Hosted or Installed CRM? Which Problems Can You Live With?

This reporter’s father once characterized the choice of a wife as choosing with risks and problems you could live with, and there’s a lot of wisdom in that. At least it provides a useful way to think about the hosted vs. installed CRM choice.

In the wake of Salesforce.com’s most recent power outage there’s been a little more questioning of the hosted model itself for sensitive company programs and data. Not a rush to the exits, mind you, more like a quick head check to make sure where the exits are.

After all, it’s good to stay aware of what the options are. Sure on-demand is the sexy choice right now, but, well, she still needs to grow up a bit before you know if it’s a lifelong match.

Naturally those who ply the on-site trade have been making their case, and it’s a good one. Just this week this reporter got an e-mail asking “should mid-market enterprises implement on-premise CRM products over hosted products like Salesforce.com?”

“Just last week, Salesforce.com had another service outage, leaving customers in the dark for hours at a time,” writes one PR agent, doing her job and doing it well.

“While it is easy for businesses to sign up for Salesforce.com and it is cheaper to initially turn on the service, many companies don’t know that Salesforce.com has limited customization features and ends up being more expensive that an on-premise product over a 3-5 year business cycle,” she correctly points out:

“What’s more, the ongoing technology upgrades that Salesforce.com boasts are not customized per client and, therefore, may not add real value to businesses because they are not actually using these generic updates. An on-premise product expert, on the other hand, can offer ongoing upgrades, features and functionality based on a business’ specific needs.”

All true. This reporter urges companies thinking of adopting the on-demand delivery model to bear in mind that it’s not a no-brainer, there are options out there – solid, worthy options you have to have a good reason not to adopt before signing checks.

First, accept that there are risks either way. Anybody out there selling on-demand as the no-risk option is to be ignored. The risk with installed is the vendor doesn’t particularly care about you after the sale, the risk with on-demand is that you ultimately don’t control your data.

Watch out for hosted vendors who try to twist your arm into long-term contracts, which work wonderfully well for them but provide less incentive to care all that much about their performance.  Those who go month-by-month have more reason to make sure you’re happy. And those who promise a full export of your data whenever you want it are of a higher breed than those who don’t as well.

David Sims is contributing editor for TMCnet. For more articles please visit David Sims' columnist page.

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