Debating Cloud Vs. On-Premise CRM

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Which type of CRM software is best suited to your organization’s requirements: an application running on the premises, or in the cloud?

Last year, I detailed how cloud CRM can meet the needs of many organizations. Organizations with relatively complex requirements, however, might be best served by using traditional, on-premise CRM software.

Why The Cloud Now Rules For Most Projects

Since then, however, cloud CRM hasn’t been standing still, as software vendors have been adding numerous new capabilities. These enhancements can support greater organizational complexity – more users, departments, countries, lines of business. These changes also offer raw technological enhancements, including easier data migration, integration, customization and application enhancements.


Accordingly, most organizations will be best served by using cloud-based CRM software, even when they have relatively complex technical or functional requirements. Organizations with CRM projects at technical and/or organizational extremes, however, may still be best served using traditional, on-premise CRM software.

Steps To CRM Success — Via On-Premise Or Cloud

Which software is best? For on-premise, your choice is simple: Siebel CRM. Meanwhile for the cloud, you’re looking at Salesforce.com, Oracle CRM On Demand, Microsoft CRM Dynamics, and if you’re in the life sciences, also Cegedim. (See our CRM smackdown to learn which one is right for you.)

But while the technology discussion is fun, if there’s one secret to a successful CRM project, it’s this: Never start with the technology. In fact, answering the “cloud vs. on-premise” question should be the last item up for discussion. That’s because the path to executing a successful CRM project involves three steps:

  1. Determine current software. Which software is your organization currently using?
  2. Deduce complexity. What type of CRM project are you pursuing, in terms of technical and organizational complexity?
  3. Pick your software. Will your existing CRM software meet your needs, or should you consider different on-premise or cloud-based CRM software?

Thus, before answering the “cloud versus premise” question for your organization, you need to first deduce project complexity.

6 Questions Help Deduce CRM Project Complexity

Based on Innoveer’s extensive project experience, we’ve found that the best way to correlate project complexity with software selection begins by answering these six questions:

  1. Users: How many people will use the CRM application?
  2. Approval: How many people get to approve the final CRM application?
  3. Change: How much organizational change is required to deliver the targeted business benefits?
  4. Scope: Will CRM support one group — sales, marketing, service — or multiple groups?
  5. Data: How much data migration is required? More data requires more conversion, manipulation, data quality checks and thus effort.
  6. Integration: How much will the CRM application integrate with other applications?

The complexity (or simplicity) calculus is simple: the more users, people, changes, groups, data or integration required, the greater the resulting project complexity. When Innoveer client Genzyme Biosurgery began searching for new CRM software, for example, it already had well-established sales processes and needed to support a finite number of users in one country.

Contrast that relatively low level of complexity with Aggregate Industries which — in addition to selecting new CRM software — also needed to create brand-new sales processes, since the organization had recently changed quite rapidly. As a result, its CRM project was relatively more complex. Same again for Innoveer client Experian, which needed a CRM system to support large numbers of users across multiple countries, business units and product lines.

Simplify Complex Situations Using CRM

While keeping things simple is a virtue, don’t shy away from complexity. In fact, a good CRM project often resolves a complex or challenging situation. For example, workforce management solution provider Kronos needed to overhaul its lead management program, which faced seven-day bottlenecks for web leads and three-day bottleneck for tradeshow leads.

Accordingly, Innoveer helped Kronos to integrate more of its applications, as well as address related people and process issues. As a result, the CRM project eliminated the apparent complexity for end users, who simply got the information they needed, with less hassle.

That gets to the rule for succeeding with any CRM project: No matter the complexity, or whether it’s running on-premise or in the cloud, don’t obsess over the technology. Instead, focus on solving business challenges. Do that well, and you’ll know that your project has succeeded, whatever the tools, and wherever they’re running.

Learn More

What are your CRM project goals, and how can they best be achieved? To understand the cost and time required to achieve specific marketing, sales or service business results, tap Innoveer’s CRM project “sizer.” Built using benchmarks derived from our work with hundreds of customers on more than 1,200 CRM projects, the CRM sizer will help you identify the most rapid and effective path to achieving your desired CRM business results.

Stay tuned, too, for our 2012 update on the “cloud versus on-premise” debate. (Which one do you think will rule?)

Republished with author's permission from original post.

Adam Honig
Adam is the Co-Founder and CEO of Spiro Technologies. He is a recognized thought-leader in sales process and effectiveness, and has previously co-founded three successful technology companies: Innoveer Solutions, C-Bridge, and Open Environment. He is best known for speaking at various conferences including Dreamforce, for pioneering the 'No Jerks' hiring model, and for flying his drone while traveling the world.

3 COMMENTS

  1. Adam,
    Surprised you feel Siebel is the only on-premise option. SugarCRM has been offering both on-premise and cloud deployment options for a while.

    cheers Mark
    PS. we are a Sugar partner here in Australia

  2. Adam,

    I am not going to even go down the path of ‘please make sure you include my company’ in this post. Frankly, I am disappointed at the lack of objectivity. There are lots of reasons for doing on premise, private cloud or public crowd or making decisions to go one way or another. It is fun debate, but this is not a debate.

    I would be intrigued if you could point me to 3rd party research that supports the following: “most organizations will be best served by using cloud-based CRM software”.

    According to the research firm Gartner; In 2009, 24% of the CRM software market was delivered by SaaS, and this has risen to over 26% in 2010. For 2014, Gartner forecasts that 32% of the CRM software market will be delivered by SaaS. My read is that in 2014 “most” organizations will NOT be using SaaS.

    Mitch

  3. Adam

    I rarely comment on blog posts but was driven to it on this occasion as I (like Mitch Lieberman) was gob-smacked by your lack of objectivity.

    Are you sure Siebel is the only choice for an on-premise CRM solution?

    You don’t even touch on the commercial aspects of cloud vs on premise or the fact that many companies start in the cloud but come on premise at a later date.

    I would have hoped for a bit more impartiality.

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