On Premise or On Demand

Recently saw two posts that were debating each side of the on premise vs on demand CRM coin. That reminds me of late 90's when ERP and CRM vendors where busy with similar press and postings trying to differentiate their solutions from CRM extensions that came out of ERP vendors vs best of breed CRM and so on.

Both models have relevance in the CRM 2.0 world and have pros and cons. On premise has to still figure out how to further lower the TCO equation, make the applications (development & deployment) more agile and shed unwanted functionality that was piled on over the last few years in the feature function war. On demand still has to figure out the security, integration, performance and verticalization (depth) issues. But make no mistake, ondemand is not a fad. Its here to stay obviously nothing is perpetual) and a valid deployment model that meets customer requirements.

If you were to take away the .. we built it multi-tenant from ground up argument .. most on premise applications today are in fact on demand. Imagine a large complex organization on a single instance of an on premise CRM product that supports multiple sister companies or global departments, so its multi-tenant (I know the purists will start crying foul here) and its usually hosted in somebody else's data center serviced by yet another outsourced IT staffing company. So for all practical purposes it is on demand for an enterprise. But for all legal purposes its still on premise.

In fact one thing that I feel will be further explored in CRM 2.0 is the on demand deployment model to further satisfy requirements in the security and integration space. More on this later ...

So in the CRM 2.0 world on premise will have to work harder on making their apps more Web 2.0, RIA, Agile and lightweight (in all aspects). Similarly on demand will have to work on more traditional IT areas of security and integration. Saying we have web services and support SOAP will just not cut it for large enterprises with 100+ apps/systems in house all having some direct or indirect hook from their CRM system.

When it comes down to CRM business processes both on demand and on premise are still struggling on some basic issues. Take adoption of an SFA system for example 10 years ago this was an issue for for all CRM vendors, its still an issue today for on demand SFA as well. Ultimately your Forecasting will be only as valuable and accurate as the info the sales guys put into it. I feel the Web 2.0 component of CRM 2.0 might help further address core CRM issues like this.