“Go with on-demand CRM” has been the message most people have seen in the past few years by on-demand trailblazers like salesforce.com. As there are many strong reasons to go with an on-demand solution, there are also some downsides one needs to consider before making a decision.

Richard Smith Vice President of CRM strategy, put together an article arguing why on-premise CRM is better than on-demand CRM. He brings up several good points such as security, cost, integration, and speed as to why on premise CRM is better.

He goes on to talk about how most hosted software providers guarantee that you will be up and running in 90 days. While this may be true, it’s usually only the “quick start” implementation and may exclude difficult tasks such as converting your existing data and/or setting up business processes.

One of the key reasons to not consider an on-demand CRM solution is integration. Usually, hosted vendors provide limited integration options but as this becomes more and more of an issue for salespeople when selling, the product marketing folks have found a way to improve integration.

Richard then mentions that the biggest issue with hosted CRM is what happens at the end of the contract. Since on-demand CRM is typically a subscription service (month-to-month usually), what is to happen with your data after the contract expires? Most CRM on-demand providers offer the option for customers to receive a backup of their data which is great but does not provide immediate accessibility until they have a new CRM system in place.

While the argument of on-demand CRM or on-premise CRM can go either way, I agree with what Richard talks about and for CRM decision-makers to understand the shortcomings when making a decision. Check out his entire article over at network world.

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