Which Fits Better Regulations and Compliance? No Code vs. Custom Software?

The demand for efficient software solutions has never been higher in the modern business landscape, where digital transformation is reshaping industries. Businesses seeking to optimize operations and deliver seamless user experiences often face the dilemma of choosing between no-code and custom software development. The decision not only impacts their technological landscape but also intertwines with regulatory and compliance considerations.

In this article, we’ll comprehensively explore the difference between no-code and custom software development and their alignment with regulations and compliance.

This article serves as a call to action for businesses to recognize the pivotal role of compliance in their software development strategy and to embrace a holistic approach that aligns with their operational needs and legal responsibilities.

What you will learn from this article:

• What are the compliance and regulations in software development?
• The types of compliance and regulations both no code and custom software need to follow
• What are the possible consequences of failing to respect regulations and compliance?
• The way compliance in no-code applications works
• The way compliance in custom software development works
• A better option between no code and custom software from a compliance perspective
• Effective ways you can find the best compliance software vendors

Table of Contents

What Are the Types of Regulations and Compliance Both Apps Need to Follow?

• Low Code/No Code vs. Custom Software — Compliance Approach
• What Are the Possible Consequences of Neglecting Regulations and Compliance?
• How Does Compliance in No-Code Applications Work?
• Benefits and Risks Associated With Using Third-Party Applications for Compliance and Regulation
• How Does Compliance in Custom Software Development Work?
• Benefits and Risks Regarding Compliance for Custom Software
• No Code vs. Custom Software — Which Is a Better Choice From a Compliance Perspective?
• When No Code is Better for Compliance
• When Custom Software is Better for Compliance
• How to Find the Best Compliance Software Vendors?
• Summary

What Are the Types of Regulations and Compliance Both Apps Need to Follow?

While apps and software bring convenience, efficiency, and innovation, they also carry significant responsibilities when it comes to compliance with various regulations and standards.

Understanding and adhering to these regulations is not only essential for legal and ethical reasons but also for maintaining trust with users and stakeholders. Let’s look at some of the key regulations and compliance requirements that apps need to follow:

The Dodd-Frank Act

Dodd-Frank is a comprehensive piece of financial reform legislation. While it primarily targets the financial industry, it has implications for software and apps that deal with financial transactions and data. Apps related to finance, banking, or investment must comply with provisions such as transparency in financial transactions, risk management, and consumer protection.

The Sarbanes-Oxley Act (SOX)

The Sarbanes-Oxley Act, or SOX, is another significant regulatory framework. It focuses on financial reporting and corporate governance. Any software or application used in accounting, financial reporting, or auditing must adhere to the strict requirements set by SOX to maintain accurate financial reporting, internal controls, and data integrity.

HIPAA

HIPAA mandates strict security and privacy measures to protect patient health information (PHI). Compliance involves encryption, access control, and audit trails. Healthcare applications must comply with HIPAA to avoid legal issues and safeguard sensitive medical data.

GDPR

GDPR ensures the privacy and protection of individuals’ personal information. It mandates stringent data protection measures, consent management, and the right to have their personal data erased. Compliance involves robust data handling practices and data breach notification procedures.

Software Bill of Materials (SBOM)

Software Bill of Materials (SBOM), while not a regulation per se, is gaining prominence as a best practice that promotes transparency in software supply chains. It involves creating a complete list of software components and dependencies used in an application, which aids in vulnerability management and compliance.

Knowing all the components and dependencies in a software application helps identify potential vulnerabilities and security risks. It allows organizations to proactively manage and patch these vulnerabilities, which reduces the risk of security breaches and ensures compliance with security regulations.

Low Code/No Code vs. Custom Software — Compliance Approach

Low code/no code and custom software are two distinct approaches that differ significantly in how they tackle compliance issues. Below, we compare them to help you understand their respective strengths and weaknesses in addressing compliance issues.

Low Code/No Code

Low-code/no-code solutions offer efficiency and speed in development, making them attractive for businesses looking to launch apps quickly. However, some low code/no code solutions offer limited customization choices, which may cause limitations in meeting specific regulatory requirements, especially for highly regulated industries like finance or healthcare. Organizations with specific compliance needs may find Low-code/no-code solutions insufficient.

