These days, almost all crm vendors offer their crm as packaged software or as a service. That creates a situation where a crm buyer can choose between two fundamentally different deployment options. In this blog post I will summarize the usual differences between on premise (i.e. packaged software) and on demand (i.e. service) crm options and the advantages that each option has.
These days, almost all crm vendors offer their crm as packaged software or as a service. That creates a situation where a crm buyer can choose between two fundamentally different deployment options. In this blog post I will summarize the usual differences between on premise (i.e. packaged software) and on demand (i.e. service) crm options and the advantages that each option has.
The first, traditional option is called “on premise” or “download” and its key feature is that the crm buyer buys a crm into his own possession and runs it himself (or lets it run for him by a third party). The second, newer option is called various names including: “on demand”, “online”, “SaaS”, etc. and its key feature is that the crm buyer subscribes to a service and gains an access to the crm for a time during which the subscription is valid.
The ultimate question on the financial side is: Which of these options has the lower Total Cost of Ownership (TCO) for the crm buyer. Unfortunately, there is no general correct answer to this question. The crm buyer will need to asses the TCO specifically to his situation.
By doing evaluation of pros & cons you can consider the following:
| |
On premise |
On demand |
| Pros |
No subscription fee
Physical control over software and data
Easier complex integration with back office systems
|
No upfront costs
No IT set up
Faster implementation
No maintenance hassle
|
| Cons |
Higher upfront license costs
Need of IT skilled staff
Hardware needed
Layered software needed
Maintenance fee
Higher operational costs
|
Subscription fee
Subscription plan limitations
Customization beyond a standard is often difficult
Need to be comfortable with data being stored off-site
|
To sum up, on demand solutions are usually preferred by companies or departments that are looking for out of the box, integration less intensive applications serving just their needs. On the other hand, on-premise solutions are preferred by companies that have strict security policies or that need highly customized and integrated solution.
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