Wednesday, September 23, 2009

On-demand CRM Vs On-premise CRM

The key factors that decide the appropriateness of a CRM deployment, whether on-site or hosted include the amount of integration required, customer processes, and the extent of operations required for a fruitful customer interaction.

An on-demand solution can be useful in scenarios where customer relationships are managed largely by the sales department which functions more or less as an independent entity. Small companies that wish to track and manage their leads without having to go through a major IT deployment can benefit from an on-demand solution. Companies in which customer relationship management is intertwined with the working of several departments including the company contact center are better served by opting for an on-site CRM solution that are more suited for the level of integration required with large organizations. Integration of legacy systems that contain vital customer data and run important business processes with a new CRM application is another consideration. Organizations in the services sector need to upgrade customer data constantly and access it in real-time from highly customized systems. For such companies, on-site CRM that offers real-time integration is a better alternative. In contrast, if data exchange between application silos does not happen in real-time and is carried out periodically, then an on-demand solution may do the trick. A CRM solution has to facilitate customer processes such that a company can leverage its expertise to the hilt and improve upon its shortcomings and compete in the market. It should provide or integrate with customer and process technologies that allow companies to identify the requirements of a satisfactory customer experience and provide them consistently. Since customer tastes and needs are dynamic, a company needs to evolve its business processes constantly to be able to fulfill customer expectations. To do this it needs a customer process solution that helps it to compete in terms of cost, products, and service level. This requires a high degree of application customization that is usually found in on-site CRM systems. The total cost of ownership of on-demand CRM is low for a short-term deployment. Even within an on-demand scenario, different solutions will have different breakeven points which a business should consider. While researching CRM solutions, it is best to consider the short-term and long-term scenarios and opt for a solution that is cost-effective in the long-term and also provides the necessary scalability. The costs of deploying and running an on-demand CRM solution for upward of three years can be more than those for an on-site solution. Thus, the rule-of-thumb for deciding company profiles fit for on-site and on-demand CRM would be that companies looking for a ready-to-use solution that does not require on-premise IT expertise, do not require a major integration between functions, do not focus on creating opportunities to up-sell and cross-sell, and do not update customer data in real-time can benefit from on-demand solutions. Companies where customer-related decisions are affected by the workings of several departments need to provide customer data to all these departments such as sales, accounts, marketing, and call centers are candidates for an on-site solution. When the growth of an organization is linked with achieving an edge over the competition by means of advanced processes and managing customer experiences and proprietary customer data, which is too sensitive for storing in a third-party database, an on-premise system is a better option. Large companies need to constantly identify key customer trends and create strategies for cross- and up-selling and present a customized experience. To this end, they need a CRM solution that offers the depth of applications for achieving cross-organization linkage and swift customer analytics. These attributes are found in on-site solutions.

neophyteblogger runs the blog The blog focuses on news and commentary related to CRM

Labels: , , , , , , , , , ,