When Everyone Uses the Same Thing, Nobody Wins
Look at the ERP landscape of any mid-sized company. SAP or Microsoft Dynamics, Salesforce for CRM, HubSpot for marketing, Jira for projects, Xero or QuickBooks for accounting. The exact same stack sits at your competitor, your supplier, your customer. These stacks are so standardised that an "SAP consultant" role is fillable across industries. Efficient – but strategically worthless.
For two decades, software was something you bought so you didn't have to build it. The lever was the core business, not the code. That logic was correct as long as custom development was expensive, slow, and risky. With AI, it no longer is.
Why Standard Became the Default
Standard software was an economic necessity. A developer cost five to ten times more than a licence. Projects stretched over years. In-house development required specifications, test plans, operations teams – and failed often enough to serve as a cautionary tale in every CFO meeting.
The result: companies bought whatever solutions the market produced. And the market produced what covered the average of all buyers. Standard software is, by definition, the largest common denominator – it works for everyone because it's perfect for no one. Whoever adapted, adapted to the software, not the other way around.
That was acceptable while software was a necessary evil. It becomes a problem the moment software becomes the core of value creation.
What's Flipping Right Now
Three shifts are tipping the old logic:
Custom development became ten times cheaper. With AI-assisted development, a small team builds in weeks what used to take months. Boilerplate, tests, integrations, UI – everything that used to eat most of the time now runs largely on autopilot. The bottleneck was never creativity, it was typing. That bottleneck is gone.
Standard software is becoming a commodity. When all competitors use the same SaaS tools, none of them can differentiate through software. What everyone has isn't an advantage – it's just table stakes. And that's exactly what standard software has become: necessary, but meaningless for market position.
Value creation shifts into workflows. The competitive edge no longer lies in having a CRM, but in how that CRM connects to the warehouse, the production planner, customer communications, and the company's own data model. Those connections are company-specific. They can't be bought.
What Makes Software Strategic
An investment is strategic when it does two things: it creates value competitors don't have, and it isn't trivial to copy. Standard software fails on both counts. Custom workflows, tailored to a company's own data, processes, and customers, deliver both.
A concrete example: A wholesaler that builds its own pricing engine – based on its own sales history, supplier terms, and margin policy – has an advantage no SaaS vendor can deliver. An insurer that optimises claims processing with its own models on its own case data settles faster and more accurately than anyone using a generic tool. A logistics firm that tailors route planning to its own fleet, its own delivery windows, and its own driver skills runs cheaper than a competitor on a standard solution.
None of these examples would have been economically viable five years ago. Today they are.
Where Standard Still Wins
Not every piece of software has to be custom. Standard software remains the right answer where differentiation is neither possible nor desired: accounting, payroll, email, office tools. Here, reliability, regulatory compliance, and integration matter. Nobody wins a market by building a better Outlook.
The strategic question isn't "standard or custom?" It's "where does our advantage come from – and where is everything the same?" Standard software belongs in the areas that should be the same. Anything that creates market differentiation belongs under your own control.
The CIO's Blind Spot
Many IT strategies optimise for the wrong target: minimal cost, maximum standardisation, clear vendor contracts. That was correct when IT was run as a cost centre. It's wrong the moment IT becomes a value producer.
Anyone looking at software today primarily through a cost lens is missing the lever. A competitor running its key processes in custom software can iterate – weekly, daily, sometimes hourly. Anyone tied to standard software waits for the vendor's next release. That speed gap becomes a competitive gap. It compounds over years.
What's Changing in Boardrooms
The conversation in executive teams is shifting – slowly, but visibly. Where discussions used to centre on software costs, they now centre on software capabilities. Which workflows do we want to control ourselves? Which data models do we not want to share? What iteration speed do we need? Which vendor dependencies can we afford?
These aren't IT questions. They're strategic questions that belong in the executive team – at the same level as M&A, market strategy, or talent development. And increasingly, they're treated that way.
What This Means in Practice
Three consequences for companies acting now:
Build a software portfolio deliberately. Which processes define us? Which workflows contain our knowledge, our data, our methodology? That's exactly where the candidates for custom development sit. Standard software becomes infrastructure – it carries the load, but it doesn't define what you do.
Invest in software capability, not just software. A company that can build software quickly and on its own terms is strategically more agile than one that buys everything. That doesn't necessarily mean in-house development teams, but at minimum the partners, methods, and architectures that enable fast iteration.
Treat vendor lock-in as a risk. Every deeply integrated piece of standard software is a piece of lost sovereignty. That was acceptable while switching costs were manageable. As mission-critical software grows, vendor lock-in becomes a strategic vulnerability.
At nh labs, we see this shift in almost every advisory conversation. The question is no longer "can we build this ourselves?" but "should we build this ourselves because it would set us apart from competitors?" Today, the answer is "yes" more often than it was two years ago.
Bottom Line
Standard software was the right answer to a world where software was expensive and custom development was risky. That world is fading. Anyone still betting that the standard is enough is handing over a lever competitors are now picking up. Software is becoming a strategic asset – not in every area, but in the areas that decide market position. Companies that understand this now and rethink their software strategy accordingly are building leads no SaaS vendor will ever close.