Hosted versus On-Premise CRM
So you’ve decided that your company needs to take the plunge and invest in a CRM (customer relationship management) application that enables you to share and centrally manage all customer-related information. Now the question is: do you invest in a CRM solution that is installed on one of your servers, or a solution that is hosted on a CRM vendor’s servers and accessed by your users via their web browsers?
If you desire to get up and running quickly, nothing beats the hosted solution. There are numerous benefits that the hosted solution provides:
- Fast and easy deployment, especially for a dispersed workforce. Hosted solutions tend to be “ready-made” for quick deployment with just a little configuration required.
- Low up-front costs. Generally, hosted solutions do not require any up-front “getting started” fees – the monthly fee is the same per-user fee in month one as in month six.
- Flexibility to switch applications. Because there is no big up-front investment – unless you invest lots of time configuring the application – it’s easy to switch to another CRM application (provided the application has good export tools).
- Little IT support required. Since the server is hosted by someone else, you don’t have to worry about supporting the server. Also, because hosted solutions are browser-based, there’s not much technical support needed for user PCs.
The hosted solution has several drawbacks relative to a solution that is installed on your server (what I call an “on-premise” solution). On-premise solutions provide the following benefits relative to hosted solutions:
- No ongoing license subscription fees. Hosted solutions required you to pay monthly subscription fees forever. From a license fee perspective, on-premise solutions generally become more cost-effective within two years of use. In other words, somewhere within a two year time-frame, you end up paying the same total license fees for both the hosted and on-premise solution, after which the hosted solution becomes more expensive because you continue to pay the monthly license fees ad infinitum.
- Greater customization capabilities. On-premise solutions provide much greater customization capabilities. Part of the reason is that – for the hosted solution – you are sharing applications and data with thousands of other people, and the hosting company cannot risk endangering your “co-tenants” because of customization changes made specifically for you.
- Better integration with other applications. Hosted solutions must be very careful about opening up APIs and data for integration with other applications and databases. With an on-premise solution, you are in control of your own data and application security.
- Improved user interface. Hand-in-hand with the greater customization capabilities is the ability to customize the solution to work exactly the way your company and its users like to work.
- Improved data security because the data resides on your server(s).
Some CRM solutions can actually provide you with BOTH options. Sage CRM – a browser-based solution offered by The Sage Group – enables companies to start with a hosted solution, then migrate that solution to an on-premise solution, enabling companies to obtain the benefits of BOTH approaches.