CRM - The On Demand or On Premise Question

Much has been written about CRM On Demand versus the traditional CRM packaged applications that are hosted on your own servers.  The arguments are really about using On Demand (hosted externally) or On Premise (hosted within your data center), and how to think about that -- not just for CRM, but for any On Demand option you might consider.

In a recent post to the CRM blog written by David Cowgill, he takes a look at the growing pains faced by CRM On Demand applications. 

Points that stick out are:

1. Don't think of On Demand vs. On Premise as mutually exclusive.  Instead think about where you want to focus your in-house IT expertise.  Do you get the biggest competitive leverage by using your IT resources to manage and/or own the functionality?   Remember that CRM and related application funcitonality is pretty standard -- but how you use it and employ it in your organization is going to be the competitive leverage that will impact sales effectiveness. 
2. How reliable have your IT folks been at delivering results on time and on budget?  Check out the reliability and track record of the On Demand vendor you are thinking about using -- as pointed out in Cowgill's post, "For most corporate executives, its chief appeal is being able to pay someone else to run and maintain the system."   Understand that you no longer have to be held hostage by an IT group that isn't responsive to your needs.
3. While David cites integration as a big hurdle - put the idea/notion of web services (also known as service oriented architecture) into your thinking, and in a nutshell recognize that with current technology it is possible to effectively integrate an on-demand application with an in-house application securely and effectively, and all On Demand vendors worth their salt will have these sorts of options available.

In summary, it's important to understand that On Demand options are available and very viable for functionality that at it's core doesn't require your investment in intellectual capital to maintain and support -- because  you won't get the bang for your buck there.  Use your valuable intellectual capital for those functions and systems that provide you with competitive advantage.

One of the chief benefits of On Demand software is "faster deployment, lower up-front costs and reduced in-house support and maintenance requirements."   

I'd love to hear your experiences and things you've considered when weighing the options of On Demand or On Premise applications deployment and utilization!  Post a comment.

Comments

[Zoli Erdos]

I think the car-lease analogy is flawed, see more here: http://www.zoliblog.com/blog/_archives/2005/8/30/1182589.html . The gowing pains article is really interesting, but its not written by David Cowgill, he simply reposted an article published at http://www.thedeal.com/NASApp/cs/ContentServer?pagename=TheDeal/TDDArticle/TDPrinterFriendlyc=TDDArticlecid=1122475915086ArtID=1122475915086 without crediting the source.