Customer Relationship Management (CRM) software helps businesses streamline and manage customer engagement; efficiently administering customer accounts and enhancing the overall customer experience.
The two main types of CRM systems are cloud-based and on-premise. While the two software serve a similar purpose, they each offer distinct advantages and drawbacks.
The Differences of Cloud-Based and On-Premise CRM
While cloud-based and on-premise CRM software manage customer relationship, they have their own unique characteristics.
| Factors/ Types | Cloud-based | On-premise |
|---|---|---|
| Data Storage | Stored in remote servers | Stored in company’s hard drive |
| Pricing | Monthy subscription | One-time purchase |
| Access | Accessible anywhere with internet connection | Complete Access |
| Customization | Non-customizable | Customizable |
| Maintenance Cost | Low | High |
| Industries | Start-ups/SMEs | BFSI |
Cloud-Based CRM
Cloud-based CRM stores its data in external servers, enabling users to gain access to the system from any location with an internet connection. This decentralised approach offers businesses flexibility and scalability; offering them a low maintenance cost as the providers are the ones responsible for maintaining the local servers and infrastructure.
It is ideal for start-ups and SMEs due to its cost-effectiveness with a pay-as-you-go subscription model; while providing enhanced data security, backup, and disaster recovery capabilities, ensuring the protection of customer information and business continuity.
On-Premise CRM
On the other hand, on-premise CRM involves installing the software directly onto the company’s servers, granting organizations complete control over their data and system.
This localized storage ensures a higher degree of security and is often favored by industries with stringent regulatory requirements, such as the BFSI industries (Banking, Financial Services, and Insurance). Additionally, on-premise CRM software provides better customization options, allowing banks to better cater to their unique needs.
The Pros and Cons of Cloud-Based CRM Software
| Pros | Cons |
|---|---|
| Scalability | Data Security Concerns |
| Cost-effectiveness | Internet Dependency |
| Integration | Customization Challenges |
Pros
- Scalability: Cloud CRM systems can be easily scaled up or down to accommodate business growth or changes in requirements
- Cost-effectiveness: Low upfront cost and operates on a pay-as-you-go subscription model, making it affordable for small businesses
- Integration: Easily integrated with other applications and software; enabling an end-to-end visibility across the entire sales process.
Cons
- Data Security Concerns: Due to the reliance of a third-party provider, it raises concerns regarding the security of the business data storage.
- Internet Dependency: A stable internet connection is required whereby an outage could disrupt any access to critical data and functions.
- Customization Challenges: Limited customizations are due to the shared infrastructure provided by the service provider which may not fully meet the needs of some businesses
The Pros and Cons of On-Premise CRM Software
| Pros | Cons |
|---|---|
| Customization | High Initial Cost |
| Compliance with Regulations | Maintenance Responsibilites |
| Enhanced Data and Control | Scalability Challenges |
Pros
- Customization: Due to its open-source code access, on-premise CRMs are fully customizable to tailor to the company’s needs and demands
- Compliance with Regulations: Regulated industries like finance and healthcare prefer on-premise due to its compliance with industry-specific regulations.
- Enhanced Data and Control: On-premise CRM provides businesses with complete control over their data, reducing the risk of unauthorized access or security breaches.
Cons
- High Initial Cost: On-premise CRM are typically costly, hich may be a financial burden for smaller businesses.
- Maintenance Responsibilities: Businesses are responsible for the maintenance of the system, which can be time-consuming.
- Scalability Challenges: Business growth may be less flexible as the software needs more hardware and infrastructure investment to handle the growing data and user demands.
Choosing the Right CRM
Cloud solutions are renowned for their accessibility, cost-effectiveness, and ease of scalability, making them an excellent choice for smaller businesses or those prioritizing flexibility. Conversely, on-premise solutions cater to companies with a preference for in-house control, a need for heightened security measures, and a willingness to invest in dedicated server infrastructure
When choosing between cloud-based and on-premise CRM software, it is important to take factors such as budget, business size, and long-term scalability into account, While cloud-based CRM is more cost-effective and accessible, on-premise CRM offers greater control and customization. However, the choice ultimately depends on the specific needs and preferences of your business.
An example of CRM software that businesses could implement would be ORLIG.
Click here to learn more about ORLIG.
