To develop apps from scratch or to buy out-of-the-box? A common dilemma for businesses

Software solutions play a pivotal role in streamlining operations, enhancing productivity, and staying competitive. Oftentimes it’s a major difference between a dinosaur of a business and a thriving commercial unit. When it comes to adopting a software system—whether for inventory management, team collaboration, or customer relationship management—organizations face a crucial decision: should they opt for a  ready-made solution or invest in developing a custom application?

The choice isn’t as straightforward as it may seem. While ready-made solutions offer the promise of quick deployment and lower upfront costs, custom-built software is designed to address the specific nuances of your business processes. For C-level executives tasked with maximizing ROI while minimizing risks, understanding the trade-offs is essential.

To illustrate these differences, let’s consider a common and relatable example: inventory management software. Almost every business with physical goods needs a system to track stock levels, monitor vendor performance, and generate reports. Yet, no two companies have identical workflows, making the decision between off-the-shelf and bespoke solutions particularly challenging.

In this article, we’ll take a closer look at the steps, costs, benefits, and challenges associated with ready-made and custom inventory management software. By the end, you’ll have a clear framework to help decide which approach best aligns with your company’s goals.

Ready-made software example: Inventory Management System

Off-the-shelf inventory management solutions are pre-built applications designed to cater to the general needs of a wide range of businesses. They provide an out-of-the-box way to start managing inventory efficiently without the need for lengthy development timelines or significant upfront investment.

Key features of ready-made inventory software

Most SaaS inventory management tools offer a set of standard features, including:

• Stock tracking: Monitor stock levels in real time, view product details, and set reorder points. ‍
• Barcode scanning: Use integrated barcode or QR code scanning for faster inventory updates. ‍
• Reporting and analytics: Generate pre-built reports on stock movements, sales, and vendor performance. ‍
• Vendor and purchase order management: Manage supplier details, purchase orders, and invoice tracking. ‍
• Integrations: Connect with popular accounting software like QuickBooks or ERPs like SAP for streamlined operations.

Popular options include Zoho Inventory, QuickBooks Inventory, and Katana, Lightspeed, Cin7, and TradeGecko which target small-to-medium-sized businesses.

Steps for implementing ready-made software

Most businesses will follow some of these steps when selecting software for a specific function.

1. Research and selection: Compare available solutions based on cost, features, scalability, and user reviews. ‍
2. Sign-up and subscription: Choose a pricing plan based on your requirements (users, advanced features, etc.). ‍
3. Configuration: Input your existing inventory data, set up warehouses, and customize dashboards. ‍
4. Training: Familiarize employees with the system using vendor-provided resources or online training. ‍
5. Go live: Start operations immediately, leveraging the pre-built capabilities.

Now let’s consider some ballpark price ranges and cost estimates for buying enterprise-grade SaaS solutions.

Cost estimate breakdown for procuring an out-of-the-box SaaS solution for an enterprise

For example, a basic enterprise plan may cost  around $299/month for a team of up to 7 users and include advanced inventory tracking and integrations. Additional costs may arise if you require support for older systems or extensive training.

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Cloud technology made the most sophisticated enterprise software accessible to SMBs by enabling the revolution of SaaS, below we set a few of the core advantages that make millions of smaller businesses pick this alternative.

Advantages of ready-made software

Many smaller players opt for out-of-the-box solutions in view of these undeniable advantages:

1. Lower initial investment: SaaS tools operate on a subscription basis, making them affordable for small and medium-sized businesses. ‍
2. Quick deployment: Since the software is pre-built, most companies can start using it within a few days. ‍
3. Ease of use: Designed with a user-friendly interface, making it accessible to non-technical staff. ‍
4. Scalability options: Many vendors offer tiered plans to grow with your business. ‍
5. Vendor support: Regular updates, bug fixes, and customer support are typically included in the subscription fee.

However, there are also downsides to buying an out-of-the-box piece of software.

Challenges with ready-made solutions

When a business can afford custom software development, these are the top reasons why they do it:

1. Limited customization: Off-the-shelf software is designed for broad use cases, which may not fully align with your unique workflows. ‍
2. Integration issues: Compatibility with legacy systems or less-common platforms can lead to costly workarounds. ‍
3. Recurring costs: Subscriptions accumulate over time and may become expensive for larger teams. ‍
4. Vendor dependence: Updates and feature rollouts are controlled by the vendor, potentially misaligned with your needs. ‍
5. Scalability constraints: As your business grows, the software may struggle to meet the increasing complexity of operations.

