How to decide between SaaS CRM software and on-premises CRM software implementation

The potential benefit of a customer relationship management (CRM) solution for businesses has made the implementation and integration of CRM solutions almost mandatory. CRM has enabled greater reach and improvement in customer service delivery and personalization. CRM can help apply analytics to customer data, increase sales, and improve customer satisfaction.

The decision to implement CRM is accompanied by the decision to choose the right approach to implementation. There are various forms of CRM integration. Each one has different skills and qualities. The two best-known approaches are on-premises CRM and software-as-a-service (SaaS) CRM. (1)

Local CRM: A traditional method of CRM implementation. It involves installing CRM software on internal computers in the company’s data center. All responsibility for the maintenance, control and management of the application rests with the organization’s IT department. This approach allows you to control all facets of the CRM application. This includes service level agreements, security, and compliance policies. The local approach limits the risk that the organization cannot access the data due to connectivity issues with the CRM provider. On-premises CRM implementation effectively handles issues related to security, reliability, and data migration.(2)

Software as a Service (SaaS) CRM: Organizations are widely adopting SaaS CRM because on-premises CRM is becoming redundant and outdated in terms of capability and management requirements. They are poorly integrating with other business systems or unable to handle the organic growth of the organization. This has necessitated the need to switch to the SaaS model. (3)

The SaaS CRM model involves implementing web-based CRM software from a CRM provider. CRM software is set up by the company’s IT department or a service provider and maintained by the SaaS provider. The approach is easy to maintain, cost-effective, and adapts to the dynamic nature of fluctuating CRM requirements.(4)

What approach to implement?
There are certain factors that can help an organization decide on the right CRM implementation approach. They have been discussed below:

Implementation cost: On-premises deployment is expensive due to capital investment in hardware, license agreement fees, labor, and cost of installations. On the other hand, SaaS CRM offers a cost advantage over on-premises because the organization must pay a monthly or annual subscription charge for the SaaS purchase. The level of involvement of internal IT staff for implementation and integration is lower for SaaS compared to on-premises CRM implementation. The SaaS model is beneficial for a restricted budget. Even if the budget is flexible and the implementation is done on-site, in the long run the maintenance cost is high compared to cloud CRM, which only involves subscription fees.(5) The cost advantage offered by the Cloud CRM depends on the volume of users, as the price is linked to the cost per seat. The cost of SaaS CRM increases as seats (users) increase.(6) Therefore, the overall cost advantage, relative to operational efficiency, must be calculated to decide on the most appropriate model for the business.

Scheduled maintenance: An on-site CRM implementation allows the flexibility to manage maintenance based on the organization’s requirements. The SaaS implementation restricts such flexibility because upgrades and maintenance are performed at the CRM service provider’s choice. An unscheduled update during a major business operation could create a problem. (7)

Advanced experience: The organization’s IT staff may not have the advanced skills to manage and maintain critical IT operations associated with the CRM solution. A SaaS model allows a software service provider, with advanced experience, to handle such issues, allowing the IT team to focus on the core operational area.(8)

Customization and upgrades: SaaS CRM allows multiple users to share software solutions, which restricts the scope of customization. Some degree of customization is allowed for users, but the nature of SaaS limits advanced customization based on user requirements. Organizations with customization requirements should opt for an on-premises CRM solution.(9) Ease of standardization makes the SaaS model a desirable option.

Flexibility: The SaaS model allows for greater flexibility. It enables rapid scalability, compared to an on-premises CRM implementation, which is more tightly integrated and doesn’t scale with corporate growth. (10) Having said that, tight integration and security can be a top concern for certain organizations that might not otherwise be very comfortable with critically migrating huge data over the Internet. For such a company, the implementation of CRM on the site is more favorable.

Accessibility: SaaS CRM is delivered through a standard browser that allows accessibility through various virtual devices such as smartphones, tablets, etc. On-site CRM solution restricts mobilization and accessibility of multiple devices. Since cloud CRM relies on internet connectivity, accessibility is hampered during downtime. If the agent is in a limited wireless service area, this causes an operational delay. An on-premises CRM solution doesn’t face operational inefficiency due to accessibility or poor connectivity.(11)

The choice of CRM model depends on the unique business requirements, the organizational structure, and the nature of the business operation. Requirements need to be determined in terms of cost of implementation, ease of maintenance, upgrades, flexibility, accessibility, and customization. Determining business priorities and goals helps make the best possible deployment decision. This offers the best results and optimal benefits for the company.

References
(3.10) Brandon, John. “CRM: What to consider when choosing between SaaS and on-premises systems”. August 30, 2010. CIO website. 03 March 2015
(5,9,11) CRM, Interior. “SaaS CRM vs. On-premises CRM: Which is Better?” February 2015. Tool Box website. March 3, 2015.
(1,2,4,6,7,8) Hooven, Chris. “Choosing the Right CRM Approach: SaaS vs. On-premise.” CRM integrator. 03 March 2015