Custom software (also known as bespoke software or tailor-made software) is software that is specially developed for some specific organization or other user. As such, it can be contrasted with the use of software packages developed for the mass market, such as commercial off-the-shelf (COTS) software, or existing free software.

Since custom software is developed for a single customer it can accommodate that customer's particular preferences and expectations. Custom software may be developed in an iterative processes, allowing all nuances and possible hidden risks to be taken into account, including issues which were not mentioned in the original requirement specifications (which are, as a rule, never perfect). Especially the first phase in the software development process may involve many departments, including marketing, engineering, research and development and general management.

Large companies commonly use custom software for critical functions, including content management, inventory management, customer management, human resource management, or otherwise to fill the gaps present in the existing software packages. Often such software is legacy software, developed before COTS software packages offering the required functionality became available.

Custom software development is often considered expensive compared to off-the-shelf solutions or products. This can be true if one is speaking of typical challenges and typical solutions. However, it is not always true. In many cases, COTS software requires customization to correctly support the buyer's operations. The cost and delay of COTS customization can even add up to the expense of developing custom software. Cost is not the only consideration however, as the decision to opt for custom software often includes the requirement for the purchaser to own the source code, to secure the possibility of future development or modifications to the installed system.

Additionally, COTS comes with upfront license costs which vary enormously, but sometimes runs into millions of dollars. Additionally, the big software houses that release COTS products revamp their product very frequently. Thus a particular customization may need to be upgraded for compatibility every 2–4 years. Given the cost of customization, such upgrades also turn out to be expensive as a dedicated product release cycle will have to be earmarked for it.

The decision to build a custom software or go for a COTS implementation would usually rest on one or more of the following:

Finances - both cost and benefit: The upfront license cost for COTS products mean that a thorough cost-benefit analysis of the business case needs to be done. However it is widely known that large custom software projects cannot fix all three of scope, time/cost and quality constant, so either the cost or the benefits of a custom software project will be subject to some degree of uncertainty - even disregarding the uncertainty around the business benefits of a feature that is successfully implemented.

Supplier - In the case of COTS, is the supplier likely to remain in business long, and will there be adequate support and customisation available - possibly from third parties? In the case of custom software, the software development may be outsourced or done in-house. If it is outsourced, the question is: is the supplier reputable, and do they have a good track record?

Time to market: COTS products usually have a quicker time to market size of implementation: COTS comes with standardization of business processes and reporting. For a global and national player, these can bring in gains in cost savings, efficiency and productivity, if the branch offices are all willing and able to use the same COTS without heavy customization’s (which is not always a given).

Major Fields

Construction

The construction industry uses custom software to manage projects, track changes, and report progress. Depending on the project, the software is modified to suit the particular needs of a project owner, the design team, and the general and trade contractors. For example, floor plans for a particular project are unique to that project and are available on mobile devices for the project team to consume through custom software. In some cases, the floor plans use SVG. Rooms and spaces on floor plans that use SVG are programmable; a room's fill color can change to red for instance if the room has outstanding deficiencies.

Project-specific data is used in other ways to suit the unique requirements of each project. Custom software accommodates a project team's particular preferences and expectations, making it suitable for most construction processes and challenges:

Design development
Tender calls
Document control
Shop drawing approvals
Changes management
Inspections and commissioning
Way-finding

Custom software developers use various platforms, like FileMaker, to design and develop custom software for the construction industry and for other industries.

Hospitals

Hospitals can keep the data of a patient and retrieve it any time. This enables a doctor and his assistants to transfer the details of a patient through a network. Keeping patients' blood groups in the hospital database makes the search for suitable-group blood easy. Hospitals also use billing software especially in their dispensary.

Places of Education

Schools use custom software to keep admission details of students. They produce Transfer Certificate also. Some governments develop special software for all of their schools. Sampoorna is a school management system project implemented by the Education Department of Government of Kerala, India to automate the system and process of over 15,000 schools in the state. These projects brings a uniformity for the schools.

Shops

Billing is a common use of custom software. Custom software is used by small shops, super markets and wholesale-sellers to handle stock-details and to generate bills.

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