Advantages and disadvantages
At the most basic level, the choice between on-premises or cloud CRM is a balancing act of cost and control. With local CRM solutions, the company pays upfront for user licenses and installs the customer database on its servers. This provides business control over their data, but also means they are able to perform most IT operations, including ongoing maintenance, upgrades and scaling of technical infrastructure.
Cloud-based CRM systems are often SaaS contracts between a company and a CRM vendor that offers access to the system and data storage. This model can provide businesses with less unreliable user support and the ability to scale, but at the expense of certain access and security. The predictability of costs that scale these systems often makes it a popular option. Another option for companies and government agencies that face certain business or local regulatory restrictions is to use cloud-based CRM in their own data center. Some vendors, such as Oracle, offer this option.
Operating costs for CRM can sometimes be more complex than simple month-to-month expenses. To get a full picture of what your CRM solution might cost, you need to consider a few additional factors:
1. infrastructure cost: operating a cloud-based CRM solution does not require as much technical infrastructure as an on-premises solution that requires in-house servers.
2. human resource costs: as demand for business CRM software continues to grow, the market for capable programmers and administrative staff is also becoming more competitive. Depending on your choice of CRM, you may need to hire additional internal staff, invest in large-scale training, or retain consulting to meet your current needs. All these options affect the total operating costs of the CRM solution.
3. business costs: while CRM at the local level seems more expensive, it provides your company with the ability to control ongoing services. With cloud-based services, companies expose themselves to potential failures or slowdowns beyond their control. Thinking about how your business could or might suffer in the event of a disaster can help you assess the risk-related costs of adopting a cloud or on premise solution.
In general, the best CRM for your business is the one that best enables your brand to interact with customers. But given the cost, it’s still important to consider upfront implementation costs and higher operating costs in addition to regular monthly subscriptions or fees.