Types of software under consideration

The vast majority of businesses require some sort of software to run their business. Many of them require multiple systems to effectively operate.  When selecting software solutions, organizations must choose between:

• Off-the-shelf (SaaS, On-Prem Licensed)
• Custom
• Hybrid (i.e. 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):

This is usually the software that runs the core business operations.  Typically handling orders, inventory, invoices, accounting etc.

Off the Shelf Examples: Oracle NetSuite, Microsoft Dynamics, SAP, Sage

CRM (Customer Relationship Management):

These systems are heavily used by sales and customer service teams to track customer and prospect interactions.  Customer / prospect contacts, transactions and pending deals are tracked here.  Ideally any transactions in the ERP are also easily accessible in the CRM.

Off the Shelf Examples: Salesforce, HubSpot, Sugar CRM

Accounting / Financials:

These systems are sometimes part of an ERP but can also be standalone software used by the finance team to track and report on the financial health of an organization.  Standalone software ideally integrates with the ERP to avoid duplicate data entry.

Off the Shelf Examples: NetSuite, Sage, QuickBooks

Website:

Your website software can fall into 1 of 3 categories depending on the type of business:

1. Basic content-only websites: These sites traditionally run using a CMS (Content Management System).  CMS software enables easier modification of website content, but usually has little to no integration with other business software. 
2. Portal sites: These sites allow users to track or request information related to their account. But do not handle Ecommerce financial transactions.
3. Ecommerce: These systems allow users to sell goods and services online and collect payments.  Usually, these systems are integrated with other business software such as ERP, CMS or accounting software.

Off the Shelf CMS Examples: WordPress, Drupal

Off the Shelf Ecommerce Examples: Shopify, Magento, BigCommerce

Marketing Automation:

This software is used to maintain and improve customer and prospect engagement through email, SMS or social media campaigns.

Off the Shelf Examples: HubSpot Marketing Hub, Iterable, Active Campaign

Human Resource systems:

This software is used to manage Human Resource tasks, from simple demographic information, organizational structure, benefits and payroll. 

Off the Shelf Examples: Bamboo HR, Workday, Paylocity, ADP Workforce Now

Industry-specific software:

Depending on the industry, there may be industry-specific SaaS (Software as a Service) or licensed solutions available to meet the needs of that particular industry. 

A few examples:

• WMS (Warehouse Management Systems) for warehouse operations
• LIMS (Laboratory Information Management Systems) for laboratory operations
• EMR (Electronic Medical Record Software) for management of medical facilities

Chances are if you are in an industry for which there are a decent number of competitors, there’s a SaaS or licensed software solution that’s designed with your industry in mind.

Potential competitive advantages of custom software for small businesses

Software-driven competitive advantages come in four main categories:

1. Increased efficiency / labor reduction
2. Improved employee satisfaction
3. Improved customer experience
4. Increased sales or customer engagement

Increased efficiency/labor reduction:

Organizations running multiple systems may have challenges with disjointed data and redundant data entry.  This:

1. can be inefficient,
2. can increase the opportunity for errors
3. and can cause staff frustration. 

A custom solution designed to replace the multisystem solution or automate the integration can reduce errors, increase efficiency and staff satisfaction.

For example, an integration that syncs customer and contact records between a CRM and ERP can increase efficiency and reduce typographical errors.

Improved employee satisfaction:

Employee turnover is costly to any organization. 

The loss of experience and costs of hiring, onboarding and training are a drain on finances and productivity. 

There are many factors to employee satisfaction such as compensation, benefits, flexibility, etc., but perhaps one lesser-recognized factor is logical and efficient processes. 

Employees that deal with inefficiencies and illogical processes can get burned out and frustrated.  Well-designed and integrated systems can reduce these frustrations. 

For example, let’s say a customer service rep needs to enter:

• address,
• demographic,
• and item information

data into a CRM to prepare a quote for a prospect.

If the prospect decides to move forward with the sale, the same rep has to re-enter the same information into an ERP. 

This duplicate data entry is a time consuming and wasteful burden to the staff.

Improved customer experience:

Modern customers have technology expectations for the companies they choose to buy from.  Modern amenities like online shopping, account portals, reminder emails, online payment options, etc. A custom solution that provides ease-of-use and transparency to your customers can increase customer loyalty and improve efficiency.

Increased sales or customer engagement: 

Well designed and timed marketing automation can work to keep your customers and prospects engaged with reminders, new product updates, sales notifications, etc. 

This engagement can lead to increased sales from existing customers and potential new customers from your prospect base.

When custom software can provide a competitive advantage over SaaS or licensed software

You need to perform an in-depth evaluation of your business processes and the SaaS solutions available for your market. 

Ask yourself:

1. Does this software address all our operations / functions? If not, what percentage does it cover?
2. Can this software be integrated with other software to provide an end-to-end solution for our operations?
3. Does this software provide all the functionality and transparency to our staff that I would like?
4. Does this software provide all the functionality and transparency to our customer base that I would like?
5. Does the monthly or annual cost of this software fit into our budget?