Let’s consider the example of an SMB that specializes in goods manufacturing.

Illustrative example: The manufacturing SMB

• Scenario: A small manufacturing company with 5 warehouses across two states needs inventory management software to track 1,000 SKUs.
• Challenge: The company needs to integrate inventory tracking with their existing QuickBooks system but doesn’t require advanced customization. ‍
• Solution: They choose a popular inventory management software  at $299/month, with basic training provided by the vendor. After a day of setup and a few hours of training, the system is operational. ‍
• Outcome: The company saves on development costs and gets immediate functionality but faces limitations in generating custom vendor performance reports.

While ready-made inventory management software offers a quick and cost-effective solution for many businesses, it comes with its own set of limitations—particularly when it comes to customization, scalability, and integration. For companies with unique workflows or long-term growth ambitions, these constraints can hinder operational efficiency and adaptability.

This is where custom-built solutions come into play. By tailoring every aspect of the software to your specific needs, custom development addresses challenges that off-the-shelf tools can’t. In the next chapter, we’ll dive into the process, costs, and benefits of developing a bespoke inventory management system designed to grow with your business. Stay tuned as we explore how custom software can redefine your approach to inventory management.

Once a company can afford to develop its own software from scratch, it will encounter the benefits and challenges we set out below.

Custom-built inventory management software

Custom-built inventory management software is tailored specifically to your business needs, providing unparalleled flexibility, scalability, and integration capabilities. While the development process involves higher upfront costs and longer timelines, the result is a solution designed to grow with your organization, offering unique value over time.

What custom inventory management software offers  

A custom-built solution can include features such as:

• Dynamic inventory tracking: Real-time updates tailored to your unique workflows, from multi-warehouse tracking to serialized inventory. ‍
• Custom reporting and analytics: Insights tailored to your KPIs, such as vendor performance, stock velocity, or forecasting accuracy. ‍
• Advanced integrations: Seamless integration with legacy systems, enterprise resource planning (ERP) software, and third-party APIs. ‍
• Role-based access control: Security features that align with your organization's hierarchy and compliance needs. ‍
• Industry-specific requirements: Features designed for niche needs, such as FDA compliance for pharmaceuticals or just-in-time tracking for manufacturing.

Now let’s review the phases of developing custom software from scratch, following this inventory management system example for consistency.

Steps for developing custom Inventory Management Software

As CIGen is an Azure consulting and development company, we’ll base this example on the Azure tech stack for illustrative purposes:

1. Requirement gathering and analysis

• Collaborate with stakeholders to define detailed specifications.
• Map out workflows, pain points, and future needs.

2. Design and prototyping

• Create wireframes and UI/UX prototypes for user feedback.
• Define the database schema and software architecture.

3. Development

Use a modern tech stack for scalability and reliability. For Azure-based solutions, this might include:

• Backend: Azure App Service, Azure Functions (for serverless computing), and .NET Core for API development. ‍
• Database: Azure SQL Database or Cosmos DB for scalable, cloud-based data storage. ‍
• Frontend: React.js or Angular for a responsive and intuitive interface. ‍
• Authentication & Security: Azure Active Directory (AAD) for role-based access and identity management. ‍
• Integration: Azure Logic Apps to connect with third-party systems like ERP or accounting software.

4. Testing and Quality Assurance

• Conduct unit testing, integration testing, and load testing using Azure DevOps.
• Test across devices and platforms to ensure consistent performance.

5. Deployment

• Deploy to Azure Kubernetes Service (AKS) or Azure App Service for high availability and scalability.
• Set up CI/CD pipelines using Azure DevOps for automated updates.

6. Training and go-Live

• Train employees on using the system.
• Monitor initial performance and resolve any bugs.

7. Ongoing maintenance

• Regular updates and feature enhancements based on feedback.
• Use Azure Monitor and Application Insights for performance monitoring.

But how much does it cost to develop a custom inventory management system? There’s no exact figure, the estimate will heavily depend on these factors: the vendor you select for development, complexity of the project, the quality of your initial input. Let’s deep-dive into the example of a cost of the custom software development.

