Performance Differences: On Demand CRM and On Premise CRM Tools

On demand or on premise? It’s the question that many companies struggle with when choosing CRM tools. Of course, there are pros and cons to each approach; but over the past several years, most CRM customers – particularly small and mid-sized businesses – have chosen to hand responsibility of their CRM tools over to a hosting service provider instead of maintaining control of their application within their own walls. But are on demand CRM tools really better?

Stats in Favor of On Demand CRM

According to a recent study conducted by CSO Insights, significant benefits can be achieved by choosing on demand over on premise. The report demonstrated that:

• Over 38 percent of on demand CRM users realized dramatic performance improvements, compared to just 20 percent of users of on premise CRM tools.
• More than 59 percent of on demand CRM tools are implemented in three months or less. But only about 15 percent of on premise CRM implementations are completed within that same time frame.
• 75.6 percent of on demand CRM projects are completed within the pre-defined budget, while only 43.7 percent of on premise initiatives wrap-up without budget overruns.
• Over 66 percent of users of on demand CRM tools were likely to buy again from their vendor, or recommend their vendor to another company. Only 34 percent of on premise users would do the same.

Analyst firm Forrester Research cites freedom from large upfront expenditures, independence from IT administration, faster deployments and upgrades, and improved usability as additional benefits of on demand CRM tools.

On Premise CRM Has its Own Fans

However, some industry experts disagree and have claimed that on premise CRM tools are the way to go. Forrester points out that although on demand applications eliminate big initial investments, they often include extra monthly fees for mobile access, industry-specific functionality, offline synchronization, and extra storage – features that are often quite inexpensive with on premise CRM tools.

On premise CRM also provides more robust integration and greater flexibility. This is critical for any business that needs their CRM system to be highly tailored to support unique customer-facing processes. On demand solutions simply can’t be customized to the same extent that on premise CRM tools can.

Then, there is the debate over short term vs. long term return on investment. While ROI is realized relatively quickly with on demand solutions, many believe that the recurring monthly fees make them a far more expensive option than on premise CRM tools in the long run.

And, security and reliability remain continued concerns with on demand software models. With in-house CRM tools, the company maintains complete control over system performance and protection. While most providers of hosted CRM tools do take uptime and data integrity very seriously, there are some that don’t safeguard their production systems as well as they should. If you choose an on demand solution, make sure it has been subject to an external audit by a certified agency.

It’s About What Works for You

The fact remains that different businesses have different CRM needs. No two companies market to, sell to, and service their customers in the same exact way. While on demand CRM may be a better fit for one business, on premise CRM tools may be just right for another. With thorough evaluation and planning, you can determine which approach is best for your company.