By Paul Curran
CRM has become a vital part of most businesses – not least in the world of ecommerce which thrives through convenience and speed, and where having the right tools to provide rapid processing of customer interactions is essential. A question many companies are asking themselves, however, is whether to outsource CRM development to a host application service provider (ASP) or do it themselves in-house?
Advocates of the on-premise approach generally point to the need for customisation and control as key reasons for their preference. Another concern is security, which some feel only in-house can provide. However, on-premise development is far from easy; it means you have to take on the responsibility for all costs associated with the build, including software, setup, maintenance and development staff.
Oracle ACE director Floyd Teter, a vice president at Oracle consultancy Innowave Technology, knows the inner workings of CRM well. He believes on-premise development isn’t easy since the middleware knowledge required to build applications in-house is particularly challenging.
“You need a database admin; a middleware admin; you need to know some of the intricacies of identity management; you need to know SOA, BPM and some WebCenter. And those are just the middleware components I’m talking about.” For this reason, he anticipates most firms choosing a hosted deployment model.
With a hosted solution, the software development is done by a specialist CRM provider and the hardware stored externally. Since the solutions have already been developed by your ASP, hosted CRM is ready-to-use and can save you 80% to 90% on up-front costs. This alone is leading many SMEs to favour hosted CRM solutions because generally only large organisations have the wherewithal to fork out on the comparatively high cost of in-house development.
Weighing the pros and cons
At the end of the day, CRM decisions often come down to a firm’s priorities: customisation, control and security on the on-premise side versus speed and low price of quality CRM for hosted. Yet, closer inspection of the two approaches reveals why the latter is now being adopted by more and more companies.
Firstly, the time and money saved through a hosted CRM solution should not be underestimated. When developing an in-house solution, you have to hire specialist staff simply to undertake the development process, not to mention ongoing maintenance. This high-salary team must also develop solutions from scratch; this can take months to get up and running and often several years to perfect. Add to that the cost of hardware and server space, plus lost opportunities while awaiting implementation, and the economic advantages of hosted CRM become clearer.
Moreover, hosted CRM solutions are generally backed by years of experience and development. Leading CRM host companies have invested billions of dollars in their platform. Because CRM is what they do, they are constantly refining their solutions and passing the advantages on to customers. Added to which, top CRM host companies are ISO certified, which means they should offer the ultimate in security.
A major game-changer in the in-house versus hosted debate is the latter’s ability to provide companies with customisation and control. Quality CRM from a hosted provider allows for special features and applications – such as workflow engines, quarterly upgrades, streamlined and automated customer experience, internal and external visibility, and multi-channel management on a single interface.
Whereas an in-house solution requires these features to be developed separately, companies who sign up for hosted CRM find they are now able to customise their system. Rather than giving their customers rigid, pre-packaged software programs, CRM ASPs allow users to choose the applications and formats they need from a broad range of options available on the host platform.
All of which means that, as hosted CRM continues to improve, the trade-offs of in-house and hosted CRM are rapidly disappearing. When you can have the cost-effective solutions that hosted ASPs provide, plus a customisable platform for reliable control, the choice of hosted over in-house becomes a no-brainer.
Have you ever had to choose between hosted and in-house development? Or do you have a strong view on which is the best route to follow?
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