Should Small Businesses Choose Microsoft Dynamics CRM as a Hosted or On-Premise Solution?

Over the past couple of years, one of the most common questions we’ve been asked at Concentrix is “What’s the best Microsoft CRM option for a small business – hosted or on-premise?”

Well, there’s no single answer. Whether you choose to deploy Microsoft Dynamics CRM on-premise or go with a hosted option depends on your business requirements: your aims, objectives, resources, and what you need from your CRM solution.

With hosted CRM (often referred to as ‘Software as a Service’, CRM ‘on-demand’ or ‘in the cloud’), the application and data is held on computers (servers), kept in an advanced data-centre. This means your CRM provider takes care of the running and maintenance of the software and servers 24 hours a day, seven days a week.

Hosted Microsoft CRM is a good fit for small businesses because you can be up and running with the software extremely quickly. Plus, you don’t need in-house IT staff or high levels of technical skills. What’s more there’s usually little or no financial outlay in terms of hardware and IT infrastructure, and you simply pay a monthly fee to use the product, based on the number of users you have.

However, if you need a high level of software configuration, if you already have your own servers and IT staff, or if you want to fully own your system outright, then deploying Microsoft Dynamics CRM on-premise is probably your best choice. You’ve also got to look at the time it will take to achieve return on investment. CRM should be a long-term business strategy and your investment in hardware for an on-premise solution will usually be recuperated fairly quickly, typically within three years. 

Choosing between hosted or on-premise CRM software is a bit like choosing between renting and buying a house. With renting (like choosing hosted CRM), you have the convenience of monthly payments, and nearly everything is taken care of for you by the landlord. On the other hand, buying a house (like choosing on-premise CRM) is a sound long-term financial investment and gives you full control of your property.

Now, here’s an interesting development. One thing we’ve noticed over the past year or so is that small businesses that choose Microsoft Dynamics CRM nearly always start off with the hosted option. In fact, since early 2009, hosted Microsoft Dynamics CRM has accounted for over 90% of Concentrix’s implementations of the product in businesses with between one and twenty users.

So, most small businesses, in the UK at least, prefer hosted Microsoft Dynamics CRM to start with. But it doesn’t stop there. We’re also just starting to see some organisations, having started off with the hosted option, then move to on-premise.

There’s actually a lot of sense in starting with hosted Microsoft Dynamics CRM and then moving to on-premise. Because of the ease of getting up and running, the hosted option is a good way for organisations to trial the product with very little risk. Then, once they’ve established the benefits, understood and demonstrated what CRM can achieve and decided that they will use CRM as a key business strategy, an on-premise solution becomes a realistic option. In the longer term it will deliver even better return on investment. So for many small businesses planning for growth, starting off with hosted Microsoft Dynamics CRM, establishing the benefits, embedding a ‘CRM culture’ before moving to on-premise is an attractive route.

Whatever option you choose, you won’t be on your own. All Microsoft CRM Gold Partners should offer comprehensive training and support services. So, whether you go with on-premise or hosted, you’ll have help available when you need it.

If you’re a small business and need further advice about choosing between hosted or on-premise Microsoft Dynamics CRM, we recommend you talk to your local CRM specialist. They’ll take a look at your requirements and provide help and advice about the best option for your needs.

By Concentrix Ltd – UK Business Management and CRM Specialists