On-Premise CRM or CRM in the Cloud? – What You Need to Consider Before You Make Your Decision

On-Premise CRM or CRM in the Cloud? – What You Need to Consider Before You Make Your Decision

Customer Relationship Management Software (CRM) has become an essential component to ensuring business success. For those who aren’t familiar with the term CRM – it stands for Customer Relationship Management and is software which keeps all your customer information in one central location. This helps you to attract new customers at the same time as keeping existing customers happy. Essentially, not only will Customer Relationship Management enable you to become more efficient and effective, it will also improve the level of customer service which you can deliver, ultimately impacting on the level of customer satisfaction and therefore customer retention.

The concept of CRM in terms of storing all customer information in one place has been around for a number of years. However, the ways in which people do this varies significantly, some people use paper folders, others use spreadsheets and there are some who simply store information in their head. However, CRM software provides a central location where all information can be stored. Initially all deployments of CRM were On -Premise solutions, however, recent developments in technology mean that there is now a ‘cloud’ alternative. This has made CRM accessible to businesses of all sizes and as a result the popularity of the solution has increased significantly.

So, what is the difference between ‘cloud’ and on-premise solutions?
With an On-Premise deployment, an organisation will have the solution based on servers which are on their own site. With the on-premise option there is an additional cost associated with the investment required in new IT hardware and Infrastructure. However the benefits of the On-Premise deployment include:

» Greater control over the solution
» Total Ownership
» Easier Integration
» No Monthly fees
» Easy Configuration

However CRM in the Cloud is where you effectively rent a space on a server which is based in a secure data centre and your solution is stored on this. Although this could raise concerns in terms of data safety, modern data centres run by major providers work to stringent security standards so you can rest assured that your data is safe.

Cloud CRM solutions, deliver a number of benefits including:

» As soon as you have bought the license you can use the software
» It is quick to set up
» You are unlikely to need any additional hardware or infrastructure
» Low initial set up costs

CRM in the ‘cloud’ has made CRM much more accessible for small to medium sized businesses as it has become much more affordable. However although ‘cloud’ CRM appeals to smaller organisations, it is also used by larger organisations who are just considering implementing CRM.

Company Requirements

The term CRM covers a broad spectrum in terms of functionality, it’s therefore critically important that you know what it is you want the software to be able to. Once you know this, communicating it to a CRM specialist will ensure that you get a solution which meets the requirements of your organisation now and continues to do so in the future. Investing in a solution which doesn’t have the ability to meet your needs in the future is an expensive waste of time. However, if you have a clear idea of what the CRM solution needs to do then it will be easier for a CRM specialist to assist in recommending a solution which is right for your organisation.

Integration with other systems

This is a critical consideration when thinking of implementing a CRM solution. If you require your system to integrate with any other back office systems, then the on-premise hosting alternative is likely to be the best one for you. Integration with other systems is not impossible with the hosted platform, but there are likely to be limitations around this.

So which is the best hosting alternative?

It really isn’t a case of On-Premise being better than cloud or Vice Versa. What really is critical is that you do full requirements capture so that you can find out exactly what you need from the solution. If for example you simply need to be able to use the out of the box solution to manage your relationships with your customers then the ‘cloud’ solution will more than likely do exactly what you need it to do. However, if you would like the ability to fully customise the solution then the On-premise version is probably more suitable.

It’s important to remember that with some cloud solutions including Microsoft Dynamics CRM Onlineif you initially have the solution in the cloud, but then decide you want to bring it in house, this can be done in the touch of button and the same applies from on-premise to cloud.
How do I decide on a hosting platform?

The decision about the hosting platform will often go deeper than the companies needs. If for example you are a small company, it could be argued that that CRM in the Cloud will be the ideal solution for you and for all intents and purposes it might be. However there is a much deeper issue to consider, in terms of the investment. When you take the On Premise Solution this is something which although there is a significant upfront cost, ultimately you will own it. This is therefore considered as capital expenditure. Although there will be the initial capital expenditure, there will also be additional operational costs which will be required to run the solution, plus depreciation in the value of the hardware.

However, if you choose to go for the cloud solution, effectively you will be renting the solution – making it an operational cost. Essentially if you stop paying your monthly payment, then you will no longer have access to the solution. This is often a question for the accountant in the organisation as it will be up to them to decide what is best for the company from a cash flow perspective.

A different perspective to consider when looking into the hosting platforms is the type of cost that you want the solution to be. After all, when you decide to go for the On-premise solution, the upfront cost will be significantly larger than if you were to go for the cloud solutions. However, after you have paid the money, with the on-premise solution, you will ultimately own the software.

Capital Expenditure V’S Operational Expenditure

In terms of CRM solutions, the on-premise solutions such as Microsoft Dynamics CRM, Sage CRM and FrontRange’s GoldMine would be classed as Capital Expenditure. This is because you will pay up front for the solution and once paid for the solution will continue to work until you tell it not to. In terms of the Operational expenditure, this is what cloud solutions are. With cloud solutions, although the starts up costs are lower, you will never actually own the software and if you stop making your monthly payment the solution will stop working.

If you decide to go for the operational expenditure (cloud solutions), there will be other economic benefits which will arise other than the direct cost saving on infrastructure acquisition such as:

– The ability to get up and running quickly
– The increased productivity of the workforce.

And although on-premise solutions (the ones which are classed as a capital expenditure) give organisations the ability to customise the solution and complete ownership, it will never just be the case of a one-off capital expenditure, there will also be the ongoing operational costs of maintaining the solution, for example the cost of energy, IT admin staff and servers.

How do I find out which solution is best for me?

To really find our which CRM solution is best for you; you need to find an Independent CRM specialist. Not only will they be able to give advice on which is the best hosting alternative for you, they will also be able to give advice on which CRM solution best suits you requirements. If you go to a company which one sells one CRM product they are obviously going to tell you that their product will match your requirements. However, If you go to a CRM Specialist, the first step they will take will be to undertake a detailed requirements capture, this is where they will find out exactly what you want your system to do, how your business operates and who needs to access the solution.

Whoever you choose as a business partner, make sure they don’t see CRM as an aside to their core business. Also check they offer a full range of services, and do not just supply software and installation.

For more information about cloud or on-premise CRM contact Concentrix on 01509 410500 or email info@concentrix.co.uk

Rebecca Rooney works for Concentrix, a UK CRM specialist that offers on-premise and cloud CRM software including Microsoft Dynamics CRM, Microsoft Dynamics CRM Online and others.

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