SaaS Versus On-Premise CRM - Look Before You Leap!

Navint’s CRM implementation methodology is comprised of five essential steps including a strategy/assessment phase, a solution design phase, an implementation phase, a post-implementation support phase and a client care phase.

Consequently, in almost every CRM implementation we do, our strategy/assessment phase addresses the SaaS versus On-Premise questions – i.e., who the are vendors and what are the costs, benefits, and risks associated to each of the solutions identified?

Needless to say, with Salesforce.com’s ongoing NO SOFTWARE campaign and with Microsoft’s plans to launch Dynamics CRM LIVE in 2007 (yes, be very afraid Marc Benioff), the appeal of SaaS CRM solutions will only continue to grow.

But the obvious must be stated:

The decision to deploy any CRM solution should be driven first and foremost by an organization’s technical and business requirements (as well as by the weighting that the organization’s management and end users give to each of those requirements).

While numerous reports from multiple research houses argue the merits of SaaS solutions versus On-Premise solutions, a more level-headed article has surfaced.

In her piece titled, The Financial Economic Impact of Software-As-A-Service, Forrester Analyst, Liz Herbert stresses, “Buyers who ask only about the cost tradeoffs of SaaS aren't looking at the whole picture. To make a more informed assessment of the overall return on investment (ROI), firms must also consider the benefits, risk, and flexibility associated with their decision.”

Accordingly, the above graphic (taken from Herbert’s article) summarizes a number of key tradeoffs that should be considered when evaluating SaaS and On-Premise CRM solutions. Furthermore, it should also be mentioned (because I am certain that no one at Saleforce.com will) that On-Premise solutions typically find a lower total cost of ownership (TCO) than SaaS solutions after year three of the investment.

For more information about the research referenced in this post and/or to obtain a copy of the Liz Herbert article, please feel free to contact me at skircher@navint.com.