Custom Software as a Generator of Competitive Advantage

All companies seek to be more competitive, and in the pursuit of that competitiveness, one of the main ways to achieve it is to be different, understanding this as doing things better at the process level, or delivering exceptional service to customers through the different contact channels that the company has with its end customer.

The core processes of a company seeking to be a leader must be different from the processes of other companies in its industry. If they do things the same as the competitors, they may only achieve marginal improvements compared to the other companies they compete with, but they will hardly achieve leadership simply by imitating.

Similarly, the way a company serves its customers, and the way it adds digital value to its product or service, regardless of whether it is a technology company or a company that sells tangible physical or “traditional” products, service is one of the biggest differentiators for a company, and today the digital attributes of the product it sells, or the digitization of the experience of both buying and using the product or service, also become a differentiator.

Another key differentiator is the way it uses data, the type of analysis it performs, and the decisions it makes based on a strategic and intelligent analysis of information as much in real time as possible.

Today, the software industry offers a fairly wide catalog of potential solutions to the standard challenges and problems of businesses, from ERP (Enterprise Resource Planning) platforms, the quintessential pillar system for centralizing business processes, CRM (Customer Relationship Management) platforms, or platforms for managing customer relationships, sales and marketing processes, and others such as SCM (Supply Chain Management) for supply chain management, HRM (Human Resource Management) for comprehensive human talent management, EAM (Enterprise Asset Management) for the management of physical assets, to name a few.

Many of these platforms serve as unifiers of internal processes in key areas, and allow for effective parameterization to adapt the implementation to the realities and particularities of the company.

So, when should you develop digital products or custom software? The strategic decision of what to standardize and where to differentiate is one of the key strategic points for business technology leaders (CTOs, CIOs, CDOs).

Build VS Buy.

The key to this question is separating commodity functions (better option is to buy a packaged product) from core capabilities that generate sustainable competitive advantage (better to build to measure).

When the right decision is to buy a packaged product and configure it:

Processes common to many companies (accounting, invoicing, customer service tickets, traditional HR management, and traditional asset management)

If speed of implementation and a lower initial project cost are needed (although in the long term it may be more expensive in the timeline in certain SaaS models)

Some guiding questions that may be helpful in deciding on a standard product:

Is there a standard product that covers at least 80% of my requirements with just the initial standard configuration?

Is this process regulatory or supportive, or does it directly impact the value proposition for our client?

What do I gain in time-to-market and risk reduction if I buy instead of building a custom solution?

When does it make sense to create a custom digital product or development?

Custom developments should typically be implemented when we refer to enabling differentiating capabilities of the company’s value proposition, improving or creating unique customer experiences, or in some cases increasing and improving customer interaction with the product through custom-designed digital channels and products.

For very specific flows due to the sector or business model of the company that no packaged product manages to adequately satisfy.

In the case of proprietary business logics, for example Fintech, insurtech, proptech, etc.

Some guiding questions that may help in deciding on a custom development:

Will the functionality or functionalities we are considering provide a clear competitive advantage against our competitors?

Do we need a level of flexibility that a standard product can’t give me?

Does my core business or part of my value proposition depend on the interaction that will take place on this platform?

Am I going to input data into my ERP that a simple, standard data capture layer cannot provide?

Ultimately, it’s not about a company having all its technological solutions customized; it’s about using what best suits and generates benefits in each case. For standard and support processes, packaged platforms are ideal, requiring only some adjustments and specific parameterizations. For solutions that are part of the business model, service scheme, and value creation for the customer or employees, the best option is customized digital solutions that allow the company to differentiate itself from competitors.