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The last few years have seen many companies switching to hosted CRM systems at the expense of traditional on-premises systems. Good news for us, but do web based systems always win over in-house systems? We say mainly yes, but not always - read on!
In-house systems have a client application running on the workstation and a server application running on a shared fileserver that hosts the data. The server is a computer owned, managed by and located at the user’s office. The client talks to the server over a network. Some processing takes place on the client, some on the server, and both client and server applications need to be installed and maintained. If you have multiple offices then those offices either need to be connected with a high speed WAN (Wide Area Network), or multiple systems are installed which then have to be synchronised. Most traditional CRM systems function this way. Field users with laptops who work on the road or from home use another version of the software, and "disconnected" system, that stores another copy of the data on their computer which is synchronised with the main database when back in the office or over the Internet.
Hosted applications are accessed from any workstation or device that has an Internet browser installed, including your workstation at work, your PC at home or a terminal in an Internet café. The processing and the data are held on the vendor’s servers which are located in a data centre with fast Internet connectivity.
Hosted applications are quick to install and use, solve the remote access problem, need no IT support, but are normally less flexible than client/server systems. The rental payment model can appear to be more expensive at first sight, but if you add up the true cost of installing and running an in-house system, including license cost, server and associated operating system and database license cost, annual maintenance of software and hardware, internal IT resources applying maintenance fixes, updates and unscrambling out-of-sync laptops, they can be cheaper even in the long term. This is particularly true if you change systems after only two or three years, as many people do.
There is also the question of ownership of the data, and the ability to get it back either for analysis or to move to another system. Most hosted CRM systems hold the data for all their customers in one database, so legally the data is theirs, not yours. It can be hosted outside of your country, raising data protection and privacy issues. And it can be surprisingly difficult to get “your” data back in a useful format when you want to move to another system. Check with the supplier how these issues are addressed.
Here's a quick summary of the pros and cons:
| Hosted | In-house | |
| Speed of implementation | Normally fast, typically one hour to one week | One month to a year |
| Cost | Cheaper in the short term, sometime more expensive in the long term but not payable all up front and the cost includes support and maintaining the IT infrastructure. Companies with more than 200 users may find it cheaper to buy rather than rent, those with less than 20 users may find that they get features they otherwise couldn't afford | For large numbers of users an in-house system will work out cheaper in the long run provided that the internal IT overhead does not have to grow and that the system is not replaced before three years |
| Access | Can be accessed from wherever you have an Internet connection: main office, remote offices, home, internet café; on PCs, Macs, laptops, PDAs and mobile/cell phones | Possible to link other offices, difficult to link to home but needs a certain level of in house IT support |
| Disconnected Users | Some vendors offer a "disconnected" version of their system - a software application that will run locally on a laptop that synchronises with the main sever. But having local software to maintain removes the main advantages of a hosted system, and data synchronisation is often unreliable | Pretty much the same pros and cons as for hosted it is another application that needs maintaining, and data synchronisation is always an issue |
| Failover | Most reputable vendors will have a failover system in case the main datacentre dies, but check that the failover system is in another city and for outage history | Most in-house systems can't afford the luxury of a redundant system on permanent standby |
| Data Security | If your data contains not just commercial information but nuclear secrets, and your in-house security is up to that level as well, then in-house will be safer. However, for normal commercial information a hosted system is fine. Many users are concerned about having their data off premises, but the irony is that it is safer with a reputable vendor than when held in-house. Most data theft happens internally, so having the data off site actually helps security. Most data loss happens when a laptop gets stolen, but if the data is held on the main server and not on the laptop then the data is safe. | Fine, providing that you back the system up every day, don't loose your laptop, don't have too many people with direct access to the data and don't send unencrypted data through the post! |
| Data Protection | To comply with EU data protection laws, data on an EU citizen must not leave the EU without that citizen's consent. If you hold data on EU companies and people, check that the vendor's servers are based in the EU and comply with local data security laws such as the UK Data Protection Act | Fine, providing that you register with the appropriate authorities and have good internal procedures |
| Integration | Hosted systems can talk to other systems through batch text files in the same way as in-house systems. For real time integration some offer APIs (application program interfaces), but it is more complicated to set up | For real time, straight to the database integration, nothing beats in-house |
| Maintenance | Done by the vendor at no cost or effort to you | Monthly fixes and half yearly new releases and upgrades have to be done by your IT department |
| e-marketing | Many systems can accept transactions such as new sales inquiries straight off your web site, and a few can send emails from within the system and track click-throughs | It is easier for web based systems to interface to other web systems, especially for real time |
| Speed & Performance | Some hosted systems can be slow, some fast. Check before you buy! | Desktop systems are almost always faster than web based ones |
| Customisation | For simple, end user customisation, this isn't a "hosted v in-house" question but a feature of the product until you get to major customisation | Higher end in-house systems can offer greater customisation capabilities than hosted solutions, albeit at a much higher cost |
| Desk top integration | Hosted systems can interface to desktop applications like Microsoft Outlook, but not as slickly as a dedicated Windows application | If you need drag and drop functionality with other Windows applications, you need a Windows application |
| Support | Again, this is a less "hosted v in-house" question but will depend on your supplier. However, as there should be no IT issues to support, the number of calls from your users should be less. | First line of support will be your IT department, they will call the vendor for IT issues |
So as in many cases it is horses for courses. If you want something that is quick to implement, want access from lots of places, need emarketing integration and want to spread the cost, then hosted is hard to beat. On the other hand if you are a large company with a matching IT department, want a lot of integration and know that what you build now will last for many years, an in-house system will be a closer fit. If you are somewhere in the middle, access versus customisation will probably be the decision criteria.
For more information about Really Simple Systems Hosted CRM, click here.
Last month we asked people what they wanted most from a CRM system. We had a great response with over 450 completing the questionnaire. The main results were that:
To see the full results and analysis, click here.
In October we launched our Web Transaction module, which simplifies the capture of data directly from your web site into your CRM system. For example, a new enquiry form can be posted directly into your CRM system, together with a task for someone to call them back. Different levels of enquiry can be treated differently, with subscription requests just being posted and "please contact me now" requests generating high priority tasks. For more details click here.
More and more people are switching to our simple hosted CRM, and our subscriber base is growing at 30% a quarter. Among other new users we welcome Alaric Systems, Aviareps, B2M Solutions, C&S Doors, Charisma Vision, Citigroup, City Credit Capital, DSSR, Futuretec Technologies, GALPA, Harlands, Journey Dynamics, localkids.co.uk, Medical Innovations, Navigate Design, Paradigm Design, Systech Group and Van Deals Direct.
Help a friend or colleague, point them our way and we’ll send you a couple of bottles of our favourite Hunter Sauvignon Blanc from New Zealand for your trouble.
With over 500 users, Really Simple Systems is now the UK's leading online CRM system. Really Simple Systems offers straightforward, easy to use hosted CRM systems to companies of all sizes. Find out more about how simple CRM can be by clicking here.