No matter your industry, products, services, or target audience, one thing’s certain:
Forging an authentic and personal relationship with your customers is essential by today’s standards.
As your following grows larger, it becomes more difficult to manage individual relationships without the use of technology; this is where customer relationship management (CRM) software comes in. 91% of companies with ten or more employees use CRM software of some kind and of those that use a CRM, 64% say doing so is “impactful” or “very impactful” to their business in some way. Specifically, improvements include:
- Sales and productivity
- Conversion rates
- Customer satisfaction and retention
It’s no wonder then, that the CRM software industry continues to grow.
There are many CRM tools on the market today—each with their own unique features, functions, and use cases. With so many options to choose from, one of the first decisions you’ll need to make is whether you want an on-premise or cloud-based option. As we’ll discuss throughout this article, your choice can have far-reaching implications for your business.
During the past decade, many companies have opted for cloud-based CRMs—while the number of businesses choosing on-premise options has decreased. This isn’t to say that on-premise CRMs are going the way of the dinosaur, though. Take a look at this chart from SelectHub:
While only 2% of the companies surveyed say they’d always opt for on-premise software, more than one-third of respondents say “it depends.”
Ultimately, there’s no “best” option, here: the ideal fit for a given company depends on their circumstances, needs, and overall goals. So, despite the trending shift toward cloud-based CRM software, don’t discount your in-house options without considering how it could benefit your business. We discuss six key factors to consider before choosing an in-house CRM solution for your company.
Let’s dive in.
In-House CRMs: The Downsides
On-premise CRM software is installed directly onto the machines, so you can only access your on-premise CRM via machines it’s installed on. Cloud-based CRMs aren’t installed on your devices at all. Rather, the software runs on the provider’s servers and is accessible on any internet-ready device. In a more traditional organization (i.e., where all employees work under the same roof, work the same hours, etc.), this might not be a major issue. For teams that work remotely, don’t have set hours, and/or operate from various locations throughout the week, however, it could pose some problems.
There are a few potential workarounds that can allow you to get some functionality out of your on-premise CRM when not physically present. As explained on Microsoft Dynamics 365’s blog, potential fixes include:
- Using a VPN to access your servers and CRM remotely
- Using an in-house CRM that offers mobile functionality
- Using an in-house CRM that allows read-only access to your CRM when offline
If remote accessibility is a major factor for your organization, you might want to think twice before committing to an in-house CRM.
Consumption of Resources
Another major factor when considering CRMs is in the amount of time, money, and energy your team will need to invest in your on-premise technology. Let’s break down these figures into the upfront investments you’ll need to make and the ongoing costs of running an on-premise CRM.
First, you’ll need to purchase a software license for each device you’ll be installing the CRM on; the more machines you plan on using, the more expensive the initial cost. Add in the software price tag, and it’s no small fee. In comparison, cloud-based CRM companies typically operate via subscription model—so the charged amount is spread out over time. Another potential upfront cost is server installations and hardware updates. You’ll need to ensure your servers have the bandwidth to handle the increase in data, and that your current hardware can run the CRM software to its full capacity. If these things aren’t in place, your setup costs could end up being much higher than anticipated.
There are also ongoing costs with on-premise CRMs that don’t occur in cloud-based versions. For one thing, you’re responsible for the maintenance and security of your servers; failure in this area could cause your sensitive data to become open for attack. Similarly, if the machines you use for CRM fail in any way, this could lead to major downtime for certain team members (not to mention the cost of purchasing a new machine).
You’ll also likely encounter charges for software updates. Unlike cloud-based solutions (which include software updates in the ongoing subscription fees), on-premise CRM providers typically update their software annually—and require customers to purchase the upgraded version upon release. While you might not need to upgrade your software annually, factor in this added cost at least every couple years.
It all comes down to two questions:
Does your organization have the capacity to deal with all these costs (both monetary and otherwise) without breaking the bank?
And does the positive impact from the on-premise option make these initial and ongoing costs worth the investment?
Problems with Scaling
If you want to do more with your on-premise CRM, it’s going to cost you. If you add new members to your team, you’ll need to purchase additional licenses; if you evolve your customer-facing processes and require additional features from your CRM, you’ll likely need to upgrade your software to the latest version. Or, you may discover your CRM doesn’t fit your needs after scaling. In these cases, your choice of CRM may actually hold you back from scaling altogether until you land on a viable solution.
If your company is in the midst of growing or has the potential to grow well beyond where you currently stand, strongly consider a cloud-based solution.
On-Premise CRM Benefits: Customizability and Control
In spite of all the downsides and potential pitfalls we mentioned, there are two main reasons you should consider going the on-premise route: customizability and control.
Regarding customizability, most quality on-premise providers nowadays will design, develop, and tailor their CRM to the needs and purposes of a specific customer (e.g., your company). In contrast, cloud-based services, are typically offered in tiers aimed at companies that fit a certain persona, and aren’t nearly as tailored as their on-premise counterpart.
As on-premise providers tailor their software to your individual needs, you’ll receive exactly what you need from in-house CRM. With cloud-based services, you might have to upgrade to a higher tier to gain access to additional features—even if you have no use for most of the other features included.
The other main upside to in-house CRMs is that you maintain control of everything. Perhaps the best way to explain why this is beneficial is to explain how little control you’d have when using a cloud-based solution.
When using a cloud-based CRM, your data is held by the CRM provider on their servers. While the providers can maintain and keep your data secure, you’ll need to trust that they’ll follow through in this regard. It’s also worth mentioning that your provider’s servers may experience unanticipated downtime from time to time—inhibiting you from accessing your CRM until they resolve the issue.
When on-premise, your team will manage any ongoing maintenance. In exchange for the extra effort and investment, you’ll have peace of mind knowing your servers, as well as your customers’ private information, are in the good hands of your team.
There’s no clear-cut answer for which option to choose. It depends on your organization’s needs and preferences—as well as your capacity and bandwidth. If you’re looking for a simple CRM that’s easy to implement and can grow with your company, you probably want to head the cloud-based route. But, if you’re looking to invest heavily into CRM-related initiatives—and you know exactly what you hope to get out of doing so—consider checking out more robust in-house options.