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Custom software development vs off-the-shelf solutions for logistics companies

Updated: Jan 19




In this blog we are going to compare the pros the cons of software development and off the shelf solutions for logistics companies who need to streamline operations.


We assist multiple growing companies in assessing existing software options and developing tailor-made solutions.


If you're a leader in the logistics industry facing growth challenges due to manpower limitations, this will help you streamline your processes.


Let's get into it


What is an off the shelf solution

Off-the-shelf software consists of standardized applications developed for the mass market and are ready for immediate use.


These products cater to a broad audience, offering a wide range of features aimed at streamlining general operations.


The majority of modern solutions provide SaaS (Software as a Service) delivery models where software is hosted in the cloud and accessed over the internet.


Although versatile in addressing various basic needs through different modules, they tend to fall short in specialized tasks.


While customization is an option, these universal software solutions often meet only a portion of specific requirements.


Pros & Cons of Off-the-Shelf Solutions



Pros

Out of the gate, pre-made software solutions promise

  • Quick deployments

  • Lower immediate costs

  • Large comprehensive feature set


Businesses aiming for rapid digital transformation or those with standard operations, see these solutions can be a godsend.


Cons

  • You don't own your data

  • Vendor lock in

  • Inherent lack of customization

  • Solutions are configurable, but may not align with business processes

  • Integration complexities can emerge, leading to costly workarounds

  • Vendor decisions that do not align with a company's evolution

  • Recurring costs and vendor profit driven subsription cost increases


Top 5 off the shelf logistics software



Samsara offers a Connected Operations™ Cloud platform that integrates the following features into a unified platform that enhance operational efficiency. It's suite includes

  • AI safety programs

  • Real-time visibility

  • Workflows

  • Reporting

  • Ecosystem Management

  • Extensive data capture from sensors and cameras

  • Telematics for fleet management

  • Equipment monitoring

  • Compliance tools


Who is it for

Construction, transportation, and government.




Magaya is a comprehensive digital freight platform designed to optimize logistics operations from origin to destination, offering automation, accelerated workflows, enhanced data visibility, and customer engagement tools to boost productivity and growth. It's suite includes

  • Supply Chain Management

  • Customs Compliance

  • Rate Management

  • Digital Freight Portal

  • CRM


Who is it for

Ideal for freight forwarders, 3PLs (Third-Party Logistics providers), NVOCCs (Non-Vessel Operating Common Carriers), customs brokers, and other service providers.




PCS Software offers an integrated, AI-driven transportation management platform Their services include . This comprehensive suite of tools aims to enhance operational efficiencies, automate processes, and support business growth, with various pricing packages to suit different business needs. It's suite includes

  • Carrier dispatch

  • Accounting

  • Fleet management

  • Optimization tools

  • Advanced scheduling

  • Mobile app for streamlined operations

  • Reporting and analytics


Who its for

Designed for both carriers and shippers.




Körber Supply Chain offers end-to-end supply chain software solutions designed to address complex challenges, improve operational excellence, and drive sustainable growth. Their integrated software has a track record of over 325 successful go-lives. Their software aims to

  • Optimize entire logistics networks

  • Enhance customer experience

  • Reduce costs

  • Turn supply chains into competitive advantages


Who is it for

Designed for factories, warehouses, distribution centers, transportation fleets, yards and marine terminals, retailers and consumers.




Bringg is a leading Delivery Management Platform streamlining last-mile delivery operations. It offers a unified platform designed to help established businesses better compete with major players like Amazon and Uber. Their software aims to

  • Reduce costs

  • Simplify operations

  • Enhance brand loyalty


It provides two main solutions, Delivery Hub for multi-carrier management and ROAD for fleet and driver management, designed to

  • Optimize shipping options

  • Digitize fleet management

  • Improve delivery efficiency


Who is it for

Designed for grocery, furniture, appliances, and white glove delivery industries


What is custom logistics software



Custom logistics software is tailor-made to address the unique needs of a company's logistics operations.


Unlike generic software solutions, it is developed to align precisely with the specific challenges and requirements of a business.


This personalized approach in custom logistics software development ensures

  • Seamless integration with existing systems

  • Seamless integration with external logistics services

  • Adherance to industry standards


Custom logistics software also focuses on including only the desired features. Companies do not have to pay for unnecessary functionalities, unlike off-the-shelf solutions that bundle the costs for all features, needed or not.


Opting for custom logistics software allows businesses to enhance their logistics management, resulting in

  • Improved efficiency

  • Accuracy

  • Control.


Custom software aligned with business processes and goals empower companies to

  • Streamline their supply chain

  • Elevate customer satisfaction

  • Reduce operational costs

  • Maintain a competitive edge in the logistics sector


The Pros & Cons of Custom Software



For businesses with unique processes, proprietary methodologies, or those aiming for a distinct competitive edge, custom-built software is the way to go.


