SAP BW|BOBJ|Project Management Blog

COTS vs Custom Development - A Practical How to Guide

Written by Lonnie D. Ayers, PMP | Thu, Mar, 07, 2024 @ 04:34 PM

Practical Decision-Making Process

 

 

Here is a step-by-step evaluation and decision-making process for choosing between implementing an SAP Advanced Add-On Solution as a Commercial Off-The-Shelf (COTS) software or developing it in-house:

 

  1. Define Requirements:

    • Gather detailed requirements for the SAP Advanced Add-on solution.
    • Identify specific functionalities, integration requirements, scalability needs, and regulatory compliance.

  2. Assess Current Capabilities:

    • Evaluate the existing IT infrastructure, skill sets of the IT team, and available resources.
    • Determine if the organization has the expertise to develop and maintain a custom solution.

  3. Research COTS Solutions:

    • Explore available COTS solutions, including the SAP Advanced Add-on Solution.
    • Assess the features, functionality, support, licensing costs, and implementation timelines of each option.

  4. Cost-Benefit Analysis:

    • Estimate the Total Cost of Ownership (TCO) for both COTS and custom development options.
    • Consider initial implementation costs, ongoing maintenance expenses, and potential future upgrades.
    • Evaluate the ROI based on anticipated improvements in efficiency, customer satisfaction, and revenue generation.

  5. Evaluate Custom Development:

    • Assess the feasibility of developing a custom SAP Advanced Add-On solution in-house.
    • Consider the time, resources, and expertise required for development, testing, and implementation.
    • Evaluate the risks associated with custom development, including potential delays, scope creep, and quality assurance.

  6. Vendor Support and Maintenance:

    • Evaluate the level of support and maintenance provided by the COTS vendor.
    • Consider factors such as availability of updates, patches, and technical assistance.
    • Assess the vendor's reputation, track record, and customer satisfaction ratings.

  7. Scalability and Flexibility:

    • Consider the scalability and flexibility of both COTS and custom solutions.
    • Evaluate the ability to adapt to changing business requirements, technological advancements, and industry regulations.
    • Determine if the chosen solution can accommodate future growth and expansion of the airline's operations.

  8. Integration and Compatibility:

    • Assess the compatibility of the warranty management solution with existing systems, including SAP and other third-party applications.
    • Evaluate the ease of integration and potential impact on business processes and workflows.

  9. Risk Management:

    • Identify potential risks associated with both COTS and custom development approaches.
    • Evaluate factors such as vendor reliability, software stability, security vulnerabilities, and compliance with industry standards.
    • Develop mitigation strategies to address identified risks and minimize potential disruptions to operations.

  10. Decision Making and Documentation:

    • Compile all evaluation criteria, analysis findings, and stakeholder feedback into a comprehensive decision-making document.
    • Facilitate discussions with key stakeholders, including business leaders, IT team members, and external consultants.
    • Make a well-informed decision based on the evaluation criteria, organizational priorities, budget constraints, and long-term strategic objectives.

Go No-Go

 

Based on this evaluation process, the organization can determine whether to proceed with implementing the SAP Advanced Add-On Solution as a COTS software or opt for custom development to meet its specific requirements and business objectives.

 

Numerical Evaluation Criteria 

 

Here is a table with example numerical evaluation criteria for each item, followed by an algorithm to make a final decision based on the scores:

 

Criteria COTS Solution Custom Development
Define Requirements 8 7
Assess Current Capabilities 7 6
Research COTS Solutions 9 5
Cost-Benefit Analysis 8 6
Evaluate Custom Development 6 8
Vendor Support/Maintenance 9 6
Scalability and Flexibility 8 7
Integration and Compatibility 9 7
Risk Management 8 7

 

Algorithm for Decision Making:

 

  1. Calculate Weighted Scores:

    • Assign weights to each criteria based on its importance to the organization's objectives (e.g., on a scale of 1 to 10).
    • Multiply the score for each criteria by its corresponding weight to calculate the weighted score for both COTS solution and custom development.

  2. Total the Weighted Scores:

    • Sum up the weighted scores for each option (COTS solution and custom development).

  3. Compare Total Scores:

    • Compare the total weighted scores for both options.
    • The option with the higher total weighted score indicates a better fit for the organization's needs based on the evaluation criteria.

  4. Consider Non-Numerical Factors:

    • Take into account qualitative factors such as stakeholder preferences, strategic alignment, and organizational culture.
    • Conduct discussions with key stakeholders to address any concerns or considerations that may not be fully captured in the numerical evaluation.

  5. Make a Final Decision:

    • Based on the weighted scores and qualitative factors, make a final decision whether to proceed with the COTS solution or custom development.
    • Document the rationale behind the decision, highlighting key factors that influenced the outcome.

Avoid Risk - Be Data-Driven

 

By following this algorithm, your organization can make a data-driven decision while also considering subjective factors to ensure alignment with broader business objectives and stakeholder expectations.

 
 
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