Cognizant CRM Insights
On-Premises vs. On-Demand CRM:
Key Considerations
By Hetal Joshi
Customer relationship management (CRM) CRM may be in for some surprises over the long
solutions have evolved enormously over the past haul. While the adoption of software-as-a-service
few years. Yet, many organizations that (SaaS) has become widely accepted in CRM, it
implemented on-premises CRM are still seeking still has its challenges and shortcomings. There
to achieve the intended ROI on their are many key considerations that you will need
investments. Some are also having a hard time to take into account as you decide whether on-
reaching the planned levels of user adoption on demand CRM is a fit for your organization.
their existing on-premises CRM systems.
Management is looking for a robust tool to The crux of the analysis is to evaluate each
manage the sales force, whereas the sales force model beyond the pure cost tradeoffs. CRM
is looking for an easy-to-use tool decision makers need to think more broadly
While the adoption of that lets them focus on sales about potential risks and benefits when
software-as-a-service activities rather than spending the evaluating SaaS. Depending on the business
models and economic drivers, it’s important to
(SaaS) has become time to learn the ins and outs of a
complex CRM user interface. consider factors such as differences in business
widely accepted in CRM, benefits, flexibility and risk when comparing
it still has its challenges These developments have led a lot various deployment options.
and shortcomings. of organizations to rethink their
CRM strategies. The most robust Some important preliminary questions: Given
tools are also the most complex to use and more our unique CRM needs, what do we gain/lose by
expensive to maintain. By contrast, the new moving to an on-demand model from on-
breed of on-demand solutions provides an easy- premise? What is the balance of short-term
to-use interface, faster time to market and benefit vs. long-term impact? And, finally, what
greater flexibility. is the ROI for a given number of users over three,
five, 10 years?
Given these facts, on-demand CRM would seem
to be the obvious choice over the more There are several variables to consider when
traditional licensed model. But the choice is not comparing the on-premises model with SaaS,
as simple as it seems, and organizations that including the following:
rush into a migration from traditional to SaaS
CRM Insights

I Functional modules/applications needed (such Keep in mind the following requirements as you
as sales, marketing and service). think through your business needs.
I Integration needs.
I Real-time data integration: SaaS solutions are
I Access needed from mobile devices. compliant with service-oriented architectures
I UI customization (such as specific tabs, look (SOA) and can integrate effectively with other
and feel). systems through Web services
I Database customization needed (such as the or middleware. Having this As a rule, the more
number of fields). “lightweight” data integration an organization has
built in to the solution can be a special requirements,
As a rule, the more an organization has special
significant benefit with SaaS.
However, you must evaluate the the less likely it is that
requirements, the less likely it is that a SaaS module will
meet its needs. This is because on-demand CRM
limitations around high-volume, a SaaS module will
solutions were largely designed to be used without
real-time data integration that meet its needs.
major customization. Customizing a SaaS CRM package
SaaS solutions can potentially
may incur costs and time that negate the solution’s
have due to API limitations. Depending on your
value, both during implementation and ongoing
application, this may be an impediment to
maintenance. However, going forward, this will likely be
adopting SaaS.
less of a consideration as on-demand vendors, including
Salesforce.com, come out with new releases with more I Reporting: Another nice feature of SaaS CRM
robust development capabilities. solutions is the out-of-the-box and customized
reporting options. However, systems adminis-
As for license contract issues, SaaS solutions trators must be aware of the inherent limita-
offer flexibility for organizations to reduce/add tions on the number of records and complex
licenses as the business expands or contracts. queries to optimize reporting response times
Organizations need to take cancellation and re- with SaaS or risk reporting performance issues.
pricing issues into account when negotiating This may be less of an issue, too, for organiza-
vendor contracts. tions that have already built functional report-
ing into their on-premises CRM system.
Customization/Configuration I Mobile accessibility: Some on-demand CRM
applications mandate availability of dedicated
One of the critical questions is whether the Internet bandwidth for high
organization’s business processes are simple performance. It is important to
If you need live, real-time
enough to fit with the vanilla approach offered evaluate your need for sup-
by most current SaaS solutions. For many port and multiple access UI interaction from a
organizations, minimal customization will be an points, such as desktops, lap- technical standpoint,
advantage. But others need some customization, tops and PDAs. With some sys- SaaS is not likely to be a
which will be severely curtailed with most on- tems, the inability to use the
good fit, as it is severely
demand solutions. SaaS application offline poten-
tially could change the way limited by the browser
For example, user interface customization as a your organization works, espe- and server-side coding.
rule is harder to achieve, as SaaS tools are less cially your mobile sales force.
mature than on-premises tools. In order to Pay close attention to process changes that
determine whether this limitation is fatal to would need to be made; if too onerous, this
adopting SaaS in your organization, you first could adversely affect user adoption.
have to understand the environmental I Solution availability: Under the traditional,
constraints while assessing your organization’s on-premises implementation, organizations
needs. If you need live, real-time UI interaction can fully control a system’s availability. With
from a technical standpoint, SaaS is not likely to the SaaS model, there will be scheduled main-
be a good fit, as it is severely limited by the tenance, as well as unexpected outages. User
browser and server-side coding. Unlike on- organizations must learn to work around
premises CRM applications, the system cannot those, though SaaS CRM solutions have a
be coded to enable real-time event interaction track record of higher availability than most
by the user. This is an important distinction on-premises solutions, so this is not likely to
between traditional CRM tools and SaaS. be a deal-breaker for most companies.
2 CRM Insights

I Implementation: SaaS solutions can be imple- Final Considerations
mented quite quickly; indeed, that is their
chief appeal. However, it is a common miscon- In our work with clients, we have discovered that
ception that you will be able to shortcut analy- the considerations discussed above are an
sis prior to and during the implementation. important part of the SaaS migration decision
Organizations need to allot as much time for path. Though it would be
analysis for SaaS solutions as they would for impractical to avoid ROI analysis Organizations need
an on-premise solution. altogether, we encourage our to allot as much time
clients not to make a decision for analysis for SaaS
I Governance and role-based access: Because
solely on short-term economic
it is so easy for users to make/request solutions as they would
impact.
changes, governance is more important with for an on-premise
SaaS than on-premises. It is very important to
Other variables are equally solution.
define policies and procedures up front -- prior
important, including the degree
to implementation -- so things do not get out
to which your CRM system has special
of control. With an application that is run inter-
requirements and how much flexibility you need.
nally, there are generally layers of controls
Much analysis is necessary in determining
that prevent rampant propagation of change
whether on-demand CRM would be a profitable
requests. The need for a control and a struc-
choice for your organization.
tured operating model is the single most over-
looked area for SaaS implementations today.
The success of a SaaS initiative rests on get-
ting this piece right.
About the Author
Hetal Joshi is a Cognizant Senior CRM strategist with more than 10 years of experience helping clients
get the most out of their CRM process improvements and system implementations. His specialties
include defining user requirements, process redesign, performing gap analysis, functional design,
estimating, scheduling, risk management and serving as a liaison between IT and business units. He
can be reached at Hetal.Joshi@cognizant.com.
About Cognizant
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