A Customer Relationship Management (CRM) suite links and integrates different interactions with the customer to improve internal efficiency and external customer satisfaction. On-premises CRM is the traditional way of computing that involves installing the CRM suite in enterprise servers, complete with all associated paraphernalia such as database and other resources required for the CRM to function. The enterprise becomes responsible for everything. On the other hand, hosted CRM is available through the cloud on a subscription model. The user can simply sign up and start accessing the CRM on the fly, without having to set up anything. Hosted CRM comes with many benefits, such as ease-of-use, centralization of data, anytime-anywhere availability and more. However, many experts believe that after a period of five years, the use of a hosted software package is no longer economical and on-premises suites recoup their capital investment. But this need not always be the case. An on-premises CRM still attracts significant recurring costs, which may actually match the subscription costs of a hosted CRM solution. This infographic illustrates the key difference between on-premises and cloud based CRM, and analyzes if on-premises CRM solutions are still relevant.

1. Key Differences
On Premises
CRM
Cloud Based
CRM
Control Complete ownership
and control
Little or no physical
control
Accessibility
Works on-premises in any
situation or environment
Available only within the
premises, on designated points
Depends on internet
and connectivity
Accessible anytime,
anywhere
On-Premises CRM
Hosted CRM
Set-Up
Complex, time consuming process Hassle-free, on-the-fly, done in
a few mouse clicks.
Stressful, time consuming
project
Rapid, smooth, seamless
and stress-free deployment.
Requires extensive
physical infrastructure
Does not require any
infrastructure, but
internet connection
Investment Significant upfront investment Little or no upfront investment
Costs
High upfront costs Little or no upfront costs
Additional recurring costs for
staff and maintenance
Monthly/annual
subscription model
SUBSCRIPTION
Fixed cost - sunk investment Cost varies depending on size
of database and number of users
Obsolescence
Software / hardware
obsolescence after some years
The pay as you go fixed pricing
also converts capital
expenditures to easily
manageable operating expenses
Flexibility
Highly inflexible. The required
capacity and functionality has to
be decided and installed upfront
Modular – subscribe only to
functions required on a
monthly basis. Most providers
offer flexible license options
Highly rigid. Very difficult and
time consuming to add capacity
Highly scalable
Capacity once added is a
sunk investment
Capacity can be added or
reduced as required
easily, on-the-fly
Scalability
Customization Enterprise can customize
the CRM as required
Extent of customization available
depends on selected vendor. Full
featured hosted CRM offer
customization options on par
with what can be achieved with
on premises CRM
Transformation of
Business Process
Does little to address issues of
data silos
Force enterprises to move all
customer related data to a
central depository, thereby
eradicating data silos
Version conflicts can derail
the system
Everyone has access to the
latest and complete version
of the data iterations
Support Requires an IT team to install,
operate, maintain, update, and
repair the CRM
No dedicated IT team required.
Lay users can run the system
Integration
Possibility of deep integration
with other systems and
components of the enterprise
Options for integration with
other systems limited -
integration may require the
enterprise's legacy
applications to comply with a
rigid, uniform system
Security
Highly secure, since there is no
need for communication to go
across to a third party. Database
is stored locally
Data, even though stored in a
private and secure database
moves through internet.
Susceptible to various attacks.
Military grade encryption
reduces threats greatly though
Ease of use Users need to be trained Minimal training required
Resources Resource intensive Relatively more
energy-efficient
Suitable for Only large enterprises Suited across the board,
especially for small and
medium enterprises
On-premise versus
Cloud CRM
Quick guide to selecting CRM type
Cost-Benefit Analysis
Security
On Premises CRM Cloud Based CRM
Software
and database
Servers and
other hardware
Other Resources
required to install
the CRM
Salary of IT staff
required to install,
operate and maintain
the system
Energy costs to run
the system
Cost of managerial
time to take care of
the system
Cost of server and
software obsolescence
Monthly subscription costs
(depending on database size
and no. of users)
BIG CONCERN
Data resides in external servers and is
transmitted over the Internet
Hosted CRM security checklist
Physical Security for the Provider's
External Data Centers
Electronic
surveillance
Multi-factor access control
systems on a least
privileged basis
Trained security
guards on 24x7 basis
Environmental
systems designed to
minimize the impact
of disruptions to
operations
Redundancy through
multiple geographic
regions and availability
zones to ensure uptime
even in case of attacks or
natural disasters
Network & Server Security
Built-in firewalls Private Subnets
Access to a small group
of administrative
users only
Regular penetration
testing
Application vulnerability
threat assessments
Network and system
monitoring on 24x7 basis
Regular and systematic
back-up of customer and
system databases
Deletion of archived
backup data after a
certain interval
Quarterly penetration
testing performed by
Workwise
Annual penetration
tests performed by 3rd
party vendor
1. suyati.com/shift-your-offline-crm-to-cloud
2. www.comparebusinessproducts.com/crm/advantages-of-on-premise-crm
3. www.forbes.com/sites/louiscolumbus/2012/07/27/gartner-hype-cycle-for-crm-sales-2012-sales-turns-to-the-cloud-for-quick-relief
4. www.oncontact.com/crm-software-cloud-vs-on-premise
5. www.techrepublic.com/blog/the-enterprise-cloud/comparing-cloud-to-on-premise-crm-choosing-a-solution
6. www.business-software.com/article/on-premise-crm-pros-and-cons
7. blog.imason.com/microsoft-crm-online-vs-on-premise
8. www.oncontact.com/crm-software-security
9. www.comparebusinessproducts.com/resources/item/the-untold-costs-of-a-crm-implementation
Reference:
Traditional way of computing
Requires installation in enterprise servers
Too many paraphernalia
Easy to use
Centralization of data
Anytime-anywhere availability
Available through cloud
Subscription model
Simple sign-up procedure
Accessible on the fly
User Acceptance
Research major Gartner estimates that 35% of all CRM
implementations are now cloud (SaaS) based, and that this will
grow to over 50% by 2020.
The extent of cloud based CRM adoption varies across CRM software categories
Web analytics
95% adoption95%
50%
40%
Salesforce
Automation: 50%
Configure Price
Quote (CPQ) : 40%
35%