CRM - Own or Rent?

by Lukas Bena
The moment your company is prepared to buy a CRM solution, it should decide whether to have CRM as on-premise or as a service. Basic characteristics and advantages of both types of ownership will be summarized in this post.

On-premise CRM applications are considered to be more conventional solutions since originally CRM systems were designed to serve as managing tools for big companies. With an on-premise solution, company buys CRM as a complete product which it implements, runs, administrates, maintains and develops at its own expenses. Rapid and continuous development in the IT field, together with growing user requirements, have brought two new trends: 1) variety of CRM solutions on the market tailored to companies of all types and sizes; 2) possibility to run software as a service (SaaS).

Besides the on-premise solution, SaaS is another possibility how to run CRM. Its basic characteristic “as a service” imply its main advantages:

Lower initial costs. You do not need to invest your money into software and necessary hardware to implement and run CRM. The service is paid in a form of monthly or annual subscription fees. You don’t need to pay either for future updates and upgrades, or for new hardware necessary when the solution is extended.

Time and capacity savings. You can start using CRM almost immediately; the only thing you need is a stable internet connection. All services related to your on-demand CRM are done by the solution provider; it saves capacities of your IT staff. This is useful not only in the initial phase of CRM implementation, but also later when upgrades and system changes are to be implemented.

High availability. Since all the CRM related IT services are done outside your company, you don’t have to worry about them. The system is provided for you on a contract basis. What’s more, you can access it remotely, from any place with internet access.

What about disadvantages of SaaS? Data security and system customizability are often mentioned.

Security. With a hosted solution, your data is stored, administered and backed-up externally, including those most sensitive information. It could be threatening that you cannot fully control the process of data management. However, reliable SaaS providers usually have not only the same level of data security, but even higher than other companies. Thus, this SaaS related disadvantage can be converted into advantage when a company identifies the weak points in its data security and backup processes. Concerning this topic you should carefully choose your partner for CRM hosting. A reliable company for CRM hosting should provide you with unequivocal information concerning basic principles of data managing. At least the following four questions should be answered: 1) Who will be able to access my data? 2) According to what rules and regimes is my data protected? 3) Where is my data physically stored? 4) What are the recovery processes?

Customizability. SaaS systems usually bring lower level of customizability since these systems are designed as a solution suitable for many kinds of users. With respect to a degree of customizability required, don’t forget that companies doing business usually have the same basic requirements: to have data stored in one place, well organized and with visible causalities and to have a user-friendly system which supports the core business functions (marketing, sales, and services). SaaS systems are customizable to some extent, however, a high level of customizability is normally required only for big enterprises with complicated processes.

When we look at an on-premise solution, the situation is different: CRM is fully owned and administered internally. Because of this, initial costs are higher and the time needed for implementation is much longer. On the other hand, the owner has full control of data security and backup as well as data storage. When a company has skilled IT staff, it can operate and customize the system very smoothly. Customizability is a great advantage of on-premise solutions. Besides this, when running an on-premise CRM, your company is not bound by contracts with any external provider; it can expand as well as scale down the system independently.

Pros and cons of all these aspects — mainly price, system availability, data security, and customizability — have to be considered individually with respect to customer’s concrete business needs and resources. Generally speaking, SaaS (hosted, rent) CRM solution is highly suitable for various companies and very advantageous for small and mid-sized businesses.
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