Beware the customized commercial software trap

Commercial off-the-shelf software (COTS) and Software as a Service (SaaS) can be great ways to rapidly procure new software or infrastructure without having to build it from scratch. For example, it makes perfect sense to buy a COTS word processor instead of building your own custom word processor.

But for major procurements of specialized, mission-critical technology, be extremely wary of claims that COTS or SaaS will work "out of the box." Vendors will often pitch their "customizable COTS" and SaaS as a magic bullet, promising that it will handle your unique regulatory and process requirements. And it might — but likely only after extensive modifications.

Before signing on to those tools, first talk to other state agencies that have used those customized products. Chances are you’ll learn that what’s being sold as an out of the box solution takes a lot more time and money to customize than you’ve anticipated.

Instead of mandating any one solution at the budgeting stage, give agencies the space to determine whether to buy or build various pieces of the system. If the budget allocation mandates COTS, then the agency is likely to wind up locked into a highly modified version of a COTS product, cut off from all future upgrades by those modifications without significant expense. Likewise, mandating SaaS is likely to force the agency to cram their needs into a SaaS product like an ill-fitting shoe, while spending a significant amount of additional money on a "software integrator" to connect it to their existing legacy system, leading to the same type of undesirable lock-in.

It may well make sense to use COTS or SaaS as the core of a major new agency system. But the legislature and the agency needs to go into that with eyes wide open, recognizing that they’re not likely to get a completely turnkey COTS or SaaS solution for specialized agency software.


  • The budget allocation does not mandate the use of COTS, SaaS, or custom software, but allows the agency to fund a combination of those as they find necessary
  • Vendors’ claims that their COTS or SaaS product will work immediately, without burdensome modification or customization, are independently investigated by talking to other states and agencies that have used those products and gone through the customization and deployment process

Key questions

  • How will COTS software updates be made once the product has been customized to meet the agency’s needs? How much further customization will be required to integrate those modifications, and who will pay for those updates?
  • What happens if the SaaS vendor goes out of business one day without warning?
  • Will the state have no-cost, easy access to its data, data models, and APIs?