There are lots of differences, but two of the key ones are easily identified and determine the approach they provide for their clients. Both are good, under the right circumstances based on the requirements the buyer has defined.

Not to oversimplify, but there are two ways software companies earn their money. The first is from software products the firm develops and sells to specific markets. These firms earn their revenues from license and support revenues and enhance their software to meet the needs of the markets they target. Salentica is a software product for wealth management firms (a vertical market) as are Microsoft and Oracle that serve horizontal markets.

Some companies make their revenue building custom software. For these companies even if they have some limited software offerings or frameworks, the bulk of their revenue is from consulting services. For these companies, every client has unique requirements that drive more services.
So does it matter which type of firm you engage? Yes! If your firm has unique requirements or you need software developed that you want to own and control, a custom solution is a good path, provided you have the contracts in place to ensure you protect the intellectual property you paid for. A company web site could be an example of a unique software solution where a custom build provides the specific look and feel that is required.

In other cases, you want to purchase a solution that is proven for your industry and where your vendor will continue to invest in the solution to support best practices in the industry. The firm is buying a tool like a hammer and has no desire to re-invent the tool. How you use the tool may be unique and your software product should accommodate your unique business practices that provide your competitive edge.

I hope this helps. Picking the right type of software company for your needs significantly increase the probability of success.

At Salentica, we are a software company that builds solutions that we sell and support. After over 25 years in the software business, we see some pretty consistent reasons why solutions work or don’t work. I hope as part of this blog to share some insights to save others wasted effort and costs.  Similar to the wealth management services our clients provide, there are some basic rules to follow to lower project risk.  Below are a couple of to consider

1.  Do you know what you want? We see companies implementing  a software solution, without a clear understanding of what they need to meet the business needs.   In many cases, these firms are looking for the technology to fix their business processes, rather than the technology supporting their business process.  If a business process is flawed before a technology solution is introduced, the technology will just enable the firm to do it more consistently

2. What do you expect from your provider and can they deliver? We see companies so focused on features they forget that it is only one piece. Just like a wealth management firm does more than pick stocks, a software supplier should be able to provide advice on best practices based on domain knowledge and a set of support services, unless of course the company has decided they want to self support.

A good indicator of the skills a software vendor will bring to a solution is to look at the focus, or lack of focus on their web site. If the site promotes expertise in many different areas, they are probably “jack of all trades and masters of none”, but happy to learn your business at your cost!

We’ll add more ideas on best practices and I hope they can help firms get better value from their software solutions.