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Why On-Premise CRM Customers Are Embracing the Hybrid Approach

SaaS & On-Premise CRM – The Best of Both Many companies, particularly larger enterprises, have been hesitant to move away from on-premise customer relationship management (CRM) to an on-demand deployment model. Although hosted CRM offers many advantages – including faster implementation and rollout, lower upfront expenditures, and more rapid return on investment – these organizations need the kind of deep system integration and high level of flexibility that only an on-premise CRM solution can provide.

However, over the last several years, many CRM vendors have realized that how CRM is deployed within an organization does not need to be a “one way or the other” type of decision. As a result, a hybrid approach has emerged – blending the convenience and cost-efficiency of a SaaS (software as a service)-based CRM application with the robustness and broad customization functionality of an on-premise CRM system.

The hybrid deployment model is by no means a new concept. Leading on-premise CRM vendors Siebel (now owned by Oracle) and RightNow Technologies were among the very first to introduce hybrid CRM solutions. SAP later followed suite and rolled out their own offering, although they were much later to enter the game than many of their competitors.

But, what exactly is a hybrid CRM solution, and what value does it deliver to companies who have traditionally utilized on-premise CRM systems?

Hybrid CRM bridges the gap between on-demand and on-site CRM solutions, taking the key benefits of both, and packaging them up in a way that seems more like an on-demand offering – only better. For example, most hybrid CRM solutions offer subscription-based licensing, making them more affordable than on-premise CRM applications.

And they are, essentially, hosted software systems. But unlike the true on-demand CRM solutions, which typically leverage a multi-tenancy architecture where multiple clients share applications, databases and servers, backup and storage space, and memory, hybrid CRM solutions utilize single tenancy (or in the case of SAP, what they call “isolated” tenancy). This offers the same high security and low level of risk as on-premise CRM environments do. It also enables higher levels of customization than SaaS-based CRM, since other customers won’t be sharing resources, and won’t be affected by any system alterations or modifications.

And, much like their on-premise CRM counterparts, hybrid CRM solutions offer very high levels of integration with back-end systems. So, even though the CRM solution is housed and maintained at a third-party site, it can still be directly linked to other applications and databases at the customer’s location, just as seamlessly as if all components resided in the same space. This is particularly important for companies with complex technology architectures and sophisticated cross-functional customer-facing processes, who in the past were unable to leverage the benefits of on-demand CRM software because of the deep level of integration they required.

Some experts believe that, in the coming years, more and more large organizations will begin blending their existing on-premise CRM solutions with on-demand environments. As a result, many of them expect the hybrid approach to become the preferred deployment model among these types of companies.