To Buy or To Rent

Sales are the lifeblood of nearly every company. With plenty of sales, you’re vibrant, healthy and have opportunities for growth and expansion. If you don’t have enough sales, you’re anemic, dying and constantly worried about how to make the next payroll.

So often, I hear companies say that they simply let their sales teams “do their magic” and “hope the sales numbers come in at the end of the month.” In reality, there are many things you can do to control sales and increase your sales team’s efficiency. One thing many firms have discovered is customer relationship management (CRM) software. CRM software helps automate and streamline your management of customers and potential customer relationships.

CRM software is available in a multitude of flavors, but a crucial decision every business must make is whether to go with an on-premises solution, meaning software that is installed and maintained on your own network, or a hosted one, in which the CRM vendor has your data on its system and gives you access to it via a web browser over the internet. The decision between on-premises or hosted CRM is important, and there are benefits and drawbacks to each.

For example, hosted solutions often make the most sense for small to midsize businesses. Total cost of ownership is low, there’s a faster implementation time and, perhaps most important, your vendor has to earn your business time and time again since it’s a “rental” service rather than a buy-and-forget approach.

One local company, Silver Cup Coffee in Lynnwood, recently chose to go all hosted and hasn’t looked back. Silver Cup’s president, Christian Kar, recently told me that the low initial entry cost as well as simple setup and maintenance of going hosted made all the difference. Silver Cup has a limited technology budget and limited in-house IT personnel, so not having to deal with all the IT back end associated with on-site CRM has allowed the firm to focus on what’s really important: sales and customer service.

However, know that hosted CRM might not be best for everyone. For larger companies that may already have a capable IT infrastructure in place, paying monthly or annual “rental” fees could end up more expensive in the long run since the price of maintaining an on-premises CRM solution can sometimes simply be rolled into existing IT costs.

Even some smaller businesses might find an on-premises solution is best, and should consider how important access to data is. Can you get by without it for a couple of hours or maybe even a day if your internet connection goes down? An on-premises CRM typically isn’t as dependent on outside connectivity as a hosted solution. Also, using an on-premises solution means organizations are physically closer to their data and involved in the fine details, which can be reassuring for some.

Finally, consider this. Another local company, Silverdale-based Steelhead Productions, made the decision to go with on-premises CRM a while back. It really didn’t have any reason at the time to choose on-premises over hosted CRM, but instead, simply based the decision on which CRM had the features most needed. With time, however, a previously unrealized benefit of going on-premises materialized.

Says Steelhead’s president, Sean Combs: “Like a lot of other companies, we’ve had to reduce costs and staff over the last year to stay nimble. So, having an on-premises solution that we physically owned and that didn’t have any service contracts has been a real benefit I hadn’t considered before. We didn’t have to worry about restructuring our CRM solution after the departure of staff, like a few other companies with subscription-based hosted CRM tools.”

In summary, before you invest in a CRM solution, carefully weigh all the factors involved, including whether an on-premises or hosted approach is best for you. No two companies are identical, and need is a dynamic creature, constantly changing. Make sure you select a CRM that is flexible enough to grow with your business.

James Wong is co-founder and CEO of Avidian Technologies, which specializes in creating both hosted and on-premises software solutions for users of Microsoft Outlook and Exchange. 

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