Custom Software Development

Custom software, developed from scratch, provides the highest level of control over compliance. Developers can build compliance features from the ground up, ensuring that every aspect of the software aligns with regulatory standards. This flexibility is a significant advantage for industries with stringent compliance requirements, such as finance and healthcare.

What Are the Possible Consequences of Neglecting Regulations and Compliance?

Adhering to regulations and compliance standards is not just an option but a necessity. However, for some, it may seem tempting to cut corners or disregard compliance requirements in pursuit of short-term gains. Yet, the consequences of such neglect can be far-reaching and severe, affecting not only the financial health of businesses but also their reputation and legal standing.

Financial Implications

Neglecting regulations and compliance can lead to substantial financial consequences. Companies may face hefty fines, penalties, and legal costs. These financial burdens can quickly erode profits and even threaten the existence of small businesses.

The severity of fines and penalties varies widely across different regions. In Europe, for instance, the General Data Protection Regulation (GDPR) can impose fines of up to €20 million or 4% of the company’s global annual revenue, whichever is higher.

In the United States, regulatory fines can range from thousands to millions of dollars, depending on the violation. Some regulatory bodies, like the SEC, have the authority to impose significant fines for financial misconduct.

Australia’s legal framework includes the Australian Securities and Investments Commission (ASIC) and the Competition and Consumer Act. Violations can result in penalties of up to $15.65 million or up to 10% of annual turnover

In Canada, regulatory fines can go up to $100,000 CAD for privacy violations under the Personal Information Protection and Electronic Documents Act (PIPEDA).

The UK has its own data protection regulations, and non-compliance with the Data Protection Act can lead to fines of up to £17.5 million or 4% of global turnover.

The legal implications of neglecting regulations and compliance are perhaps the most severe. Companies can find themselves entangled in costly and protracted legal battles that drain both financial and human resources.

Reputation Damage

The reputation of a business is one of its most valuable assets. Neglecting compliance activities can tarnish this asset irreparably. News of non-compliance can spread rapidly through social media and news outlets, which can damage a company’s image.

When a company neglects compliance, it sends a signal to customers that it cannot be trusted. Additionally, a company with a history of non-compliance may struggle to attract investors, limiting its growth potential.

How Does Compliance in No-Code Applications Work?

Low-code agencies ensure that software or application created using no-code tools adheres to legal and regulatory standards, and meet industry best practices.

No-code platforms often come equipped with pre-configured compliance modules. These modules are designed to align with industry-specific regulations, making it easier for no code app builder to create compliant applications.

To enhance compliance capabilities, no-code platforms integrate seamlessly with compliance-related APIs. These APIs provide real-time access to regulatory updates and ensure that applications remain up-to-date with the latest requirements.

Furthermore, no-code platforms allow developers to add compliance elements to their workflows effortlessly. This includes features like data encryption, access controls, and audit trails, all essential for maintaining compliance.

Developers can tweak existing app features or create new functionalities by writing code or leveraging deep customization options offered by the low-code platform to match specific business processes and needs. This ensures that compliance is not a one-size-fits-all approach but tailored to the organization’s requirements.

Benefits and Risks Associated With Using Third-Party Applications for Compliance and Regulation

Using third-party applications for compliance and regulations in business operations can offer several benefits but also come with certain risks. It’s essential to carefully consider both aspects when integrating such solutions into your organization’s workflow.

Key Benefits of Using Third-Party Applications for Compliance and Regulations

1. Ability to streamline compliance processes: These applications are often equipped with specialized features that can automate business processes, reducing the burden on your internal resources. By doing so, they ensure that your business remains compliant with regulatory requirements, saving time and resources.
2. It is a cost-effective solution: Third-party applications offer cost-effective alternatives that cater to businesses of all sizes. You can opt for a subscription-based model or pay-as-you-go, which allows you to scale your compliance efforts according to your needs and budget.
3. Expertise and updates: Third-party compliance management solutions often come with a team of experts who stay updated with the latest regulations. This ensures that your business remains in compliance with any changes in the legal landscape.
4. Scalability and flexibility: As your business grows, so do your compliance requirements. Third-party applications provide the scalability and flexibility needed to adapt to these changes seamlessly.

