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Cloud vs. On-Premise CRM: Key Business Drivers to Review for Each Scenario

By July 5, 2016June 21st, 2023No Comments

Key Business Drivers to Review for Each ScenarioAs we continue our blog series on considerations to keep in mind when evaluating cloud-based versus on-premise CRM software solutions, today we’re taking a look at some of the main business drivers associated with each scenario, including both pros and cons, to help direct a more thorough analysis. Mapping each business driver to the unique use cases and operational environments of your company can help ensure that the model chosen is appropriately fitted for optimization, adoption, and success across the enterprise.

Concerning Costs: Accounting for Initial and Ongoing Expenses

In the cloud versus on-premise debate, one top talking point is the overall cost of each solution. While an on-premise system is typically purchased as a one-time capital expense at the onset of the implementation, a cloud-based model is usually “rented” as an operational expense. Though the latter option may appear to be less expensive initially, the price of renting over time can add up to substantially more in the long-term, subject to price increases that are typically unavoidable once a “vendor lock-in” has been established. An additional consideration is the amount of complexity and customization that often accompanies a CRM integration—while much of this can be managed internally for in-house models, leaving such services in the hands of an outside, third-party provider can often mean higher costs overall. In sum, it’s important to take into account a variety of factors when estimating the true cost of a CRM deployment, as several elements outside of strict software pricing often contribute to the final expense.

Room to Grow: Considerations around Scalability, Speed, and Security

One benefit of cloud-based CRM models is their ability to be scaled as required to fit surges or declines in company demand, boosting operational agility and lowering costs by allowing companies to pay for just what they need at any given time, an advantage over on-premise systems, which are typically not designed to support such flexibility of use. Yet, this “pay-as-you-go” model often comes in the form of per-seat/per-user pricing, a subscription service that can often generate greater costs than initially expected as a company grows over time.

Moreover, in cloud computing environments, users can often leverage “instances” to allot resources to a multiple computers, greatly speeding time-to-market and providing workload efficiencies over single, on-premise computers. Yet, while transmitting data across the cloud can often be accomplished in faster and more flexible ways than in on-premise systems, it’s important to also consider the security and integrity of such information as it travels outside of company perimeters. In cloud-based scenarios, an external provider handles sensitive and/or confidential data with limited allowance for internal control against data breaches or other insecurities. On the other hand, on-premise systems allow organizations to maintain full control and decision-making authority over every aspect of systems and data, so executives are always up-to-date on where their systems and software stand and can make more informed decisions concerning the safety of their data.

Efficient and Strategic: IT Performance Goals and Objectives

It goes without saying that an efficient IT team is required to keep any CRM system up and running, and to this end it’s important to note how each CRM scenario (whether cloud-based or on-premise) will potentially impact the performance of these critical employees. While cloud-based deployments may take a majority of high-impact burden off the internal IT team, the time and resources it takes to train these employees on the new cloud-based environment can be substantial, whereas in an on-premise environment, IT personnel can continue working within existing processes and parameters, even controlling and scheduling strategic system updates, maintenance, and compliance measures around key company timelines to minimize downtime (though such duties can potentially tax in-house IT departments already stretched thin to capacity). Thus, while IT teams overseeing a cloud-based deployment may not have as many duties and responsibilities surrounding day-to-day oversight as their on-premise CRM peers, it’s this very lack of control that can often lead to more work in the long run, spurring companies to evaluate the true workload that accompanies each option.

A True Measure: Adding It All Up

When evaluating the potential of any CRM scenario, multiple factors should be added in for an accurate, overall picture of how either cloud-based or on-premise CRM will affect a company’s short- and long-term operational objectives. The key business drivers above, though only a sample of the myriad considerations surrounding the investment, are designed as a jumping block to spur more in-depth and wide-reaching conversation, helping ensure the ultimate decision is one that will boost profits, performance—and probability of success.


“Points to Investing in On-Premise or Cloud,” OSF Global Services, p. 5.

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