I often see projects mandating COTS or No-Code solutions (and excluding custom development) – in the belief that these will be simpler and cheaper to implement. It’s easy to focus on the up-front price tag—the license fee, subscription cost and user pricing: but the actual cost, the Total Cost of Ownership (TCO), goes way beyond that upfront number. If you don’t look at the big picture, you might end up with a nasty surprise.
Off-The-Shelf
For Off-The-Shelf, when calculating TCO, don’t forget to include hidden extras – like training and transition costs, efficiency losses when solutions don’t exactly match what you need, the costs to move out of this software when it reaches end of life and costs arising from software providers with their own roadmap and agendas. Will you get the support and attention you need from a large software provider and what will it cost you to be blocked if you need to move forward at a different pace to them?
And of course, the biggest hidden extra and risk with COTS is when you need to customise – you may well spend a lot more than you were hoping to save by taking this option in the first place – and then end up with unsupported customisations.
No-Code
No-code platforms appear to offer a compromise position, “build the system you want without any coding”. But remember that it’s not just the stated licence and usage costs: no-code platforms can charge significant extras for additional integrations and often favour opaque per-user pricing. You can end up paying for everyone to use a feature they may not need, or cobble together some workaround that becomes a real headache later on.
Of course, that’s assuming you don’t find yourself hitting barriers in the platform that mean you can’t actually create what you need after all.
What’s more, everything your team develops is now in a highly bespoke proprietary technology that is usually non-transferrable. And you can find yourself totally locked-in – “Hotel California” style.
It’s also worth considering whether you really want your team spending hours perfecting minor details, like button sizes and colour schemes or learning coding languages like Apex. Time spent “grooming” apps distracts from their primary job responsibilities, and while that might not show up in the IT budget, it has a real cost.
Custom
Custom development has traditionally been seen as higher risk, and may have higher up-front costs, but may be well worth considering in the light of TCO – with the potential of no ongoing usage or licence fees, a system that neatly matches the way you work, with exactly what you need – could save you a lot in the medium to long term.
But custom development may NOT be a good fit when you don’t really know what you need or don’t have settled business processes.
- If you’re considering custom development, here are my tips:
- choose an open-source framework that is supported,
- demand your choice of database and deployment technology,
- demand open standards and formats,
- always do a proof of concept, and demand an iterative approach that delivers early value,
- aim for an ROI <12-18 months and use your projected 12-month total cost as a budget.
And consider the benefits of a local provider (with any approach):
- ability to have face-to-face meetings and workshops, build lasting relationships with a vested interest in your success, and someone who will pick up the phone when you get stuck,
- who understands your operating, legislative and regulatory context,
- and don’t rule out a smaller provider – they will give you greater focus, attention and responsiveness.
Want to talk more about the challenges of solving TCO?
I’m keen to hear your experience and discuss it with you.
You can book a meeting with me on the Biz Hub contact page.