How to Choose between Hosted and On-Premise CRM software – a Guide for Small Businesses

Updated: June 17, 2010

Whether you go with hosted or on-premise CRM software is down to your preferences and business requirements: what you're aiming to achieve, your objectives, resources, and what you need your CRM to do for your organisation.

With hosted CRM (often referred to as ‘Software as a Service', CRM ‘on-demand' or ‘in the cloud'), the application and data within it is held on secure servers kept in a remote data-centre. This means your software hosting provider takes care of the running and maintenance of the software and servers.

Hosted CRM software tends to be a good fit for small businesses because it can be up and running with ‘out of the box' functionality very quickly. Your own staff and users won't need detailed technical knowledge or development skills (although they will need training to use the product effectively). And arguably the main attraction of hosted CRM to small businesses is that there's generally little or no financial outlay in terms of hardware and IT infrastructure, certainly at the start of the project. Costs are also straightforward - you pick your level of service, sign up and pay a monthly fee per user.

However, if you have more complex business processes and so need quite a bit of software configuration, if you already have your own servers (which is often the case if you have your own email or are also using an on-premise accounting or ERP application), or if you want to own your system completely, then deploying a CRM system in-house/on-premise is probably your best option. Return on investment is also an important consideration. Done right, CRM is a long-term business strategy and the money spent on hardware for an on-premise CRM solution will usually be regained fairly quickly, typically within 24-36 months

Featured Research
  • Making the Case for a New CRM

    Did you know that having an outdated CRM is just as bad as not having one at all? Do you find yourself working even just a little too hard to make your current CRM work to maintain your contacts and relationships? While it is increasingly more difficult to reduce customer churn, modern CRM tools are much more powerful and provide much more opportunity to develop stronger relationships with your clients that can provide more stability and revenue to your company and bottom line. more

  • Don't Make These 10 CRM Mistakes

    Finding and buying a CRM is exciting. It is also quite daunting as you want to be as prepared as possible so as to avoid making a costly mistake. We have seen that many businesses fail when implementing a CRM, as they repeatedly make the same errors over and over again. more

  • The 2017 CRM Comparison Guide: Q2 Edition

    If you’re in the market for CRM software, we’ve got good news. We’ve updated our CRM comparison guide for Q2. more

  • Are You Using These 8 CRM Features?

    One of the biggest mistakes that businesses make when it comes to their CRM software is the features they don’t use. This happens because they invest in CRM with a handful of problems in mind, so they’re content as long as it solves them. But if you want to maximize your ROI, you should be utilizing every feature available to you. more

  • 2017 CRM Software Cost Guide

    Would you believe that 89% of businesses expect to compete primarily on customer service in the upcoming years? With that in mind, it’s no surprise that CRM software is becoming such an integral part of business operations. But not all solutions are created equally, especially when it comes to the value they deliver to your business. more