James Wong is CEO of Avidian, makers of CRM software. In this guest column he shares his insight on if you should host CRM software on premise (on your own server) or use a hosted service.
Many sales teams use customer relationship management (CRM) software to keep track of all their customer information, create a consistent sales process, track goal progress and forecast sales for an allotted period of time. If you’re considering CRM software, one of the crucial decisions you need to make is whether you want an on-premise solution, which is physically located on your own infrastructure, or a hosted solution, which is maintained by your vendor in the cloud. Hopefully the following breakdown of the benefits of each avenue will help you decide which type of solution will work best for your business.
Hosted solutions tend to make the most sense for small- to medium-sized businesses. One of my clients who uses a hosted offering recently told me the low initial entry cost and simple set-up and maintenance of going hosted made a big difference for his company. This client has a limited technology budget and limited in-house IT personnel so not having to deal with all the IT backend associated with an on-premise CRM has allowed them to focus on what’s really important—sales and customer service.
Many smaller businesses also do not have top-of-the-line security and backup functionality that vendor companies offering hosted services usually do so going with a hosted solution can be safer. Additionally, security and technology updates are maintained by the hosting company, thus further easing the burden on you. Perhaps most important, your vendor has to earn your business time and time again since it’s a “rental” service rather than a buy-and-forget solution. This helps to ensure great customer service and technical support.
However, in some instances, an on-premise solution might actually be the best option—even for growing businesses. For example, if your organization’s infrastructure is already in place and capable of handling the solution’s backend, then you may save money in the long run by buying an application and managing it on your own.
Another potential costs savings from an on-premise solution, one that another client recently shared with me, was the benefit of not having to pay for monthly or annual contract fees for individual licenses during the up and down economic climate. Hosted solutions usually follow this time-based contract model. With a fluctuating number of employees on this client’s sales staff having a set number of licenses that weren’t always being used could be costly. An on-premise solution helped this client avoid the unnecessary licensing costs that he could have been locked into with a “rented” hosted CRM.
Also, with an on-premise solution, an organization is physically closer to its own data and is thereby able to be more involved in the finite details of the solution. This might give some organizations greater peace of mind.
Finally, with an on-premise solution there is less of a chance data will be inaccessible due to a loss of outside connectivity. You’ve got to ask yourself what would be the result if your Internet connection goes down for a time and you can’t access all of your data. Some are willing to take this risk because the benefits outweigh it, others are not.
Some of you may have an on-premise solution and feel its time to move to the cloud. If you’d like to make this transition you should keep in mind several best practices to make the transition as smooth as possible. You want to start with a well-planned migration. Next, make sure to back up all your data before you begin transitioning, that way if a mistake should happen in the transition you won’t lose any data.
Finally, adjusting to new software can be hard for employees, so you’ll want to implement a plan to increase user adoption. Here are several tips to help your employees transition to the new system smoothly.
- Keep it simple; choose a solution that will seamlessly integrate with existing daily routines.
- Avoid overwhelming employees by giving them only bite sized chunks of the new technology at a time. Once they’ve become familiar with one aspect, give them another.
- Demonstrate clearly to employees the new system being proposed will benefit them and it’s not just about cutting costs.
- Implement a rewards program for using the solution.
On-premise and hosted CRM are both great options, but you’ve got to remember to carefully weigh all the factors of on-premise verses hosted and choose the solution that’s right for you.
James Wong is a seasoned entrepreneur and founder of three successful companies. James has been honored with the Puget Sound Business Journal’s 40 Under 40 award, the region’s premier award that spotlights the next generation of business leaders under the age of 40 who have made a difference in the region through their business and community involvement. Under Wong’s leadership, Avidian has won the Seattle Mayor’s Small Business Award; was honored in 2005, 2006 and 2007 by Washington CEO magazine as one of the “Best Companies to Work For” in Washington state; and was named by the Puget Sound Business Journal in 2006 and 2007 as one of Washington’s 100 Fastest Growing companies. The company has been named to the Inc. 5000 List two years running and in 2009, was also named to the Red Herring North America 100 List.