Introduction
There is always a debate when it comes to choosing between an on-premise CRM and a cloud CRM. The parameters that you should consider when choosing between the two make all the difference.
Before we discuss on-premise CRM or on-cloud CRM, you should try to answer the following questions that will help you analyze what suits you better:
- Are you a small to medium size business or a large enterprise?
- Do you have an internal IT team with relevant IT skills?
- Do you have an in-house data center?
- Do you have the resources to manage ongoing hardware and software upgrades?
What is the budget you have set aside for the CRM project? This should include all costs like software, hardware, implementation, customization, training costs, etc. to arrive at the Total Cost of Ownership (TCO).
On-Premise CRM Software
On-premise CRM software, also referred to as shrink-wrap software, was invented first for corporate-wide software deployment within the premises of the company. It is a big project on its own and will need huge up-front financial commitment. Read along to understand it in detail.
Cloud CRM Software (or SaaS CRM)
Cloud-based CRM system, also referred to as Cloud CRM software or SaaS CRM software (Software-as-a-Service), is the most modern approach to CRM deployment. It evolved in the 2000s as broadband gained popularity.
Increasingly more and more companies are adapting to cloud CRM. In 2022, 94% of enterprises are using cloud services. In the international market, even large banks like Lloyds Banking Group, UK, etc. are shifting to cloud computing.
Let us understand what might be the reason for the growing popularity of Cloud CRM in detail along with the advantages and disadvantages of both On-Premise CRM and Cloud CRM.
Differences between On-Premise CRM and Cloud CRM
The main difference between the on-premise CRM and cloud CRM is the location where they are hosted. This parameter has many implications.
Infrastructure for Hosting
On-premise CRM software is installed on servers within the premises of the organization. These include application servers, database servers, backup servers, and storage. It is generally deployed in-house and also maintained by the internal IT department.
On the other hand, Cloud CRM is deployed on the Cloud and not within the premises. You can imagine it as a virtual CRM available on-demand across the world. Cloud CRM software is hosted on the infrastructure provided by cloud service providers. The leading cloud vendors are Microsoft Azure, AWS, and Google Cloud. These cloud service providers follow very stringent global security standards.
Implementation Methodology
On-premise CRM software implementation methodology involves the setting up and configuration of CRM application servers and database servers. As a good practice, you will also require to set up separate instances for the test and production environments.
Traditional on-premise CRM is a huge project in itself. It can turn out to be a colossal task for the organization. The implementation team constitutes multiple technical teams for the implementation project. These generally include hardware specialists for installing the application and database servers, application specialists for installing and configuring the CRM software, a database specialist, functional consultants, and a project manager. You may also want to involve infrastructure and application security experts to build strong security governance.
All this requires multiple teams collaborating to make your project successful. However, in the case of Cloud CRM implementation, the hardware resources are provided and maintained by the cloud service providers. Your main focus and efforts will be to take care of the CRM application installed on these virtual servers.
In the case of SaaS CRM software (software-as-a-service), a large part of the setup and configuration of the CRM application is already done by the CRM vendor. It just needs to be customized a little depending on your specific business requirements. It is like a pre-built system available to you on demand.
Implementation Vendor
In the case of traditional CRM software vendors, you will need to hire a third-party organization to implement and configure your CRM application. This is over and above the vendor from whom you buy the CRM software licenses. Many CRM projects fail whenever you have a dependency on multiple vendors with them blaming each other.
But with a few new-age SaaS CRM vendors, like HappSales Account Management CRM, the software license and the implementation partner are the same. The vendor takes complete ownership of the software, its implementation, configuration, and training requirements. In this case, the success of the project completely lies with this one vendor.
Financing – Capex vs Opex
On-premise CRM software projects will require you to make a huge upfront capital investment. This capital expenditure includes application servers, database servers, storage, and sales CRM software licenses. In many cases, you will also need to provision for the real estate and the human resources involved in the implementation and ongoing maintenance.
In the case of SaaS CRM vendors, you need not block your capital upfront. You can avail a subscription fee charged by the vendor and treat it as an operational expense. It is like a pay-as-you-go subscription fee similar to your Gmail, Netflix, or Mobile bill subscription.
The subscription fee generally depends on factors like the number of users, features, storage, number of data records, etc.
