Factors to consider when choosing between COTS and Custom Development
In my recent Blog http://www.optimation.co.nz/our-people/life-at-optimation/blog/for-pms-its-not-all-handshakes-and-lattes/ “For PMs its Not All Handshakes and Lattes” I talked about some of the challenges faced when getting a new IT project or programme successfully launched. I talked about team building, having a methodology, and setting quality expectations and the benefits of getting these challenges resolved early.
A big discussion point of recent times is whether a Commercial Off the Shelf Software (COTS) implementation or custom development project is the right way to go. The common thinking is that COTS implementations are easier and less risky than custom developments. The fact is that this is “not necessarily so”.
Having been involved in a number of each type of project, I have found the following four points critical in making the right decision;
- Requirements fit
- Product roadmap
- Supplier Compatibility
- Total Cost of Ownership
Requirements Fit
One of the keys to a successful COTS implementation is understanding how close the product meets the requirements of the business now and into the future. You will note there are three variables to understand in this equation;
- Business Requirements now
- Business Requirements in the future
- Product’s ability to deliver to these
If the COTS product meets 90-100% of your critical business function the risk is lower and manageable (assuming you have measured this accurately). But what if the product meets 60% or 70% of your critical business function, what are your options? What about the new products that the business is planning next year? Do you change your critical processes or start talking to the vendor about customising their product, neither of which are very enjoyable conversations.
Out of the Box (OOB) implementations of COTS products can be low risk, but customising vendor software can be costly and leave your business “orphaned” from the mainstream product development resulting in time consuming and expensive upgrade paths.
Product Roadmap
What are the vendor’s plans for the product? Do they have a roadmap?
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Are they redeveloping, re-platforming, integrating or sun setting? Does the vendor road map align to your company vision and direction; do the roadmaps run in parallel, converge or diverge? |
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Does the vendor want to talk with you about your contribution to their road map; do they have a user group (that works)?
On the other hand with a custom developed system the product road map is your road map, it contains your priorities in the timing and sequence that you want them. You own the IP, it is yours to share or limit access to. You discuss with the supplier the content, timing and cost. You are in control.
Supplier Compatibility
Do you have conversations with your vendor or are you told when upgrades are coming, when patches are to be deployed, when you need to upgrade hardware, databases or operating systems.
Does the vendor have local support, if the head office is in the Northern Hemisphere, is there a real, sustainable local presence that can influence the head office on your behalf, or is the two person satellite office in Sydney all you have access to.
Is the vendor company able to move at the same rate as your company? Can you get local decision making, responsiveness and flexibility that your company needs to succeed in your market?
Is the vendor company bureaucratic and rules driven and your company all about culture and relationships? When doing your reference checking, don’t just ask about the product; question the support, the ease of doing business, their process maturity and ability to meet timeframes.
Total Cost of Ownership
This item is really a culmination of the other points. Too often the decision to go with a COTS implementation or a custom development is made on insufficient data. Consideration needs to be given to the on-going licencing costs (do you actually understand what you're licensed for?), increasing infrastructure costs and the annual support fee, what is included in this and what is additional. Understanding the multi-year costs of a COTS implementation may level the playing field over a custom development in open technologies.
The aim
Clearly there is a place for COTS and custom developed solutions, both have their distinct risks and issues and both can be very successful. The challenge for business is to make this decision based on the right framework and logical assessment and to take careful aim…
