Codium Logo Codium Logo
  • Services
    • Strategy
      • Technology Partner
      • UI / UX Design
      AI
      • AI Consulting
      • AI Reporting
    • Development
      • Software Development
      • Mobile App Development
      • Software Integration
      • Hardware Integration
      • Microsoft Access Databases
      • Replace Spreadsheets
    • Managed services
      • Software Takeover
      • Software Support (SLA)
      • Managed Hosting
      • Private AI Hosting
      • On-Premise AI
  • Industries
  • Our Work
  • About
  • Blog
Blog · Custom Software

Custom Software and Competitive Advantage

30 October 2019


The Different Roles of Custom Software and Off the Shelf Software

Since the essence of strategy is being different in a way that matters to customers, we find it curious when prospective clients consider off the shelf software for the business activities that are at the heart of their differentiation. To be clear, we aren’t against off the shelf software (we have subscription software products and a subscription software implementation service that are important parts of our business). But we see off the shelf software being best suited for generic activities the firm doesn’t want to differentiate itself on. For instance, if best practice is good enough for the HR function, then off the shelf solutions like HR Advanced and CloudHR can be better than going custom (although this may not be true for firms differentiating on talent). Or if little differentiation can be derived from the Accounting function, then cloud services like Xero or Oracle Financial may make better sense. Using off the shelf software in such situations makes sense because it can lead companies to best practice almost overnight for functions and processes they may have underinvested in or not prioritise for investment in future.

Differentiation and Innovation

But for activities the business wants to be different in or to out innovate competitors on, off the shelf software may be a risk. By using off the shelf software for such activities, a business may achieve some initial benefits (e.g. quickly closing the gap between current practice and best practice or avoiding the innitial upfront software development cost). But it is likely to sap the business’ ability to perform these activities differently to rivals (even in applications with more built in customisability). In such cases, the business’ ability to innovate in that area is limited to the rate at which the software licensor adds functionality to the software. Even then, the additional functionality is likely to be available to competitors. The same applies to the business’ ability to differentiate itself in that area.

The Crucial Crossroads of Choice

So, as we advise all of our clients, before choosing to go down the off the shelf or custom software path (which both have their place), two important questions to consider are “Do we want to be different in the set of activities this software is to perform?” and “Do we want to out innovate our competitors in the set of activities this software is to perform?”

Custom Software 2019
Keep reading

More from the blog

ASD has warned about AI agents going off-script. Here is how we keep ours in line
21 Oct 2026

ASD has warned about AI agents going off-script. Here is how we keep ours in line

On 25 September the Australian Signals Directorate published a High alert about AI agents doing things nobody asked them to do. If...

Has your business outgrown Excel? Seven signs, and what to do about each one
15 Oct 2026

Has your business outgrown Excel? Seven signs, and what to do about each one

Spreadsheets fail slowly, so nobody notices the day they stop being a tool and start being the system. Here are the signs, the fix...

What has changed in custom software development over the last 12 months
2 Sep 2026

What has changed in custom software development over the last 12 months

Software development continues to evolve quickly, but the last 12 months have seen some particularly significant changes in the wa...

All articles

Want to talk about your own project?

Tell us what's slowing your business down. One of our digital strategists will talk it through with you.

Get in touch Call 1300 887 103
Codium Logo
Codium Pty Ltd.
Ground Floor, 207 Greenhill Road
Eastwood, 5063
Adelaide, South Australia
  • 1300 887 103
  • sales@codium.com.au

Development

  • Software Development
  • Mobile Apps
  • Software Integration
  • Hardware Integration
  • Microsoft Access
  • Replace Spreadsheets

Managed Services

  • Software Takeover
  • Software Support (SLA)
  • Managed Hosting
  • Private AI Hosting
  • On-Premise AI

AI

  • AI Consulting
  • AI Reporting

Strategy

  • Technology Partner
  • UI / UX Design
  • Due Diligence (M&A)
  • Why Projects Succeed
  • What Software Costs
  • What AI Consulting Costs

Technologies

  • PHP · Laravel
  • JavaScript · Vue.js
  • AWS

Company

  • About Us
  • Industries
  • Our Work
  • Blog
  • Careers
  • Contact Us
  • Customer Feedback
  • Remote Support

© Codium Pty Ltd. All Rights Reserved.

  • Terms of Business
  • Privacy Policy
  • Quality Policy
  • Security Policy
  • Customer Experience Charter
Back Top
Codium
Services
All services Strategy
  • Technology Partner
  • UI / UX Design
  • Technology Due Diligence
  • Why Projects Succeed
  • What Software Costs
  • What AI Consulting Costs
Development
  • Software Development
  • Mobile App Development
  • Software Integration
  • Hardware Integration
  • Microsoft Access Databases
  • Replace Spreadsheets
Managed services
  • Software Takeover
  • Software Support (SLA)
  • Managed Hosting
  • Private AI Hosting
  • On-Premise AI
AI
  • AI Consulting
  • AI Reporting
Industries
All industries
  • Construction
  • Finance
  • Government
  • Health
  • Insurance
  • Manufacturing
  • Mining
  • Retail & E-commerce
  • Transport & Logistics
Our Work About Blog
Get in touch Call 1300 887 103