In the case of HappSales Account Management CRM, the subscription fee calculation is the simplest. It only depends on the number of users with all features included and no limit on storage and the number of data records. That way there are no hidden charges and no surprises coming your way. You also get the flexibility to start small and increase your budget only when you grow your business and add more users.
Software Maintenance – Upgrades & Updates
Like any other technology, CRM software also needs to be always maintained. CRM vendors keep coming up with regular enhancements and improvements that get released in the form of software upgrades and updates. Here are some of the reasons for the same –
- To keep pace with new technology trends.
- To add new features and functionalities that get developed.
- To fix software bugs.
- To apply new security patches to keep the software free of any security vulnerabilities that regularly come up across your IT systems and networks.
- To maintain compatibility with frequent enhancements in servers, database, operating systems, mobile technologies etc.
In the case of traditional on-premise CRM software, these enhancements and upgrades are like any other software implementation project depending on the type of upgrade. You will need to engage a team of technical and functional consultants to execute this upgrade project exclusively for you.
On-premise CRM upgrades will also require occasional system downtime. In many cases, you will also need to invest into hardware upgrades as well. All these investments make upgrades a costly affair. Also, missing these updates on time may lead to some business risks in-view of the constant security vulnerabilities.
But in the case of SaaS CRM software like HappSales.com, all these enhancements and upgrades are performed at the backend without disturbing your live instance. These updates get seamlessly pushed to every client. This ensures that all clients are always on the latest versions without the need for additional investments.
Scalability
Scalability refers to the ability of the software application to cater to growing business needs. It is not limited to only the number of users accessing the application. It also has many other implications like the load on the backend infrastructure, performance and response speed of the application, seamless access to the data residing in the database, hardware configuration, storage requirements, network support etc.
In the case of on-premise software, all the above-mentioned factors have to be considered as your business and requirements grow. You will need to provision additional investments regularly. In this case, you also carry a risk on your investment if at all you may have to scale-down due to unforeseen business downturns, like the recent one we witnessed during the pandemic. Companies ended up with excess licenses and capacity with vendors not willing to do any buy-back.
In the case of SaaS CRM software, both scale-up and scale-down both are easy to perform. The elastic and flexible severs and infrastructure provided by the cloud vendors can dynamically accommodate these changes without any limitations. You pay-as-you-go depending on your business requirements without any risk to your investments.
Data Security
Traditionally, there is a general feeling that your data is more secure when your data is within your premises, as in the case of on-premise CRM software compared to when the data resides in the cloud. However, lately, companies have realized this myth and there has been a huge shift in the trend with many companies, including some banks migrating to cloud services.
You need to remember that data security is solely your responsibility in the case of on-premise CRM software. You will have to take stringent end-to-end IT security measures across all components to protect your company from any threat to your valuable data. These include your infrastructure, application software, database, data-center, network infrastructure, your physical premises, and people policies accessing all these components. You will also need to plan and invest in to backup, business continuity plan (BCP), and disaster recovery (DR) strategies to safeguard your business at the time of disruptions like cyber-attacks and natural disasters.
During the recent lockdown due to the pandemic, many companies struggled to access their in-house servers with no resources available to restore or maintain them.
On the other hand, SaaS CRM software significantly minimizes many of the above-mentioned risks and investments. Cloud service vendors like Microsoft Azure and Amazon Web Services (AWS) have the most stringent data security practices in place.
Your data backup is always available to address all the risks and disruptions. These factors significantly reduce your investment in IT security. It offers you complete peace of mind allowing you to focus on your core business without worrying about the upkeep of the CRM.
Human Resources & Skills
The human resources needs and associated skills required in both cases are very different.
On-premise CRM software will need you to plan for expert technical consultants. You need to also invest in network administrators, system administrators, database administrators, security staff, and systems to guard your server rooms 24*7. You will need to either recruit them to be part of your in-house IT team or rely on your outsourced IT partner. The resource costs in both these cases are very high. You will need to budget similar resources and costs even for the ongoing maintenance and upgrades.
In the case of SaaS CRM software, this dependency and costs are reduced to a very large extent. The Cloud vendor takes responsibility for most of the above-mentioned points. Moreover, their subscription fee includes all these costs. There are no hidden costs and you do not have to worry about any surprises.
Original Source: Cloud CRM vs On-Premise CRM
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