Cost breakdown of a basic custom solution

These costs are only indicative and vastly depend on the complexity of the solution as well as the software development vendor selected for the job. We are providing a bottom and top price ranges for a basic project with fundamental features only for a vendor with outsourcing capabilities.

For a small-to-medium-sized business, a custom-built solution might start at around $80,000 for initial development, with additional yearly costs for maintenance and Azure hosting services (~$5,000–$15,000/year).

Advantages of custom-built software

Many market leaders opt to develop their custom software solutions for a myriad of reasons, these are just some of them:  

1. Tailored to your needs: Every feature is designed to align with your workflows, eliminating unnecessary complexity. ‍
2. Seamless integration: Works effortlessly with legacy systems, ERP platforms, or proprietary tools. ‍
3. Scalability: Scales with your business, allowing for new features and increased capacity as needed, companies can add as many employees, warehouses, and SKUs as operationally needed. ‍
4. Security and compliance: Implements custom security protocols and meets industry-specific compliance standards. ‍
5. Ownership: You retain full intellectual property rights, avoiding vendor lock-in and recurring subscription fees.

That said, creating an app from scratch comes with its downsides as well, let’s review some key challenges in the next chapter.

Challenges of custom development vs buying out-of-the-box solution

Businesses should be ready to face these tradeoffs for all the customizability, security, confidential data privacy and seamless integration that come with the custom-build software:

1. Higher initial costs: Significant upfront investment compared to SaaS options. ‍
2. Longer time to deploy: Development timelines can range from 4–6 months or more. ‍
3. Requires in-house expertise: Collaboration with technical teams or external consultants is essential. ‍
4. Ongoing maintenance: Responsibility for updates, fixes, and hosting lies with the business.

Now let’s review an example of the manufacturing company that is powered by Azure cloud and has opted to develop a custom inventory management system.

Illustrative example: The growing retailer

• Scenario: A growing eCommerce retailer with 10,000 SKUs needs an inventory management system that integrates with its proprietary order management system and supports multi-channel sales across platforms like Shopify and Amazon.
• Challenge: Off-the-shelf solutions like Zoho Inventory lack the flexibility to integrate custom APIs and support for complex workflows, such as handling multiple warehouses and automated vendor reordering. ‍
• Solution: The retailer invests in a custom-built Azure-based inventory management solution, developed over 5 months. ‍
• Backend: Built on Azure App Service with APIs for order management integration. ‍
• Frontend: React.js interface for easy navigation and role-specific dashboards. ‍
• Database: Azure SQL Database for scalable and secure data storage. ‍
• Cost: From $95,000 initial investment, with $10,000/year for hosting and maintenance. ‍
• Outcome: The retailer achieves seamless operations, improved vendor relationships, and real-time multi-channel inventory updates—enhancing efficiency and scalability.

Making the right choice for your business

Choosing between ready-made and custom-built software solutions is a decision that depends heavily on your business's unique needs, growth ambitions, and budget. While ready-made software offers a quick and cost-effective way to get started, it often comes with limitations in customization, scalability, and long-term value. On the other hand, custom-built solutions provide unmatched flexibility, integration capabilities, and ownership but require a higher initial investment and longer development timelines.

As we saw in the example of inventory management software:

• Ready-made solutions like Zoho Inventory, Katana, or Oracle Fusion Cloud IM are ideal for businesses looking for quick implementation and standardized features at a low upfront cost. They work well for companies with simpler workflows or those just starting out. ‍
• Custom-built solutions leverage technologies like Azure’s powerful ecosystem to provide tailored, scalable software that integrates seamlessly with existing systems and supports complex business processes. They’re the better choice for organizations with specific requirements or plans for long-term growth.

Ultimately, the right choice comes down to aligning your decision with your operational goals and the value you expect to derive from the software in the years to come. If you’re unsure, a hybrid approach—starting with a ready-made solution to test workflows, then transitioning to a custom solution—can provide the best of both worlds.

What’s your next step?

Evaluate your current pain points, consider the scalability of your processes, and weigh your budget against long-term ROI. If custom software feels like the right fit, start by consulting with experienced developers to scope out a solution tailored to your needs.

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