Custom Software vs. Off-the-Shelf: A Case Study
I've written in the past about why associations should avoid
creating their own customized association management software (you can read
that here and here). But a recent experience with one of my clients has
reinforced my opinion on this.
Background
The International Widget Association [the name is fictitious
but all other information contained herein is real] has a small staff (just
four employees) and has been using a
custom built database for many years. Due to some significant
functionality requirements that the current vendor could not address, the
executive director (very wisely) decided to search for new AMS software.
The process
IWA engaged me to help them with determining their data
management needs, identify potential solutions, and assist with selecting a new
data management system. During this process IWA received proposals from four
vendors: three providing off-the-shelf products, and one from their incumbent
vendor [whom will call IVendor] to build an association management system on
top of open source software (essentially a custom build).
One of the four vendors was immediately eliminated because
of price. IWA looked at demos from three of the vendors, including the custom
solution from IVendor. After great consideration, IWA decided to proceed with
the custom solution. The driving factor in the decision included the ability of
the custom solution to directly address some key data management issues that
the off-the-shelf systems could not.
IWA then engaged IVendor to perform a “discovery” review of
IWA’s needs. This review is a “deep dive” into IWA’s data management needs,
allowing IVendor to get a very detailed understanding of IWA’s data and
processes, in order to provide a very firm quote on costs. IWA paid
approximately $8,000 for this engagement.
Results
During the initial round of reviewing proposals, IVendor had
submitted a bid with a price range between $55,000 and $100,000. After
completing the initial discovery phase, IVendor’s revised proposal had a price
range of $150,000 to $196,000. (You can see where this is going…)
It didn’t take long for IWA to decide that perhaps this path
was not the best solution for IWA.
Next Steps
As a result of this process, IWA has decided to go back to
its second choice, an off-the-shelf (OTS) Software-as-a-Service (SaaS) offering
that will cost about $10,000 per year (plus some additional upfront fees in the
range of $10,000-$15,000).
Lessons Learned
It should be acknowledged that by choosing the OTS SaaS
offering, IWA is not going to get everything they want.
The custom solution offered by IVendor would likely have
provided some significant functionality that IWA will not get from the SaaS
solution. However, that lack of functionality can be addressed through manual
intervention, and the tradeoff is tens of thousands of dollars and potentially
months of development time.
Incidentally, the money IWA spent on discovery with IVendor
was not wasted. This discovery process allowed IWA to learn more about what
data it manages and how it manages it. This information will be useful to IWA
regardless of which system they ultimately choose.
Conclusion
As I’ve written elsewhere, for the vast majority of
associations, custom development of association management software does not
make sense. There are several reasons for this:
- Developing software is too expensive. Research
and development of the product is borne solely by one association as opposed to
spreading those costs over many clients.
- Developing software is time-consuming. OTS
software is typically available in months or weeks (even days with some SaaS
models). Custom software will typically take months to develop.
- Given the cost in time and money, custom
software generally does not provide the return on investment to justify the
investment. IWA’s experience merely reinforces this fact.
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