On-Demand vs On-Premise CRM

There are many firms out there struggling with the decision of which type of customer relationship management program to choose. There are basically two approaches from which any company can pick, on premise or on demand CRM. Both have their varying pros and cons, as well as fans and detractors.

On premise customer relationship management revolves around the firm’s software applications and information being kept on the premises of the firm itself. Data, access to it, servers, and connections are all directly controlled by the business, and stay within the business’ physical walls. In contrast, on demand customer relationship management is a scenario where a business’ CRM applications and information are accessible by the firm over the Internet. Both the information physically, as well as the data servers themselves, reside in a building owned by the vendor of the application. This solution is commonly called SaaS, which stands for Software as a Service.

On premise customer relationship management software solutions have a significant following. While they may require substantial upfront investments, they do eliminate the monthly maintenance fees, which cover such items as offline synchronization, functions specific for the industry, additional monthly charges to have mobile access, and additional storage. On premise CRM solutions offer greater versatility and better integration too. This is important for all businesses which require their CRM software to be specifically set up to handle their individual processes which face the firm’s customers. There is no doubt that on demand solutions are not customizable to the point that on premise CRM platforms are. Where longer term return on investments is concerned, the continuous monthly fees cause on demand solutions to be significantly more costly than are the on premise CRM solutions over a given longer time frame. Security and dependability are major pluses of on premise CRM solutions. Since the servers and data are in house, the firm itself keeps total control over the protection and performance of the system in question.

But on demand customer relationship management platforms have their ardent supporters, as well. There are numerous advantages to selecting on demand over on premise, as per a study recently conduced by CSO Insights. In this report, it was made clear that:

  • Greater than fifty-nine percent of all on demand customer relationship management solutions can be put into place in three months or under. Yet only fifteen percent of alternative on premise CRM solutions can be affected in the same time frame.
  • More than thirty-eight percent of such on demand customer relationship management users achieved significant improvements in performance, when only twenty percent of the on premise CRM users realized the same.
  • Greater than sixty-six percent of those who employ on demand CRM solutions reported that they would purchase their program from their vendor again, or even recommend the vendor to another firm. Yet only thirty-four percent of the users of on premise systems would do this.
  • An astonishing in excess of seventy-five percent of those who use on demand CRM tools state that they finish their project within the pre-set budget. Yet a mere over forty-three percent of those who use on premise concepts are able to complete their project without running over budget.

Finally, the research firm Forrester Research holds up another series of benefits for on demand customer relationship management solutions. Among these are a number of elements favoring on demand solutions. These include greater usability, quicker upgrades and deployment time frames, IT administration independence, and avoiding major upfront investments.

1 Comment for this entry

September 20th, 2010 on 7:50 pm

Great article, very detailed differences between both systems. I’m going to focus on company size. On-Premise CRM is simply not a good fit for small businesses, a more practical solution for today’s small to medium sized businesses is On-Demand CRM. It is true that a web based CRMs are the cheapest option right from the deployment stage to the monthly charges. In our case, at Intelestream, we provide intelecrm, a SaaS solution with a unique pricing model, charging for the amount of data accessed rather than the number of licenses. Additional reading on the differences between on-line and on-premise models can be found at Intelestream’s web page.