Sales Force Marketing - Salesforce.com CRM:
CRM Software - Do I Choose an In-House Or Web Based Solution?

CRM Software is fast becoming a key business strategy that many companies rely on to streamline their sales, marketing and customer service processes. Choosing the CRM application that is right for your business now and into the future is a critical step to take.

It is perceived that a large enterprise that requires integration into other business systems must deploy their CRM solution In-House whilst a smaller business with less demanding requirements should consider a web based software solution using Software-as-a-Service (SaaS). These perceptions can be far from the best solution in both cases. There are a number of factors that go into deciding In-House versus SaaS.

What IT resource and capacity do you have to manage a system In-House? For example, if you buy Microsoft Dynamics CRM and you are a "Microsoft house" the impact is likely to be small. Do you want to integrate your CRM into other systems such as accounting, document management or ordering systems? As a general rule, integration is cheaper and easier through In-House deployment. It also depends on whether a commercial connector is available to connect your CRM with these other systems. For example, with accounting systems there is a variety of connectors developed by third party developers you can purchase to provide (bi)-directional connection to your CRM application. If your information is extremely sensitive then In-House deployment is usually chosen. It is a myth that security for cloud based SaaS applications is likely to be less secure than In-House. Commercial web hosting companies provide security that most organisations could only dream of affording.

Traditionally, if the IT department is heavily involved in the decision making of a CRM project they are most likely to want an In-House deployment as they have ownership of the solution. IT decision makers are starting to see the virtues cloud computing can offer and the market is seeing a move to SaaS.

From a financial perspective SaaS is an operational expenditure and looks better on the balance sheet in the short term. In-House solutions, if paid upfront require a capital budget. Although, many CRM providers offer a financing option to commercially lease the software and services over a period of time moving the cost from capital to operational. It's tough to see how SaaS is a less expensive option when looked at over a 3-5 year period even if further hardware is required for In-House deployment. With SaaS you effectively rent the software, so your configuration and data are only good as long as you keep paying your bill. Further, you need to keep pace with the upgrades as they are applied to the system. To do this users require training on new features, and updates often need to be applied to the latest versions of key software such as Microsoft Office. Further any development customisations you've made to your system require updates and testing.

SaaS is highly desirable for a new business or a new department if you have a small budget to get started. Many commercial CRM Vendors provide "cheap" entry points for their SaaS options. Why? It's a "loss leader" offer to get you hooked in. It's a bit like the TV grocer commercial where you get a litre of milk for 99 cents to get you in the store. This is just good marketing but you want to think a little about the future before signing on the dotted line. If you take a cheap option to get going, what is it going to cost to get my data exported into the system I really need in 12 months time? Or, upgrade to the "full version" of the application. Be careful!

Does the number of users make a difference? When you are looking at less than 10-20 users and want to get going quickly SaaS might be your answer. More than a couple of hundred users tend to be more In-House and you can go either way in between. Some CRM Vendors provide the ability to jump between In-House and SaaS. Sage with SageCRM and sagecrm.com; and Microsoft Dynamics CRM are two examples. If you have a high retention rate of employees and you are highly customising the system, the tendency is towards In-House deployment. If you need a system "yesterday" then SaaS can be "turned on" very quickly.
Further factors to consider - Are you an early adopter of new technology and can afford to take on greater risk? What load is the CRM application putting on the entire system (In-House) or Internet (SaaS)?

The argument for and against the best option for deployment is on-going between experts but should not be your number one consideration when evaluating a CRM system. If a particular vendor only offers SaaS they are obviously going to sing the virtues of the platform and vice-versa for Vendors with an In-House deployment option.

Antony Dutton link
 

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