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
  • 2017 CRM Buyer's Guide

    Customer Relationship (CRM) software has become one of the most important business tools in today’s world. By allowing you to better connect with new and existing customers, CRM is an indispensable tool for sales teams and customer service teams alike. But with so many choices available, it can be difficult to decide on a solution. more

  • The New 2016 CRM Comparison Guide

    Our new 2016 Q4 CRM Comparison Guide includes all the information you need to make the best purchase for your business. With relevant information on over 40 CRM vendors, you can learn what solution offers the features and pricing you need. more

  • CRM Software Cost Guide

    Did you know that you don’t have to spend a fortune to implement a CRM solution? In today’s marketplace, there are a variety of CRM options to choose from. And whether you’re a small business or a large enterprise, there are always ways to save. more

  • CRM Basics for e-Commerce Start-ups

    Customer Relationship Management (CRM) software is an invaluable tool for any e-commerce start-up. Your existing customers are the most valuable asset you have. With a CRM, you can better engage with them so that one-time customers become repeat customers and even evangelists for your brand. more

  • The Customer Connection

    To stay competitive, your small business needs to take advantage of CRM and social media. CRM software is a useful tool that can help you develop a social media presence and connect better with the customers you already have. more