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ChaPter 3 • ProjeCt management 61

Figure 3.8
Advantages Disadvantages
Comparing the advantages and
Creating Custom • Specific response to • May be significantly higher disadvantages of creating custom
Software specialized business needs initial cost compared to COTS software, purchasing COTS
• Innovation may give firm a software or ASP packages, and outsourcing to a
competitive advantage • Necessity of hiring or working SaaS provider.
• In-house staff available to with a development team
maintain software • Ongoing maintenance
• Pride of ownership

Purchasing COTS • Refined in the commercial • Programming focused; not
Packages world business focused
• Increased reliability • Must live with the existing
• Increased functionality features
• Often lower initial cost • Limited customization
• Already in use by other • Uncertain financial future
firms of vendor
• Help and training comes • Less ownership and
with software commitment

Using SaaS • Organizations that do not • Loss of control of data, systems,
specialize in information IT employees, and schedules
systems can focus on what • Concern over the financial
they do best (their strategic viability and long-run stability
mission) of the SaaS provider
• There is no need to hire, • Security, confidentiality, and
train, or retain a large IT staff privacy concerns
• There is no expenditure of • Loss of potential strategic
employee time on corporate advantage regarding
nonessential IT tasks innovativeness of applications

Original software should be created when an organization is attempting to gain a competi-
tive advantage through the leveraged use of information systems. This is often the case when an
organization is creating ecommerce or other innovative applications where none have existed.
An organization also may be a “first mover” in the use of a particular technology or in its particu-
lar industry. Organizations that have highly specialized requirements or exist in niche industries
can also benefit from creating original software.
The advantages of creating custom software include being able to respond to specialized
user and business needs, gaining a competitive advantage by creating innovative software,
having in-house staff available to maintain the software, and pride of owning something you
have created.
The drawbacks of developing custom software include the potential for a significantly
higher initial cost compared to purchasing COTS software or contracting with a SaaS provider,
the necessity of hiring or working with a development team, and the fact that you are responsible
for the ongoing maintenance because you created the software.
Purchasing COTS Software
COTS software includes such products as the Microsoft Office suite, which includes Word for
word processing, Excel for spreadsheets, Access for building databases, and other applications.
Other types of COTS software are for organizational-level systems rather than office or personal
use. Some authors include popular (but costly) ERP packages such as Oracle and SAP in their
examples of COTS software. These packages differ radically in the amount of customization,
support, and maintenance required compared to Microsoft Office. COTS software can also refer
to software components or objects (also called building blocks) that can be purchased to provide
a particular needed functionality in a system.
You should consider using COTS software when you can easily integrate the applications or
packages into existing or planned systems and when you have identified no need to immediately
or continuously change or customize systems for users. Your forecasts should demonstrate that