CRM Cloud vs On Premise

CRM buyers sometimes wrestle with whether to choose on premise or cloud CRM software. While the CRM market has overwhelming moved to the software-as-a-service model, CRM in the cloud clearly offers different risks and rewards for each company so diligence is required.

"Cloud Software as a Service (SaaS) offerings continue to grow impressively," affirms Ahmar Abbas, SVP of CSS Corp., a global IT company. He advises that when its time to upgrade or change your CRM system, recognize that "SaaS-only vendors have risen in all key software domains and have successfully challenged the packaged software application companies."

There are several reasons for such widespread and enthusiastic adoption rates.

"The virtues of a hosted solution are legendary," says Bill Johnson, CEO of Jesubi. "Cloud providers hardware is consistently upgraded and amortized against thousands of other customers; software upgrades happen dynamically with no or little involvement from the end-user; response times allow for end-user success; and there are no incremental service fees to manage the hardware infrastructure or break-fix issues."

"It's too common-sensical in today's economy to do anything other than a cloud solution," suggests Johnson.

It appears that companies from large to small are quick to seize these advantages and learn from the experience. "According to our most recent survey, cloud CRM is still gaining market share, and a lot of the myths are being shaken off," explains Shari Lava, senior research analyst for Info-Tech Research.

"The total cost of ownership (TCO) is about the same after three years – so don't make your decision based on that," she advises. "And SaaS products have nearly equal functionality."

Considering myths have been busted and many of the old rules of thumb no longer apply, how is one to know whether or not to thumb a ride on the cloud computing and SaaS CRM bandwagon?

Info-Tech's Lava breaks it down this way:

Choose Cloud CRM if ...

  • There is a lack of executive support or CRM strategy and you need a departmental solution right away.
  • You need to speed up the customer relationship management implementation process.
  • You need a business software solution right now that can grow with you as needed. A lot of companies that went through a failed big-bang CRM project are trying SaaS CRM, but are doing so cautiously and want to see results before they continue their roll outs.
  • You have too few IT staff available to support and administrate the business system over the long term.
  • You have no disaster recovery plan for CRM so keeping it on someone else's locations seems smart.
  • Little offline capability is needed.

Choose On-Premise CRM if …

  • There is a legislative or regulatory requirement to host your own data or keep it in a certain jurisdiction.
  • You require complex system integration with large data volumes. Info-Tech's survey suggests that customers are still having some trouble getting the kind of tight integration mid-size and large companies need. Solving this challenge is key for SaaS CRM solutions to continue to move up market. Data integration can be tricky enough to begin with, but there are several factors that complicate it further, such as large data volumes integrated across the web and firewall configuration issues.
  • Your company operates in a regulated industry such as financial services or healthcare and you wish to assume complete ownership in managing the security risks.
  • You want to align CRM software with your existing Enterprise Resource Planning (ERP) software system and the on-premise product is different or superior.
  • Heavy offline capability is required.

CRM buyers evaluating CRM software should recognize there is no one-size-fits-all answer to the CRM Cloud vs On Premise debate. But, there is an undeniable market movement to the SaaS CRM model. Gartner reports that in the prior year, nearly 90 percent of all new CRM purchases were made for cloud CRM.