Custom software development is the designing of software applications for a specific user or group of users within an organization. Such software is designed to address their needs precisely as opposed to the more traditional and widespread off-the-shelf software. Such software is typically created just for that specific entity by a third-party by contract or in-house group of developers and is not packaged for reselling.
Off-the-shelf software consists of a packaged software application available to a large audience with varying, albeit fundamentally similar needs. For example, Microsoft Word is designed for the mass public as a diverse solution to the many different needs of its users. It does not, however, cater to any specific entity like custom software would.
Customised software development entails the commissioning, development and release of a software product tailored to a single specific entity. For example, an application created for JPMorgan Chase would only be used by that company and the department for which it was designed. The software is designed keeping the company’s infrastructure, branding and implementation needs in mind, implying it can only work for that organisation.