Risks of Using Third-Party Applications for Compliance and Regulations

1. Security concerns: Entrusting sensitive compliance data to third-party applications introduces security concerns. While reputable providers implement robust security measures, there’s always a risk of data breaches or unauthorized access.
2. Data privacy issues: Compliance often involves handling personal or sensitive data. Using third-party applications means sharing this data with external entities, potentially leading to data privacy issues.
3. Dependence on external providers: Relying on third-party applications can create a level of dependence on external providers. If the application experiences downtime or operational issues, it may disrupt your compliance processes.

Low-Code Governance

Low-code governance is a set of practices, policies, and procedures that organizations put in place to oversee and manage the development and deployment of applications created using low-code platforms.

While low-code development offers speed and agility in application development, it also introduces certain challenges and risks that need to be carefully managed. Low-code governance addresses these challenges to ensure that the use of low-code platforms aligns with an organization’s goals, standards, and regulatory requirements.

Benefits of Low-Code Governance:

1. Standardization: Low-code governance standardizes development practices, ensuring consistency across applications and reducing the risk of errors or vulnerabilities.
2. Risk mitigation: Governance measures help identify and mitigate security and compliance risks early in the development process, minimizing the potential for costly issues in the future.
3. Compliance assurance: By incorporating compliance checks and documentation, low-code governance provides confidence that applications meet regulatory requirements.
4. Efficient collaboration: Governance promotes collaboration among development teams, business stakeholders, and compliance experts, leading to better-designed applications.
5. Resource optimization: Well-governed low-code development streamlines resource allocation and reduces the time and effort required for application development.

Risks of Low-Code Governance:

1. Initial overhead: Implementing low-code governance requires an initial investment in policies, training, and infrastructure, which can be resource-intensive.
2. Resistance to change: Developers may initially resist governance measures if they perceive them as overly restrictive or cumbersome.
3. Resource intensity: Effective governance requires dedicated resources for monitoring, audits, and compliance checks.
4. Complexity: Managing low-code applications under governance can be complex, especially in large organizations with numerous applications.

Low-code governance is a vital framework for organizations to harness the benefits of low-code platforms while managing the risks associated with rapid application development. Gartner predicts that 80% of all application development will be done on low-code platforms by 2024, highlighting the growing importance of governance in ensuring application quality and security.

How Does Compliance in Custom Software Development Work?

Compliance in custom software development is a critical aspect that ensures that the software meets legal and regulatory requirements while also adhering to industry standards and best practices. Achieving compliance in custom software development is a complex but necessary process to ensure that the software not only functions as intended but also operates within the boundaries of the law.

The compliance journey begins with a thorough analysis of regulatory requirements. Development teams must understand the specific rules and standards that apply to the software they are building.

During the design and development phase, compliance considerations are integrated into the software’s architecture. This includes implementing security features, data encryption, and audit trails.

Rigorous testing and validation processes are essential to ensure compliance. This phase involves conducting vulnerability assessments, penetration testing, and compliance audits to identify and address any issues.

Benefits and Risks Regarding Compliance for Custom Software

Custom software offers several benefits and risks when it comes to compliance with various regulations and standards. Let’s look at some of the key benefits and risks associated with custom software in terms of compliance:

Benefits of Custom Software Regarding Compliance:

1. It is a customizable solution: Custom software is designed to meet the unique needs of a business. When it comes to compliance, one size does not fit all. Custom software can be tailored to align seamlessly with a company’s compliance goals.
2. It offers enhanced security: Compliance often involves handling sensitive data and protecting it from unauthorized access. Custom software allows businesses to implement robust security measures tailored to their compliance needs. This level of customization can help in preventing data breaches and maintaining regulatory compliance.
3. Scalability: As businesses grow and regulations evolve, compliance requirements can change. Custom software can be easily adapted and scaled to accommodate these changes, ensuring that a company remains compliant as it expands.
4. It can streamline processes: Custom software can automate compliance-related processes, reducing the margin for error and the time required for manual tasks. This streamlining of operations can lead to increased efficiency and reduced compliance costs.
5. Competitive advantage: By investing in custom software for compliance, businesses gain a competitive edge. They can demonstrate a commitment to meeting industry standards, which can be an attractive feature for clients and partners who prioritize compliance.

