Commercial Off-the-Shelf (COTS) Software vs Custom Development

What is commercial off-the-shelf (COTS)?

According to Gartner, off-the-shelf is “equipment that has already been manufactured and is available for delivery from stock.”

More specifically, commercial off-the-shelf (COTS) is ready-made software designed for many customers. Some common examples of COTS software products include:

• Microsoft Exchange 
• Payroll and claims processing tools
• ERP and CRM systems

COTS software follows “one-size-fits-all” general best practices. Here’s why businesses turn to COTS solutions:

Convenience

COTS software has a lot of appeal for businesses of all sizes and industries because it’s readily available. If you need a straightforward solution, you could have a new COTS application implemented in a matter of days. You can also deploy more complex systems quickly.

Predictable costs

Compared to the alternatives, COTS products typically have more predictable costs. Because there are few options for customization, annual licensing is typically the only long-term cost after initial implementation. The vendor also handles support, software updates, and patches.

The problem with “one-size-fits-all”

COTS products won’t fit your company’s exact functionality needs or goals. The software is almost guaranteed to be lacking in at least one area. Some software includes unnecessary features you must pay for, even if you don’t need them.

Let’s say you’re looking for new ERP software to enhance financial and operational workflows.

After browsing vendors, you find a few options that fit your immediate needs. But what about in six months when your company acquires a competitor in APAC?

The COTS system that was once the perfect, quick fix now needs to support a larger, global workforce. Is it able to scale? Is it compliant with the regulatory environment of other regions? Can it integrate with a new set of existing systems?

Companies grow and evolve constantly, but COTS systems are always a few steps behind.

As an out-of-the-box solution, COTS products aren’t customized — they are configured. Fully integrating with your IT infrastructure can require extensive rigging by an experienced developer.

Your engineers can only configure solutions within the boundaries of the tools, even those with broader-than-average capabilities. COTS limitations lead businesses to adapt their processes to fit the tool when really it should be the other way around.

Even modified off-the-shelf (MOTS) software — COTS with some control over customization— is limited. Vendors typically don’t support customizations because they require custom coding. Custom coding is an expensive process you were likely trying to avoid by purchasing an off-the-shelf product.

Off the shelf vs. custom software: When to build and when to buy

Custom development isn’t necessarily the right choice in some scenarios. The same can be said for low-code. Here are issues to consider when choosing off-the-shelf vs. custom software or whether to build or buy.

Custom low-code software development

Enterprises used to see custom software development as a huge investment in money and time. While this may still hold for traditional development, low-code software development is an entirely different story.

Enterprise low-code platforms take a visual approach to custom development. Intuitive drag-and-drop interfaces, reusable components, communication tools, and more guide you through every step of the application lifecycle. You can build fully customized solutions faster and more affordably than traditional development. No hard coding skills are necessary.

Low-code platforms make custom development not only possible but also quick, easy, and cost-effective. Here’s how:

1. Flexibility and scalability

Build anything from simple process automation apps to modernized core systems. Low-code platforms operate in the cloud. Cloud computing gives you the flexibility and scalability necessary to build applications for your organization’s current and future needs.

You can also continuously enhance applications as business processes evolve.

2. Business-IT collaboration

Low-code operates in a visual, model-driven development environment to streamline cross-departmental communications.

Instead of traditional coding languages like Java and C#, you build using visuals like iconography, diagrams, graphics, and logic. Everyone can collaborate and communicate using this common language.

Low-code collaborative opportunities help teams make more robust solutions in less time than custom development.

3. Low total cost of ownership

The up-front cost of custom development may be higher than with COTS products, but the math changes with low-code.

Low-code is a better choice in the long run. It helps companies save time and money and helps them retain full control over their product.

The limitless ROI of low-code

NC State University knows all about the build vs. buy decision process.

NC State has more than 100 campus entities that offer courses, and each relies on a different registration method. The disparities made reporting processes inefficient, and the university’s decentralized IT architecture created standardization challenges.

On top of all this, NC State must follow strict federal, state, and PCI DSS compliance requirements.

NC State released an RFP for a customized COTS solution with the hope that a third party could help. The responses from COTS vendors were unsustainable: $3-10 million over five years.

They couldn’t afford traditional development, and a custom COTS solution wasn’t an option either. Anxious for an affordable, fast alternative, NC State started to search for a different kind of solution.

“That’s when we started to become aware of low-code platforms as an alternative to rapidly develop and deliver code,” said Gwen Hazlehurst, Assistant Vice-Chancellor of Enterprise Application Services at NCSU.

Read the full NC State University customer story here.

Is a low-code platform what you’ve been looking for?

Low-code provides more flexible software solutions than alternatives like COTS products.

A low-code platform removes barriers like cost and time, allowing your organization to create custom solutions. While COTS software lacks customization capabilities and adaptability, low-code automation platforms make anything possible.

With Mendix, enterprises can ditch “one-size-fits-all” generic solutions for one-of-a-kind, fully-tailored software. The platform can also supplement your core systems, giving you the flexibility to evolve at the speed of business. You can also turn your commercial software ideas into lucrative outcomes with the Mendix ISV program.