- Improved employee satisfaction
- Reduced staff turnover
2. Identify when to measure. For some ROI metrics, it can take a long time to see results. Once you identify which metric(s) you will use to calculate ROI, plan when you will start evaluating them — and how often.
Don’t forget about integration
It is easy to fall into the mentality that you must decide between off-the-shelf or custom. That is rarely the case. Most modern applications have solid integration capabilities — APIs, webhooks — that allow development teams to augment their solutions or integrate them with others.
Next steps
- Evaluate your needs. What does the software need to do for you to operate your business effectively?
- Identify possible off-the-shelf solutions. If your company operates in an industry with a significant number of competitors, there are most likely a few off-the-shelf options to explore.
- Map how the identified solutions work with your process.
- Identify any processes that off-the-shelf solutions cannot handle in a satisfactory manner.
- Evaluate the off-the-shelf systems’ integration capabilities and options. Are there APIs or webhooks that allow reading and writing data into the application?
- Review maintenance and support requirements.
If a SaaS or licensed solution:
- satisfactorily addresses most of your needed functionality, and
- leaves no glaring process problems, and
- matches or surpasses your competition’s offerings,
then moving forward with that solution might be the logical choice.
If a SaaS or licensed solution satisfactorily addresses most of your needed functionality but still leaves process gaps — or does not provide the competitive advantage you desire — then a custom-developed enhancement or augmentation may be the best path forward.
Finally, if the off-the-shelf solutions:
- are limited or nonexistent, or
- do not solve the majority of your process, or
- you are looking for a significant competitive advantage,
you may want to explore a fully custom software solution.
If you feel a custom solution or custom integration is your best path forward, feel free to reach out to discuss. And if you like to be prepared, here are a few pieces of information that can make our conversations more efficient:
- Current system information (e.g. name, developer, age, etc.)
- Issues or shortcomings with the current solution
- Any existing software packages that will need to be integrated with
- Potential off-the-shelf applications you have explored and how they matched up with your needs
- What you are looking to accomplish and why you feel you need a custom solution
- Number of users
- Volume of transactions
- Regulatory compliance requirements (PCI, DOD, NIST, HIPAA)
Custom software for small business case studies
Want to see how these ideas play out in practice? Browse our case studies for real examples of custom software, integrations, and business process automation built for growing businesses.
Ready to move off of Access? Check out these Access conversion case studies
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