Risks of Custom Software Regarding Compliance:

1. Initial investment: Developing custom software can be expensive, particularly when compared to purchasing off-the-shelf solutions.
2. Development time: Custom software development is a time-consuming process. Businesses need to consider the time it takes to design, develop, and test the software, which could delay compliance efforts.
3. Scope creep: There’s a chance that the project’s scope may expand or change during the development process. This can lead to budget overruns and timeline extensions without effective scope management

No Code vs. Custom Software — Which Is a Better Choice From a Compliance Perspective?

Choosing between a no-code solution and custom software from a compliance perspective involves careful consideration of various factors. Both options have their own benefits and risks, and the choice depends on the specific needs and constraints of your organization. Let’s compare and contrast both solutions across various aspects to help you make an informed decision that aligns with your compliance requirements and overall business goals.

Required Coding Skills

No Code: No code platforms have gained popularity for their promise to empower non-technical users to create applications without coding expertise. This means that your compliance team or business stakeholders can actively participate in the development process.

Custom Software: Custom Software, conversely, relies on professional developers with strong coding skills. The advantage here is the ability to fine-tune your compliance features to perfection. However, it requires a technical team or the hiring of developers.

Development Time

No Code: No code solutions shine when time is of the essence. Rapid development means you can address compliance issues promptly. It’s perfect for quick fixes or temporary solutions.

Custom Software: Custom Software development takes time, often requiring careful planning and a lengthy time to write code and test. This approach is best suited for businesses with well-defined, long-term compliance needs.

Pricing Considerations

No Code: No code solutions are generally a more budget-friendly option for businesses with limited financial resources compared to custom development.

Custom Software: Custom Software development can be expensive due to developer salaries and extended development timelines. However, it may provide a more cost-efficient option in the long run, especially for businesses that prioritize compliance above all else.

App Speed and Maintenance

No Code: No code platforms often excel in rapid application development. Compliance solutions can be deployed quickly, addressing immediate needs. However, as your compliance requirements evolve or your business scales, no code apps might struggle to keep up.

Custom Software: Custom Software can be meticulously optimized for speed and efficiency, ensuring smooth compliance processes. Maintenance is also under your control; this allows you to adapt swiftly to regulatory changes.

Scalability

No Code: No code platforms can be limited in their scalability. As your compliance needs grow, you might outgrow the capabilities of no code solutions.

Custom Software: Custom Software is highly scalable and can accommodate evolving compliance requirements as your business expands.

Security and Compliance

No Code: No code solutions may have limitations in addressing specific security and compliance requirements, especially in highly regulated industries.

Custom Software: Custom software provides greater control over security measures and compliance, making it a better choice for businesses with stringent regulatory needs.

When No Code is Better for Compliance

There are scenarios where no code solutions shine, offering a simpler and more efficient approach to meeting compliance requirements. Here are some situations where no code is the better choice for compliance:

Scenario 1:

Imagine a startup in the healthcare sector that needs a simple compliance tracking system to meet regulatory requirements swiftly. No code platforms like Zapier or Airtable can provide a quick, user-friendly solution. Compliance officers and non-technical team members can easily design and modify workflows to meet their immediate needs.

Scenario 2:

Suppose you’re a startup with a tight budget or a small e-commerce business looking to implement basic compliance checks without breaking the bank. For example, you can use no code tools like Google Forms and Sheets to create simple compliance forms and track submissions without the need for costly custom development.

Scenario 3:

In many compliance scenarios, key decision-makers and stakeholders may not have coding expertise. No code platforms are designed with these users in mind. Consider a situation where a financial institution wants to streamline its compliance reporting process. Many employees in various departments are responsible for data input and reporting.

No-code solutions like Power Apps can empower these non-technical users to create custom apps for data collection, reducing the burden on IT departments.

Scenario 4:

A retail chain wants to gather feedback from its store managers about compliance with company policies. No code survey tools like SurveyMonkey or Google Forms allow non-technical staff to create and distribute compliance surveys, simplifying the data collection process.

