Custom software isn't the first option for every company, and it shouldn't be. Many operations run perfectly well on well-configured generic tools. Custom development comes into play when those tools stop fitting the business's real process.
Some common signs: your team uses spreadsheets with increasingly complex formulas to make up for what a system should be doing; several people manually keep the same information in different files; or a specific process in your business simply doesn't exist in any standard software on the market.
When that happens, a custom system doesn't compete with generic tools: it complements or replaces them only where needed, adapting to the company's real process instead of forcing the team to work the way the software expects.