Packaged software is the popular choice, not necessarily the right one
By Dave Turbide, contributing editor -- Manufacturing Business Technology, 2/1/2004 7:00:00 AM
Few manufacturers develop their own software anymore, but are packaged applications always the right choice?
Probably not, says Rex Fowler, who as president of Denver-based Fowler Software Design has spent more than two decades helping companies find the right applications for specific needs.
"There are different costs in terms of time, money, and effort whether you go with off-the-shelf software or custom development," Fowler says. "You have to consider all the costs and match them to the benefits you expect to achieve."
Fowler says the advent of ERP systems, which contain functionality that takes years—and often millions of dollars—to develop, first pushed manufacturers toward the use of more packaged software, and changed the nature of his business in the process.
"In the 1980s, we worked almost exclusively writing [custom] applications for manufacturers. As commercial off-the-shelf software matured and the manufacturing industry fell behind economically, more companies opted for packaged applications. We then began modifying packages and working more with other industries, as well as with new application areas like CRM."
Despite the broad acceptance of packaged solutions, Fowler still believes simple custom applications can have real benefits for some companies, even if the up-front cost is higher. While it may cost less to buy a packaged application, Fowler argues that few companies can use all of the features and functionality contained in most packages, and must find ways of adapting the package to meet their needs.
In such cases, he warns, "You will pay the cost year after year in the difficulty of using the package and in finding ways of getting through or around the features that you don't need." A better solution, he contends, would be a smaller, simpler custom application that more closely matches the company's business model and would therefore be easier to use and more cost effective.
Some companies like packaged software because they believe it forces workers to adopt standard processes that will improve overall business performance, but there are risks associated with that approach as well. Using the so-called best practices embedded in a package might be all that's needed to become a shining star in the eyes of customers. In many cases, however, the company must change the way it does business to "fit" the way the software works, and those changes sometimes rob a company of its competitive advantage.
The bottom line, says Fowler, is there's no single right answer to the age-old question of whether it's best to build or buy software. "If a company wants to adapt to industry-standard processes, it should stick with commercial off-the-shelf software," he says. "For those seeking a more innovative approach, custom software can still be a wise choice, provided the business case for that choice has been thoroughly investigated."
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