In the end, you want to determine if the software allows you to run your business:

1. the way YOU want to
2. and as efficiently as you can. 

There are times when some software doesn’t entirely address the needs of a company.   It’s important to:

1. identify these situations
2. ensure that the lack of functionality is acceptable.
3. If a workaround or additional software is needed, you need to determine what that looks like. 

Here are a few examples where a system may not do exactly what’s needed, and a workaround or additional software could be beneficial:

CRM with an insufficient quoting model:

We’ve worked with a client that offers a variety of solutions during the quoting process for a new prospect. 

In the end, if the prospect decides to accept the quote, they select the solutions that best suit their needs. This is a subset of the solutions that were on the quote. 

However, the client’s original SaaS CRM only allowed for an all-or-nothing quote acceptance process. 

As a result, the client would have to settle for a less automated quote acceptance process.  To fully automate the process, a custom solution that integrates with the SaaS CRM could be developed to address the unique quoting needs while maintaining the other functionality of the SaaS CRM.

ERP with pricing limitations:

A client we’ve worked with manufactures custom products with an almost infinite number of combinations and each combination can have significantly different costs. 

Traditional ERP systems have most standard pricing systems covered, 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 their larger enterprise counterparts

Custom software solutions can be expensive. Larger companies generally have an advantage when it comes to the financial resources available to invest in their software. But that doesn’t mean that 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 a lot of effort from multiple teams to make adjustments. 

Larger organizations often:

1. have multiple larger departments,
2. have engrained operating procedures,
3. and require significant training efforts to roll out change. 

These, along with 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, businesses of all sizes run multiple software solutions, but larger businesses tend to use more systems than their smaller counterparts. 

These additional systems expose problems with disjointed data and duplicate data entry.  They increase the complexity of custom software implementation because of the many ways the systems interact, the methods of data flow, etc.

Smaller businesses with fewer applications in play can often develop systems or integrations faster.

Priority identification: 

A small business can often schedule a meeting with key stakeholders and identify priorities as well as the impact across departments quicker than larger organizations 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 often interacts with a customer throughout the course of the business relationship. This tight relationship gives the small business team insight into the customer’s needs, desires, etc. 

On the contrary, larger firms with larger teams tend to have less redundant interaction with the same customer, so they end up relying more on surveys to gather customer sentiment.  When used in decision making and prioritizing, 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’s needed from the custom software, it’s important to set clear expectations and evaluate all decisions on functionality.  Without being deliberate on what needs to be done, projects can drag on in time and budget.

Over-prioritizing less valuable functions:

When identifying the needs of a system, it’s helpful to identify the priorities. Some desired functionality can impact multiple departments and create significant efficiencies for all users. Other functionality may only benefit a handful of users a negligible amount of time.  Be sure to prioritize the functionality with the greatest benefits.

Always choosing the custom route:

Custom solutions have their place. When implemented properly they can be extremely beneficial. But they’re not always the right choice. 

Whenever new functionality is needed or when improvements need to be made to software, it’s important to evaluate the existing SaaS or licensed solutions to see if they provide the needed improvement.  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 or 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:
2. Increased sales
3. Reduced costs
4. Labor efficiencies
5. Improved brand recognition
6. Improved customer satisfaction
7. Improved customer engagement
8. Improved employee satisfaction
9. Reduced staff turnover
10. Identify when to measure: for some ROI metrics, it can take a long time to see results.  When you identify what metric(s) you will use to calculate your ROI, it’s important to plan when you will start to evaluate it, and how often.

Don’t forget about Integration

It can be easy to fall into a mentality that you must decide between off-the-shelf or custom. That is rarely the case. Most modern applications have solid integration capabilities (i.e. APIs, web hooks) that allow development teams to augment their solutions or integrate with others. 

Next Steps

1. Evaluate your needs – What does the software need to do to allow you to operate your business effectively?
2. 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 options for Off the Shelf solutions to explore.
3. Map how the identified solutions work with your process
4. Identify if there are any processes in which off-the-shelf solutions can’t handle in a satisfactory manner.
5. Evaluate the off-the-shelf systems integration capabilities and options – Are there APIs or webhooks that allow for reading and writing data into the application.
6. Review  maintenance and support requirements.

If a SaaS or licensed solution:

1. satisfactorily addresses most of your needed functionality and
2. leaves no glaring process problems and
3. matches or surpasses your competitions offerings,

then moving forward with that solution might be a 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:

1. are limited or nonexistent, or
2. do not solve the majority of your process, or
3. 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.

In case you like to be prepared, below are a few pieces of information that can make our conversations more efficient:

1. Current system information (e.g. name, developer, age, etc.)
2. Issues or shortcomings with the current solution
3. Any existing software packages that will need to be integrated with
4. Potential off-the-shelf applications that you’ve explored and how they matched up with your needs
5. What you’re looking to accomplish and why you feel you need a custom solution
6. Number of users
7. Volume of transactions
8. Regulatory compliance requirements (PCI, DOD, NIST, HIPAA)

Custom software for small business case studies