Is on-premise CRM dead?

Gareth Cartman is a digital marketer with a particular passion for CRM, having worked with a number of CRM businesses.

Someone remind me what the point of on-premise is again. Microsoft was quite clear that Cloud users would get first dibs on their 2013 update and 2014 is looking eerily similar.

So is this a clear indication that everyone from large corporations to SMEs are swiftly outgrowing their on-premise software solutions with hopes of finding a platform that meeting their evolving needs?


Surely where Microsoft lead others will follow? According to findings from Info-Tech Research, Cloud and SaaS are still gaining market share and it’s true that many companies these days are switching to Cloud-based CRM systems because of their vast features and ability to streamline workflow processes while allowing for Real time information updates.

Yet how are you supposed to decide as a business, whether to effectively rent or own your CRM infrastructure? On-premise is basically like buying a house in that your business retains ownership. The initial costs are greater bu spread out over time – just like a mortgage and over the years, value sets in.

But think about the problems that come with having your own house – when something goes wrong internally, it’s up to you to fix it. There’s no landlord to wave his magic wand to make it all better.

On the flipside, when you rent a property (likening it to a SaaS solution), you pay a monthly fee. However, you’ll have all those little niggles ironed out with no questions asked. This is a pretty simplified metaphor so let’s delve a bit deeper into the real benefits of each system…

Is on-premise: past its shelf-life?

According to a study by Gartner, 50% or more of software functionality never gets used. So although on-premise solutions might feature a more extensive list of functions, they might well be futile given that no one ever gives them a second glance let alone uses them for analysis purposes.

Cloud-based CRM systems have become the favoured model since they allow businesses to gain quicker and wider access to the CRM database. Though new software seems to be testing this technology.

As a business owner, it’s crucial to know whether a cloud CRM system or on-premise solution is right for the company. Both have their advantages and drawbacks but first thing’s first – you need to understand your business’ needs.

In order to better understand what system is best for your business, consider the following options:

  • Consider the amount of IT support you currently have – is it enough to support on-premise CRM?
  • Consider security requirements of your accessibility and the data itself
  • Customisation – how much do you realistically need?
  • Calculate the cost per head figure – does it add up?
  • Consider other enterprise solutions – do you want to integrate them?

The pros of on-premise CRM

Some might view it as a step backwards but on-premise CRM does have its advantages – especially for larger, more complex companies. If your business has the resource to support an on-premise CRM system, it might seem like a more secure way to keep track of data.

Here’s why:

  • Control:
    On-premise CRM gives your company the highest level of control over its client information. Having your database on a public internet server might not be the best option if you have the resources to support your own
  • Access:
    With On-Premise, you’re more directly involved with business decisions. Automated applications of Cloud CRM may be a useful tool for some businesses but you might prefer more direct control over updates to their information
  • Security:
    You benefit from higher levels of security. If your business information is private or highly regulated through Service Level Agreements, an on-premise CRM system may be required by law. Healthcare providers, for example, deal with sensitive customer data that shouldn’t be trusted with an outside server
  • Affordability:
    An on-premise CRM system option may actually end up being more cost effective for your company if the per-user cost does not work in your favour. (Especially if a large amount of workers need access to your database)
  • Smoother:
    Having an outside service provider may make your maintenance less of a headache, but it also makes your company more susceptible to connectivity issues with your service provider

The advantages attached to Cloud CRM 

SMEs are likely to choose Cloud CRM since they have qualities that can greatly increase the efficiency and make every day operations easier for the small business owner and their employees:

  • Connectivity:
    For SMEs, tapping into a cloud network makes your data more accessible to your employees across large distances. If different offices or departments need to share information, the cloud network can connect them easily via Tablets and Smartphones
  • Maintenance:
    Leaving everything in the capable hands of an outside vendor can ease the stress involved in routine maintenance. They can oversee instillation and testing, as well as manage your application data
  • Eco-friendly:
    Using a cloud CRM system is a much more energy-efficient method of storing information. Storing data on an Internet sever uses less energy than on a private one
  • Cost-effective:
    Quite likely the main reason why so many small businesses are switching to cloud CRM is because it chargers per-user and can be paid in monthly or annual payments, which can be an influential aspect for businesses with a small budget. The total cost of cloud ownership is way lower, as we are even seeing in our own lives with the likes of Spotify & Netflix.

Microsoft might have prioritised Cloud users by offering them the new Dynamics update before On-Premise users, however businesses shouldn’t take that as code red that everyone should now switch to SaaS. Ultimately, the system they choose should relate to what will work best for them uniquely – something that could be applied to several areas of business.

A hybrid solution may well be the answer – having both an on-premise CRM for large user populations with complex business processes and partnering that with a SaaS solution to fill the needs of remote or specialised business units.


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