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Choosing the Right CRM Approach: SaaS vs. On-premise


Posted on May 25, 2011 by Chris Hooven, Vice President, Business Development, OSF Global Services

The benefits of a customer relationship management (CRM) solution are easily seen. Having the latest customer data at your fingertips helps you provide better service, increase sales and improve customer satisfaction.

However choosing to implement a CRM solution may be an easier decision than selecting the right CRM implementation approach for your business. That’s because there are a variety of ways to implement a CRM – each with its own unique capabilities and benefits.

Gain value from a CRM solution

The two most popular approaches are on-premise CRM and Software-as-a-Service (SaaS) CRM.

On-premise CRM is the more conventional method. In this scenario, the CRM application is installed on computers in your own data center, and your IT staff manages it. This type of implementation provides you with more control over every aspect of your CRM, including service level agreements (SLAs), security and regulatory compliance requirements. It also lessens the chance that your company data will be inaccessible due to a loss of connectivity with your service provider.

SaaS CRM is becoming the default choice for many organizations. This web-based software is purchased from a service provider and is available on an as-needed basis via the Internet. Once the CRM is configured by your IT resources or a service partner the application is maintained by the SaaS provider. This approach reduces your initial cash expenditure, is easy to deploy and allows you to use the service as needed to meet fluctuating demands.

Select the right approach

So how do you decide which CRM solution is right for your organization? There are five key factors that can help you make that decision.

  • Service level agreements – With an on-premise CRM, your IT resource(s) controls when regular maintenance or upgrades are scheduled, which helps you reduce disruptions to your business. However, with a SaaS CRM, the service provider chooses when changes will be made. This can be a particular problem if the service provider has to perform an unscheduled upgrade during a crucial time for your company, such as during an audit.
  • Availability of IT staff – To implement, maintain and manage a CRM solution requires an experienced IT staff. While your resources may easily handle software patches, troubleshoot problems and perform standard updates, the question is whether they have the expertise to handle advanced activities like information security. And more importantly, do they have the time. With a SaaS CRM solution, your IT resources can focus on your core operations while outside experts look after your CRM solution.
  • Customization of your solution – The complexity of your CRM solution, in particular the complexity of the service management component, is a critical deciding factor. Generally, an on-premise CRM solution enables you to customize your solution more than a SaaS CRM. With an on-premise CRM, you can better define workflows and fine tune the performance of the solution. Remember, it’s important to clearly define how much customization you require. This ensures you don’t waste time and money deploying the wrong solution.
  • Volume of users – A SaaS CRM solution is delivered using a cost-per-seat formula. This makes it an affordable choice if you have a low volume of users. But if you have a high volume of employees, such as a call center staff, the price-per-seat formula may not be the most affordable way to go.
  • Integration with other solutions – If you must integrate your CRM solution with other enterprise solutions, then an on-premise CRM solution might be the better choice. Many SaaS CRM solutions are limited in how well they can be integrated with other solutions. And not all service providers deliver the extensive application interfaces and web services you need to run your operations.

Know your business

Choosing the right CRM implementation approach ultimately comes down to understanding your business and IT requirements. Determine what your requirements are in terms of SLAs, security, regulatory compliance, ease of integration, ongoing maintenance and cost. By understanding your objectives, you can then choose the implementation approach that delivers the greatest benefits to your organization.