Pros of custom software

It offers scalability crafted with future aspirations in mind and ensures that the organization benefits from

  • Tailored to specific business needs

  • Control of features & data

  • Control of the trajectory of software evolution

  • Avoidance of costly ongoing price increases


Cons of custom software

Opting for a custom-built solution requires

  • A higher initial investment

  • Longer deployment time

  • More involved stakeholder engagement & decision making

  • Maintenance and updates


Its success is contingent on having access to the right development talent—a resource that's often at a premium.


So, What's the Verdict?

The decision between off-the-shelf and custom software isn't binary. It hinges on

  • A company's immediate needs

  • Long-term vision

  • Budgetary constraints

  • Risk appetite


As a guiding principle:

  • For Rapid Deployment: Off-the-shelf solutions shine when the aim is to digitize quickly and if the business processes align relatively closely with standard industry practices.

  • For Unique Needs & Long-Term Vision: Custom-built solutions are the torchbearers. They cater to businesses that prioritize tailored functionality, scalability, and full ownership over their digital assets.


It's crucial for decision-makers at all levels to engage in open dialogues, understand the implications of each choice, and chart a path that aligns with the organization's broader objectives. The software landscape is vast and varied, but with a clear vision and informed choices, businesses can harness its power to propel themselves to new heights.


FAQs

Why hire a custom software development company?

Choosing a software development agency offers numerous advantages for businesses. It eliminates the hassle and time associated with hiring and managing in-house teams, providing a more cost-effective solution.


You gain access to a wide range of specialized expertise, ensuring agile and responsive project development. This approach accelerates the development and deployment process, enhancing your project's efficiency. Software development agencies excels at integrating diverse systems and technologies seamlessly.


What is the most important step while developing custom software?

Accurate requirement definition is essential for effective and efficient software aligned with user and business needs.


The initial phase in custom software development involves a thorough and methodical evaluation of your current processes, needs, and gaps to create a comprehensive list of the features and requirements for your ideal software solution.


Skipping or inadequately defining requirements can lead to misaligned development, increased costs and time, poor quality, and user dissatisfaction.


How long does it take to build custom software?

Generally, software development timelines span 4 to 9 months on average. The project's size and complexity are the primary determinants of its duration.


What does a custom software development timeline include?

A custom software development timeline typically encompasses several key stages: initial discovery and analysis to understand requirements, followed by user research, UI/UX/technical design, development, and rigorous testing.


This process includes user interviews, prototyping, quality assurance, and deployment in the production environment. Post-deployment, the focus shifts to user training, ongoing support, maintenance, and regular updates, concluding with a project closure review.


How much does custom software development cost per hour?

The average hourly rate for entry-level software developers typically varies between $30 and $60. In contrast, more seasoned developers, boasting 5 or more years of experience, often have hourly rates ranging from $60 to $80 and above.


How much do companies pay for custom software?

Rates for software development companies to build custom software typically range between $80 and $150 per hour, catering to projects with budgets varying from $10,000 to $500,000.


How much do offshore developers cost?

Opting for remote offshore developers can lead to significant cost savings, particularly for small businesses and new startups. The hourly cost for a junior offshore software developer is around $25, while senior software developers typically charge between $50 to $70 per hour.


It's crucial to factor in time zone differences, language and communication barriers, and your ability to manage software projects and developers. These considerations could potentially increase the overall hours required for project completion, thus impacting the total cost.


Is outsourcing or insourcing software development cheaper?

Insourcing can be more cost-effective than outsourcing, especially when utilizing in-house staff as resources. However, costs may rise if you lack experience in overseeing software projects or in assessing the performance of your development team.


How long to depreciate software development costs?

From 2022 onward, there's a significant tax change affecting software development costs. Under the Tax Cuts and Jobs Act, certain costs can no longer be deducted in full in the year they're incurred. Instead, they must be spread out (capitalized and amortized) over five years, or fifteen years if the development work is done outside the U.S.


This change categorizes software development costs under research and experimental expenses. Detailed guidelines defining these costs are still forthcoming, emphasizing the importance for businesses to accurately differentiate between costs for developing software and costs for buying software to ensure correct tax treatment.


What software development costs can typically be expensed in the same year?

Software development costs that can typically be expensed in the same year include routine maintenance and minor upgrades, research and experimental costs for new or significantly improved software, and some costs related to software developed for internal use.


Cloud computing expenses, such as Software as a Service (SaaS) fees, and payments for leased or licensed software, can also be expensed in the year they are incurred.


Additionally, under Section 179 of the U.S. IRS tax code, businesses can deduct the full purchase price of qualifying software.


It's advisable to consult with a tax professional for specific advice as accurately applying expenses depends on the nature of the software, its use in the business, and the accounting methods used


How does the US IRS tax code handle custom software development costs under Sections 174 and 179?

Under the U.S. IRS tax code, custom software development expenses are treated differently under Sections 174 and 179. Section 174 covers research and experimental costs, allowing taxpayers to either deduct these expenses as incurred or amortize them over at least 60 months, particularly for innovative or experimental software development.


Conversely, Section 179 permits businesses to fully deduct the purchase price of qualifying software, including certain custom software, in the year it is put into service. The applicability of these sections depends on various factors, including the nature and use of the software, highlighting the importance of consulting a tax professional for tailored advice.

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