Fundamentally, these options are based on whether your company wants to own or rent their CRM infrastructure. While there are pros and cons to both approaches, the driving force behind this decision tends to be the cost benefit and needs requirements. This model relates well to buying a house over renting an apartment. With the On Premise solution, the business is buying a house, and thus retains the ownership. The initial costs are greater but spread out over time, the value begins to set in. With that option, when the dishwasher breaks, its up the owner to fix it or to call the maintenance company to repair it, for a charge. Alternatively, when you rent an apartment, you pay the landlord a monthly fee. However, when the dishwasher breaks, you put in a maintenance request and the landlord will fix it without charge.
Of course, things aren’t exactly this black and white. Without oversimplifying, I’d like to explore the two options to help you make the right decision for your company.
Hosted CRM’s number one benefit is its nearly instant ‘time to value.’ A business could potentially have a CRM system up and running the same day they made their purchase. Also, you won’t need much of an IT staff to use
On Premise CRM
On Premise CRM solutions excel in several areas such as enhanced integration capabilities with other systems, especially when real-time integration is crucial. Because a Hosted option would generally not give your business access to the SQL database in which CRM resides, you will be limited in many regards to the level of integration. The On Premise CRM, on the other hand, gives a business full control over every bit of data. Most companies choose this method for its integration enhancements or its level of security and control. On the flip side, the largest drawback to the On Premise solution are the up front costs. The per user cost is substantially higher than that of the Hosted solution. That’s not to say the Hosted solution is cheaper; depending on the number of users, businesses may begin to have savings within a few years. If you take costs over a longer period, such as 10 years for example, the licensing savings should be substantially. Keep in mind that this option still requires maintenance for issues, service packs, upgrades as well as the hardware infrastructure. Having a skilled IT staff will help defray costs.
What to Choose?
While I wish I could list every scenario and best approach, what it ultimately boils down to is what will work best for your business, both from a process standpoint and a financial standpoint. One thing I would urge all businesses to consider prior to committing to one method, is to really examine what CRM will offer them and to what extent they will use its functionality. Also consider what level of customization will be needed, and do you already have hardware in place or will you need to purchase a new server, for instance. These are good starting questions to aid in your decisionmaking.
One closing thought is a third option and relatively new concept…. a hybrid solution. That is, having both an On Premise CRM for large user populations with complex business processes and supplementing with a Hosted solution to fill the needs of remote or specialized business units. Whichever you choose, spend the time doing the homework; it will make your decision that much more rewarding to your company.
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