Enterprise Software

Comparing cloud to on-premise CRM: Choosing a solution

Is your organization best suited for cloud or on-premise CRM? Guest contributor Kate Webster lists some of the issues you need to consider before making a decision.

Cloud based CRM systems seem to have gained popularity in allowing your business to have quicker and wider access your customer relationship management database. Though new software vendors seem to be pushing this technology, as a business owner, it's important to know if a cloud CRM system is really the right choice for you company.

Both cloud and on-premise systems have their good and bad qualities, and sometimes being hesitant before adopting the latest technology trends might not be the worst idea.

Understanding your business's needs

In order to better understand which CRM system option is best for your company, there are a few important questions to consider:

  • Does your company have adequate IT support to administrate an on-premise CRM?
  • What are your security requirements, both of your accessibility and of the data itself?
  • How much customization do you need?
  • Does the cost per-head method calculate in your favor?
  • Do you want to integrate your CRM with other enterprise solutions?

Cloud CRM benefits

A CRM system that runs on a cloud network may be a better choice for your company if it is relatively small. Cloud CRM systems have qualities that can greatly increase the efficiency and make every day operations easier for the small business owner and employees.

  • More accessible database- 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. Workers can also access information using their mobile device when out in the field handling clients on the go.
  • Third party service provider- Having an outside vendor can ease the stress involved in routine maintenance. They can oversee instillation and testing, as well as manage your application data.
  • Environmental impact- 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-effectiveness- This is probably the main reason why so many small businesses are switching to cloud CRM. 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.

On-premise CRM benefits

Larger and more complex companies might not choose to apply the cloud CRM option for a number of reasons. If the business has the resources to support an on-premise CRM system, it may seem like a more secure way of keeping track of its client and constituent information.

  • More control over your database- On-premise CRM systems gives your company the highest level of control over its client information. Having their database on a public internet server might not be the best option for companies who have the resources to support their own.
  • Higher security- If the company's information is private or highly regulated through Service Level Agreements, an on-premise CRM system may be required. Healthcare providers, for example, deal with sensitive customer data that shouldn't be trusted with an outside server.
  • Directly involved with business decisions- Though the automated applications of cloud CRM may be a useful tool for some businesses, others may prefer more direct control over updates to their information.
  • Might not actually be cost effective- 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 favor. If a large amount of workers need access to your database, it may be less expensive to host your own system.
  • Less susceptible to outside issues- 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. On-premise systems also lower the chance that your data will be inaccessible to your workers at any given time.

Choosing the right CRM system is integral to your business. Customer's data can be used for a number of important aspects, and having this stored in a system that works best for your business is important. Be sure you know the pros and cons of each option before making your decision.

Kate Webster writes for lead generation resource, ResourceNation.com. She focuses on a variety of topics including sales and CRM software.


Great article! If you are looking for a user-friendly tool to help you manage your small business customer relations, then http://www.hitechito.com/ is the way to go. They provide many features including flexible calendaring, file sharing, and customizable fields and filters, among other things.


My concern is about the speed of cloud based software. I need to add contact details to a cloud based database. In my client's case speed and turnover is very important and I find that the software tends to lag quite a lot. I'm using cable broadband.


Some vendors let you do Cloud and licensed...so you have flexibility. FreeCRM.com - can be cloud or licensed on a per-server basis SugarCRM - can be done as a cloud or as a licensed solution

Matthew Ranger
Matthew Ranger

This is an interesting article that provides a good summary of the many concerns companies have in determining whether to move to a cloud CRM system or not. Small and medium-sized enterprises, however, have their own set of concerns when it comes to choosing whether to go with a cloud CRM solution or to stay with the on-premise model. A simple cost-benefit analysis is always the first place to start when determining whether an on-premise or cloud solution is best for a company. Plus, for most SMEs, the scale and structure of the solution required must also be considered and the views of the teams who will use the system must be assessed. Talking to key users – both individuals and departments – is a vital step to understanding what the key concerns are among the people who will actually be employing the CRM solution. Companies can then use this information when talking to CRM providers to see whether these concerns can be addressed. For most SMEs, this very direct process helps in working out whether a cloud CRM solution is right for them. Some of the key concerns that might be raised by SME users are highlighted in new research that is soon to be released by Maximizer Software. While reducing the up-front cost of implementing a CRM system is a key benefit that most firms considering a move to a cloud solution are looking for, others need to be reviewed, including: the ability to scale up or down, regular upgrades to ensure security, and accessibility across all departments and sites. By choosing a technologically advanced provider, the major concerns of data security, service interruptions, slow performance and poor service can be overcome. -Matthew Ranger, Head of Sales, EMEA, Maximizer Software


I like to support the point that cloud-based CRMs are much more beneficial for SMEs than for big corporations. But I like to stress the subject "Security and Data Protection" which is much better organized for SMEs in the cloud than locally provided that the service provider is a reliable and trustworthy vendor. Such CSPs offer data protection which are in compliance even with German FDPA, one of the highest standards of security.

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