The potential benefits of a customer relationship management (CRM) solution for businesses has made the implementation and integration of CRM solutions almost imperative. CRM has enabled greater reach and improvement in customer service delivery and personalization. The CRM can help apply analytics to customer data, increase sales and improve customer satisfaction.
The decision to adopt CRM goes hand in hand with the decision to choose the right approach to implementation. There are different ways of CRM integration. Everyone has different competencies and qualities. The two most popular approaches are on-premise CRM and software-as-a-service (SaaS) CRM. (1)
On-premise CRM: A traditional method of CRM implementation. This includes the installation of CRM software on the computers in the company’s internal data center. The overall responsibility for maintaining, controlling and managing the application rests with the organization’s IT department. This approach allows control over all facets of the CRM application. This includes the service level agreements, security and compliance guidelines. The on-premise approach limits the risk of data inaccessibility for the company due to connectivity issues with the CRM provider. The on-premises CRM implementation effectively addresses issues related to security, reliability and data migration.(2)
Software as a Service (SaaS) CRM: SaaS CRM is being widely adopted by businesses as on-premise CRMs are redundant and obsolete in terms of capabilities and requirements handling. They either integrate poorly with the other business systems or are unable to handle the organic growth of the organization. This has necessitated the move to the SaaS model. (3)
The SaaS CRM model involves the implementation of web-based CRM software from a CRM vendor. The CRM software is configured by either the company’s IT department or a service provider and is maintained by the SaaS provider. The approach is easy to maintain, cost-effective, and adapts to the dynamic nature of fluctuating CRM needs.(4)
Which approach to implement?
There are certain factors that can help a company decide on the right approach to CRM implementation. They have been discussed below:
Implementation costs: On-premises implementation is expensive due to capital investment in hardware, license agreement fees, labor, and setup costs. On the other hand, SaaS CRM offers a cost advantage over on-premises since the organization has to pay a monthly or annual subscription fee for the SaaS purchase. The level of involvement of internal IT staff for deployment and integration is lower with SaaS than with on-premises CRM implementation. SaaS model is beneficial for a limited budget. Even if the budget is flexible and implementation is on-premises, long-term maintenance costs are high compared to cloud CRM, which only includes subscription fees.(5) The cost advantage that cloud CRM offers depends on the number of users away. since the price is linked to the cost per seat. The cost of SaaS CRM increases as the number of jobs (users) increases.(6) Therefore, the total cost benefit in terms of operational efficiency must be calculated to determine the most appropriate model for the business.
Scheduled Maintenance: An on-premises CRM deployment allows the flexibility to manage maintenance according to the needs of the organization. SaaS delivery limits this flexibility as upgrades and maintenance are at the choice of the CRM service provider. An unscheduled upgrade during an important business process can cause problems. (7)
Advanced Expertise: The organization’s IT staff may not have the advanced skills to handle and maintain critical IT operations related to the CRM solution. A SaaS model allows a software service provider with advanced expertise to handle such issues, freeing the IT team to focus on core operations.(8)
Customization and Upgrades: SaaS CRM allows multiple users to share software solutions, limiting the scope of customization. Some level of customization is allowed to users, but the nature of SaaS limits advanced customization according to user requirements. Organizations that have customization needs should opt for an on-premises CRM solution.(9) Ease of standardization makes the SaaS model a preferred choice.
Flexibility: The SaaS model allows for greater flexibility. It enables rapid scalability compared to on-premises CRM deployments that are more tightly integrated and do not scale with business growth. (10) However, tight integration and security could be a major concern for certain organizations that would otherwise not be very comfortable with the massive migration of important data over the Internet. For such companies, on-premises CRM deployment is cheaper.
Accessibility: SaaS CRM is delivered through a standard browser that allows access through various virtual devices such as smartphones, tablets, etc. On-premises CRM solution limits mobilization and access to multiple devices. Because cloud CRM relies on internet connectivity, accessibility is hampered during downtime. If the agent is in an area with limited wireless service, it will experience an operational backlog. An on-premises CRM solution does not face operational inefficiencies due to accessibility or poor connectivity.(11)
The choice of CRM model depends on the unique business needs, organizational structure and type of business operations. It is necessary to determine the requirements in terms of implementation costs, maintainability, upgrades, flexibility, accessibility and customization. Establishing the organization’s priorities and goals will help select the best possible implementation. This brings the best results and the best benefit for the company.
(3.10) Brandon, John. “CRM: What to Consider When Choosing Between SaaS and On-Premise Systems.” August 30, 2010. CIO website. March 03, 2015
(5,9,11) CRM, interior. “SaaS CRM vs. On-Premises CRM: Which is Better?” February 2015. Tool Box website. March 03, 2015.
(1,2,4,6,7,8) Hooven, Chris. “Choosing the Right CRM Approach: SaaS vs. On-Premise.” CRM integrator. March 03, 2015