Is bespoke software worth it for a small business?

Where the assumption comes from

Bespoke software has a reputation for being something only large companies buy, and twenty years ago that was fair. A custom system meant a long project, a team of consultants and a bill to match.

That is not how it works now. The tools for building business systems have moved on, a small team can build a focused system in weeks, and hosting that once needed a server in a cupboard is a monthly fee. What has not moved on is the reputation, so plenty of firms that would get a clear return never ask the question.

The honest answer is that it depends on the firm, and the only way to know is to count. Here is how.

Step one: find the hours

Pick one week. Ask the people in the office and the people on the road to note, roughly, how long they spend on these:

• Typing the same thing twice. A job written on a sheet, then into the diary, then into the invoice. A timesheet copied into payroll. A delivery note typed into the accounts package.
• Finding out what is going on. Ringing a driver to ask where they are. Ringing the office to ask what the job is. Looking for the certificate, the photo or the signed sheet.
• Chasing. Quotes waiting to go out, paperwork waiting to come back, approvals waiting on one person.
• Month end. Pulling the figures together from several places so the invoices, the payroll and the management numbers agree.
• Things that get missed. An inspection date, a renewal, a job that was done and never invoiced. These are harder to count, so count the ones you know about.

You will not get this exact, and it does not need to be. A rough number of hours a week, by person, is enough. Most owners are surprised by the total, not because anyone is slacking, but because the work is spread so thinly across so many people that nobody sees it in one place.

Step two: put a value on them

Multiply the hours by what those people cost the business, including the on-costs. For the owner or a manager, use what an hour of your time is worth when you are winning work or looking after customers, because that is what the admin is taking you away from.

Then add the things that are not hours. Jobs that were done and not invoiced. Quotes that went out late and were lost. Overtime at month end. A fine or a failed audit because a date was missed. Not every firm has these, and you should only count the ones you can point to.

That gives you a yearly figure for what the current way of working costs, over and above the work itself. Write it down.

Step three: get a fixed price to put against it

This is where bespoke software should be easy to judge, and often is not, because the quote comes as a day rate or an estimate. Ask for two numbers in writing: a fixed price to build the first system, and a fixed monthly fee to host, back up and support it. Ask what the monthly covers, in plain terms, and what counts as a change.

With those two numbers, the sum is simple. Build cost plus a year of the monthly, against a year of the hours and the misses from step two. If the second number is bigger, the system pays for itself inside the year. If it is close, the second year decides it, because the build is paid once and the savings carry on.

If the sum does not work, you have lost an afternoon and gained a clear picture of where your admin time goes, which is worth having anyway.

What makes the sum work

A few things decide whether a small firm gets a good return, and they have more to do with the firm than with the software.

• Starting small. The first system should be the one thing the business leans on most, built to do that job well. It goes live in days or weeks, depending on size, and the rest follows as a change rather than a new project. Paying for everything up front is how the sum stops working.
• People on the road. Firms with drivers, engineers or site teams tend to get the biggest return, because the hours lost between the road and the office are the easiest to give back. Our mobile apps for field teams page covers what that looks like.
• Things that get typed twice. Every place the same figure is entered more than once is a saving waiting to be made, and connecting the system to the accounts and payroll you already use is usually part of the first build.
• Records someone could ask for. If an auditor, a customer or a regulator could ask for a certificate, a check or a date, a system that keeps them and reminds you is worth more than the hours alone. Compliance records are often where a firm starts for that reason.
• A fixed price. A day rate means the risk is yours. A fixed price in writing, with what is not included written down too, means the sum you did in step three is the sum you pay.

When it is not worth it

Sometimes the sum says no, and it is better to know. If the hours in step one are small, if a package already does most of what you need and the team is happy with it, or if the business is about to change shape, a system built now may be a system built for the wrong firm. A good developer will say so after the first conversation rather than after the first invoice.

Our guide on bespoke software or off the shelf goes through which kinds of work suit a package and which suit a system built round the firm.

What this means for you

Do step one this week. It costs nothing, it takes an hour of asking, and the total is useful whatever you decide. If the hours are there, get a fixed price in writing and put the two numbers side by side.

If you would rather have someone do the counting with you, that is what our free Business Systems Assessment is: an hour with whoever runs the day to day, then a written list of where the hours go, what we would change first and what it would cost, yours to keep whether you use us or not.