Hardware refers to the physical components of a computer system. These are the parts you can touch, such as the monitor, keyboard, hard drive, motherboard, and printer.

Software refers to the programs and applications that run on the hardware. These are sets of instructions that tell the hardware what to do. Software includes operating systems, word processors, games, and web browsers.

1. System Software e.g. operating software, utility software. 

2. Application Software:

• Off-the Shelf - Generic software e.g. Word, Photoshop and special purpose software e.g. Sage for payroll. 

• Custom built software - coded from scratch for a business for a specific use e.g. First Trust Bank Software. 

• Performs general tasks and is not limited to one particular application.

• Software may not meet the exact user requirements.

• Example: a spreadsheet application.

• Designed for a specific application.

• Software will meet the exact user requirements.

• Example: payroll software (SAGE)

Advantages:

• The software is coded to meet the exact user requirements so the system e.g. payroll will do exactly what the business needs it to do.

• Closer involvement with the developer team as the developers will be in the business to ask for help.

• The developers will be onsite to assist with implementation and testing of the new system.

• No unnecessary or unwanted additional features will be included in the application.

Advantages:

• Immediately available for use can purchase online to download.

• Wide range of support resources available on the open market i.e. community support on open forums etc.

• Cheaper -Reduced cost as development costs are shared across a wider audience.

• It will have been thoroughly tested so there won’t be any serious problems or bug.

• More Functionality – Developers try to meet the needs of as many users as possible.

Disadvantages:

• Not available immediately as its developed from scratch so the business will have to wait for the payroll system to be created.

• More expensive as the business is designing their own system and the have to pay the whole cost.

• Need to employ a specialist team in-house to produce the solution or outsource it to a specialist IT company to develop.

Disadvantages:

• May contain a lot of additional features the organisation does not need and may be overly complicated.

• Can be costly to customise.

• May not contain all the features the organisation needs to carry out tasks. Task may be completed slightly differently and organisation needs to amend their approach to fit the application.