What is Custom Software Development?

September 13, 2019

“Software is eating the world.” I’m sure that you’ve heard the famous quote by Marc Andreessen and it couldn’t be truer today. Regardless of industry, software has become an integral part of how businesses operate and grow. While some companies are purely software, other physical industries like manufacturing, transportation, and constructions are transforming themselves through software.

This article is intended to be an introduction to custom software. I’ll explain what custom software is, why you would build it, and whether you should build it for your organization.

What is custom software?

Custom software is exactly as it sounds: software specifically created for the user or a group of users within an organization. It’s also known as “bespoke software” or “tailor-made software.” Unlike off-the-shelf software, which is developed for the mass market and fits a general need, custom software is designed for specific preferences and requirements within an organization.

Custom software must go through a software development process that includes discovery, strategy, design, development, and launch. The best teams use an iterative process to explore ideas, get feedback, and incrementally release new features and functionality. This process can range from a couple of months to years, depending on the size and scope of the project. Custom software can be a significant investment with lots of risks, so a good process will help mitigate risks and launch a successful product.

If your organization has an in-house IT department with the appropriate capabilities and bandwidth, then you can build the software internally. Otherwise, you’ll need to hire a software development company to partner with you to create the custom software. Also, in many cases, there is a mix of internal and external team members that work together to build software.

Why would an organization build custom software?

There are a lot of reasons why an organization should not build custom software. In fact, most software development projects fail – they are expensive and filled with assumptions and risks. I recommend that organizations explore off-the-shelf solutions before moving directly into custom software. Nonetheless, there are some good reasons to build custom software and huge upsides if done correctly.

Competitive Advantage

One of the most important reasons why an organization would build custom software is to provide a competitive advantage. If a custom solution can enable your business to work faster, more efficiently, or deliver more with less than you’ll have the advantage over others. A great example is how Amazon used the internet to wipe out Borders and Barnes and Noble. Another example is how Robo-advisors like Wealthfront, Betterment, and Personal Capital have made significant moves in the financial services sector.

Automation & Reducing Manual Work

Many businesses still rely on a lot of manual work that is time-consuming and inefficient. Custom software can automate these tasks and create systems that reduce errors and omissions. Instead of busywork, employees can focus on tasks that grow the company.

Process & Workflow Optimization

All businesses have various routine tasks and processes that need to be completed and confirmed. Custom software can help build systems that improve efficiency, reduce errors, and improve the bottom line for a business. With process and workflow optimization software, management can view insights into the process and make improvements based on collected data.

Unique Workflow or Process

Some organizations can license off-the-shelf software and adapt their workflow to match the software. On the other hand, some businesses need specific functionality to match their unique workflow or process. There are hundreds of Customer Relationship Management (CRM) software services available, but if your organization has a unique approach to customer management, then custom software might be the right choice.


If your organization intends on growing, it might make sense to build custom software that can scale with your organization. As companies grow, their processes improve, and custom software can evolve to match the growing business needs. This is especially important for companies that have various departments, workflows, and teams working together.


Custom software enables organizations to build for the present but plan for the future. Many organizations build software in phases that add new features and functionality; having a product roadmap will help plan for the future growth of your business. Software developed today can be designed to accommodate future services and products that your organization plans to offer in the future.

Custom software isn’t for every organization. If a real need is there and the software is built correctly, then it can be transformative for an organization.

Should I build custom software?

While there are usually clear indicators of whether you should build custom software or not, it’s a tricky question. Before you jump into custom software, you should always test if off-the-shelf software will solve your problem. If you’re interested in whether you should build or buy software, then check out this article.

As you explore the idea of custom software, you should ask yourself the following questions:

  • Does your workflow or process provide a competitive advantage?
  • Are any of my internal processes slow, inefficient, manual, or disconnected?
  • Is growth limited by manpower, manual work, or any inefficiencies?
  • Are we relying on multiple, different software solutions to do one thing?
  • Are we heavily using spreadsheets, documents, and other programs that are slowing down our process or causing too many issues?
  • Would a new capability or offering provide a competitive advantage?
  • Are there any manual and inefficient processes that we could automate?
  • Would a customer portal help reduce time spent communicating with clients and sharing information, statuses, and updates?
  • How difficult would it be to modify your workflow to match a generic technology platform?

While answering these questions, it’s important also to consider your budget and timeline. Custom software can be expensive, ranging from tens of thousands of millions of dollars. While there are some good ways to set a budget for a software development project, it’s difficult to estimate without spending time and effort exploring the problem and potential solutions. If you’re strapped for cash or on a tight deadline, I would recommend staying away from custom software.


Custom software can be a powerful tool that helps organizations innovate and grow. Unlike off-the-shelf products, custom software is designed and built specifically for an organization or a set of users. While it can be expensive and time-consuming, the payoff in efficiency, process improvements, and competitive advantage can transform an organization into a leader.

It’s essential to recognize that custom software is an investment that should typically have a realizable ROI. How much money will this software save us per year? How much time is opened up because of this software? How many errors and omissions will be eliminated because of this software? When custom software is approached in this manner, it will lead to exceptional results for your organization.