To Buy or To Rent

Sales are the lifeblood of nearly every company. With plenty
of sales, youre vibrant, healthy and have opportunities for growth and
expansion. If you dont have enough sales, youre 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 teams 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, theres a faster
implementation time and, perhaps most important, your vendor has to earn your
business time and time again since its 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 hasnt looked back. Silver Cups 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 whats 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 isnt 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 didnt 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 Steelheads president, Sean Combs: Like a lot of other
companies, weve 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
didnt have any service contracts has been a real benefit I hadnt considered
before. We didnt 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.