CRM system: On-demand vs On-premise?

Posted on 16th Feb 2018

It is impossible to have effectively working organization without a CRM system. But which CRM system will be more productive, as every organization is a unique environment and needs it's one approach.

Let us look through some main types of CRM systems, which are available on the market. We also will bring a light to the most popular projects, which can be useful for you. 

So, as you probably know, there are two main ways of basing the system: on-demand and on-premise. Let's describe each of them.



Last years shifted market share to the pie of SAAS CRM sytems (Customer relationship management systems). It's obvious, because more and more small and medium organizations go to digital business operations. This makes them chose system on-demand. Such systems placed on servers of system provider, and they sell access per user. They already have set up environment, which can be sometimes deeply customized to the needs of company. Usually such solutions are very simple and can be used from the first entry. On demand CRM systems are very beneficial for small organizations, because they don't need requirements like big enterprises. 

This systems also have a lot of integrations, which let users implement many services, which they used outside of CRM, or which they want to use and gain a lot of benefit. Usually such integrations included in basic package of the system, but if user wants more, it is necessary to make additional payment. 

As cons and pros of such CRM systems, we can highlight, that On-deman customer relationship management very simple in use, very easy to set-up and for sure for small business only. As main disadvantage, will be more difficult deep customization of the system. Vendors of On-demand CRM's don't provide source code, so company can't customize it and change to a specific needs of customer. Also, when company wants to move to another CRM system vendor, it may be a trouble or sometimes impossible to transfer records of leads, contacts, opportunities etc. So, for big organizations it can be a risk. Also, big enterprises will pay to much for such systems, because they need to pay monthly fee for every employee.



There is yet another type of CRM system currently in use - an on-premise CRM. The demand for that type of CRM is much less on the market and there’s no surprise  - taking up an on-premise option significantly increases costs of CRM management and maintenance. Servers are installed directly in the company building unless server space is rented elsewhere.

Still, the CRM owner requires to hire a team of IT specialists in order to keep the system running. Naturally, adding a separate IT squad on a payroll as well as purchasing additional equipment needed isn’t exactly affordable to companies with less than 6-digit revenue.Yet choosing an on-premise CRM doesn’t come without its perks and is widely considered the only right option among many Fortune 500 companies. The proponents usually point out that future benefits outweigh initially required heavy costs since the company receives a highly customizable system which was designed to fit exactly company needs.

That flexibility is well appreciated among large companies since the complexity of their operations scales up with their size. Same goes for the CRM data flowing into the system - more sophisticated business processes take place the more data is compiled.  One should also note the absence of most legacy issues while using on-site CRM software. As was outlined before there are no redundant out-of-the-box features the company should pay for, nor there are that many issues with CRM integration as possible limitations are accounted for on pre-development stage. But still, building up a CRM process that would encompass the full breadth of your operations is a challenging task even for an experienced team of IT specialists.

It’s also often unclear how and when should one expect a return on CRM-related investment. The risk is further amplified for an on-premise system. With that said, being able to better understand your client is usually well worth the effort and provides an invaluable input. So once the decision is made the companies have to consider CRM developers carefully so as to succeed.


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