Cloud CRM vs on-premise CRM: an objective comparison

In the past, CRM software systems were nearly all supplied ‘on-premise’ in that they would be installed to run on computers on site, in the building of the user, and not in a remote facility operated by a third party.

However, things are changing, and now cloud-based CRM has become extremely popular. In this case, your CRM software is hosted externally and you access it via the web - in other words, it is hosted in a (metaphorical) 'cloud'. 

But with the cloud CRM being so popular, does this mean that this is the one you should get for your business, not even looking at the ‘on-prem’ version? We are going to take the time to look at this question, taking into account the advantages of both and making an objective comparison.

Work out what type of CRM you need

This is easily done by looking at the key elements that your business needs the CRM to provide:

• Does your budget allow you to cover the cost of the software plus new infrastructure, licensing and support etc.?
• How tech-savvy are you and your staff?
• How essential is confidentiality of data to you?
• Is your business going to grow quickly?
• How flexible does your CRM need to be?

Compare on-premise and cloud CRM with this CRM comparison guide

Now let’s take a look at the advantages of each type of delivery method:

Cloud CRM

• You don’t need to purchase new hardware
• New IT infrastructure not required
• Will cost less initially and you are free of expensive perpetual licenses
• Scalable monthly cost, depending upon how many users you have
• Easy to update
• Fast to set up

On-premise CRM

• Software is placed onto your own hardware so you manage it in-house
• Greater control over data and security
• Price usually includes for dedicated IT support
• Easier to customize

As you can see, both systems have advantages and when it comes down to your choice, much depends upon your specific business needs and of course your budget.  But don’t make the mistake of getting fixated on cost; make your decision based upon what is the most logical choice for your business. If we take just one element of the cloud-based CRM and look at the monthly subscription, this may be low to begin with but what will happen as your business grows – could it become more expensive over time than an on-premise version?

Take your time

The secret is not to rush. Take your time to clarify the needs and wants of your business before opting for either model. 

If the vendors that you are going to approach offer both on-premise and a cloud CRM, ask them to run through the various advantages of each system with you and make use of their industry knowledge and vast experience to make sure you make the perfect choice.

You will still need to carry out your own research but by tapping into their expert proficiency you may be made aware of system preferences which you may have otherwise missed.