Category Archives: Custom Software

Predictive Analytics: Hype versus Reality

Custom Software, Predictive Analytics

A quote in a recent PR release from Dresner Advisory Services, an industry analyst covering advanced and predictive analytics:

One clear conclusion we can draw is that there is a substantial gap in adoption of advanced and predictive analytics (A&PA) between the industry-messaging machine of vendors, media, and analysts, and the actual people who generate analytical output in organizations. While awareness of the importance of A&PA is high, adoption and practice are far from universal.

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Predictive analytics and associated techniques have been around for many decades (we used refer to such techniques as regression analysis – which, by the way, was developed in early 1800s, econometric modeling, or machine learning back then).   In the midst of all the euphoria about the business value of predictive analytics, it is our experience that marketers continue to struggle to operationalize the predictive models into day-to-day decisions.  We had one client whose internal decision sciences team built a complex but unusable model after a multi-month effort, but the model was never operationalized.   We developed a simpler but implementable model and integrated it into a decision-making software tool to guide and automate marketer’s decisions.

 

 

Custom Technology Solution or Off-the-shelf Software Tool: Revisit Your Decisions

Business Value, Custom Software, Marketing Analytics, ROI

Over the years, given the perceived relative strengths of off-the-shelf software – faster, cheaper, better – compared to custom software, off-the-shelf software (enterprise or hosted) gained popularity.  But the advent of open-source platforms, infrastructure, and tools, has bent the cost curve for custom software, requiring organizations to rethink the custom versus off-the-shelf software decision.

  • Features that matter:  With off-the-shelf software – enterprise or software-as-a-service – you are stuck with the features the software maker provides, not the features that your unique business needs. Off-the-shelf software is either designed for a wide range of businesses across industries, or it is targeted to a particular industry.  In either case, you will need to adapt your decision systems and processes to the tool.
  • Competitive differentiation:  If you’re using off-the-shelf software, it is quite likely so are your competitors. Why would you choose to play on the same level playing field when you can develop advantages that are unique to your business, purpose, and organizational and operational strengths? Custom solution incorporates your proprietary insights and business processes, improving effectiveness and competitive advantage.  Every successful company has to be unique in the marketplace in or of more of the following: internal systems, processes, and decisions, external products, service, and operations.  In particular, for smarter marketing with data, associated uniqueness should be embedded into the data, analysis, or application of insights.  Consequently, there always will be considerable opportunity in custom software.
  • Continuous support and refinement:  Off-the-shelf software typically has basic level of support available with a support staff typically unable to understand the inherent intricacies of your business. With custom software you get in-depth support from an internal or an outsourced team who designed and developed the system.  As businesses and markets evolve, your needs change.  Custom software can adapt faster and more efficiently to your changing needs.   You may be stuck with what you have in off-the-shelf software. 
  • Higher ROI:  In our experience, you incur higher initial costs for design and development (though the cost premium is vanishing with the incorporation of open-source platforms and tools), and lower recurring costs for custom marketing analytics software, compared to off-the-shelf software.  But custom software can also deliver persistent incremental revenue premium.  Consequently, well-designed and implemented custom software solutions can deliver a greater return on investment.
  • Business application:  For basic plumbing and infrastructure go for the standard off-the-shelf and open source platforms and tools.  For simple analytics applications such as metrics and reporting, continue to adopt off-the-shelf apps.  But for predictive analytics, cause-effect analytics, and real-time marketing decision engines, you need custom software since this is the sweet spot for competitive differentiation: either in data or how data are consumed (I’ll expand on this topic in a future post).
  • Time to value:  Custom software, even with a scotch-tape approach built on top of open source platforms to (dis)prove a new way of thinking and doing, is often preferable to off-the-shelf software in terms of time to realize measurable business value.   It may not take a long time and internal resources to develop custom software, compared to even a decade back.  Rapid prototyping approaches have resulted in the development of great custom software quickly.
  • Maintenance:  With custom software hosted on the cloud, there are minimal ongoing costs associated with IT personnel.   Of course, there is need for data exchange – periodically in batch mode or continuously in real-time – between the business and the hosted solution provider.   But once the initial data integration hurdle is crossed, the rest is mostly business value generation.
  • Code ownership:  In a custom technology solution, the client owns the source code, except the modules embedding any proprietary algorithms of the system developer.

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We realize that the custom or off-the-shelf software decision is not an easy one.  But with the advent of open-source platforms and technologies, challenge the status quo, and revisit this important decision.