When Custom Software is Better for Compliance

Custom software development provides the flexibility and precision needed to meet complex and specialized compliance needs. Let’s explore scenarios when custom software becomes the preferred option for addressing complex compliance requirements:

Scenario 1:

In industries with complex and highly specialized compliance needs, custom software is often the superior choice. For example, if you operate a multinational pharmaceutical company, you must adhere to complex and ever-evolving pharmaceutical regulations. Custom software developed by experts is essential here. It can be customized to accommodate complex compliance needs, ensuring every aspect of the business is in full compliance with local and international regulations.

Scenario 2:

Suppose you’re a financial institution handling sensitive customer data. Building a custom compliance management system offers the scalability and adaptability needed to comply with evolving regulations over the years.

Scenario 3:

In businesses with established technology stacks, integration is crucial for compliance. Consider a multinational corporation that needs to ensure global tax compliance. Custom Software can seamlessly integrate with existing financial and reporting systems, streamlining compliance processes and reducing the risk of errors.

Scenario 4:

A growing fintech company anticipates an increase in compliance requirements as it expands into new markets. Custom software for fintech allows them to build a scalable compliance infrastructure that can adapt to evolving regulations and handle a growing volume of data and transactions.

How to Find the Best Compliance Software Vendors?

Finding the best compliance software vendor for your organization is crucial for ensuring regulatory adherence and risk management. To help you make an informed decision, consider the following list of features and criteria that can help you evaluate compliance software vendors:

Experience

When considering compliance software vendors, experience is a crucial factor. Vendors with a proven track record in the industry are more likely to understand the complexities of compliance management. Look for vendors who have been in business for several years with a history of developing top-notch compliance management software tools and serving clients similar to your organization.

Certification and Accreditation

Certification and accreditation are indicators of a vendor’s commitment to quality and compliance. Ensure that the vendor holds relevant certifications and accreditations in the field of compliance software development. Certifications such as ISO, SOC 2, and HIPAA can provide assurance of globally recognized standards for quality management, data security, and privacy respectively.

For organizations in highly regulated industries, such as pharmaceuticals and chemicals, Process Safety Management (PSM) is of utmost importance. Check if the vendor’s compliance software aligns with PSM II certification requirements and can effectively manage safety-related compliance.

Safety Features

Safety is a critical aspect of compliance in many industries. Look for software that offers safety-specific features that align with your corporate compliance program, such as incident reporting, hazard analysis, and safety compliance tracking. These features can enhance workplace safety and regulatory compliance.

Scalability and Customization

As your organization grows, so do your compliance needs. Choose a vendor that offers a scalable compliance management solution that can adapt to your evolving requirements. Additionally, consider the software vendor that offers the ability to customize the software to suit your specific compliance processes.

Integration Capabilities

Your compliance management systems should seamlessly integrate with your existing systems and tools. This integration capability ensures data continuity and simplifies the management of compliance-related data.

Cost and Budget Considerations

Budget constraints are a reality for most organizations. Evaluate the pricing structure of potential vendors and compare it with your budget. Be sure to consider the long-term costs, including maintenance and updates.

User Reviews and Recommendations

Reading user reviews and seeking recommendations from industry peers can provide valuable insights into a vendor’s reputation and the quality of their software. Look for reviews that highlight successful compliance outcomes. You can check a reliable review source for software houses like clutch.co to gain insights into the experiences and feedback of clients who have worked with these software vendors or assess their reputation.

Summary

Deciding between no-code solutions and custom software for regulations and compliance depends on the unique needs, budget, and long-term goals of your organization. Remember that no-code solutions offer speed and cost-efficiency, making them attractive for many businesses. However, they may not handle extreme complexity or rapid growth as effectively as custom software.

Custom software, while more time-consuming and costly, provides unparalleled precision and scalability, ideal for organizations with complex regulatory demands and long-term vision.

Ultimately, the right choice depends on conducting a thorough business analysis to ensure that the chosen technology solution aligns with strategic goals and effectively manages compliance demands.

Originally published at selleo.com by Mateusz Górny