Like crops, businesses require a lot of tending to. When it comes to software deployment, you need the right fertilizer for the job. Whether you source your fertilizer locally (on-premise CRM) or via a third-party (public cloud), is up to you and what works best for your situation. Just like strong pesticides could wreak havoc on the soil and the food you grow, the wrong model can hinder how effective your CRM software is.

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Similar to organic farming, the CRM market is booming and is expected to expand at a CAGR of 13.3% from 2022 to 2030. Companies understand the importance of investing in CRM. That means choosing the right solution — and deployment — is becoming more critical than ever if you want to remain competitive.

So, how do you know whether the cloud or on-site is better? That’s what we’re here to expand on.

But, before we plow our way into the territory of on-premise CRM solutions, let’s get clear on terminology.

What is On-Premise CRM?

On-premise CRM, also known as on-site CRM, is purchased and installed on your company’s server. Instead of paying a vendor to host all your CRM data, you store customer information on an on-site server that requires a license. Users can only access the data on a desktop application on company grounds.

Self-hosting your CRM is a mixed bag. It’s purpose-built for your company’s usage and gives you complete control over data, but its initial set-up costs may end up burning a hole in your pocket. These costs include hiring an IT team to build the software and purchasing and installing hardware. Post-installation, you are also responsible for handling maintenance costs. Due to these high-running costs, on-premise CRMs tend to be usually favored by big businesses.

While the initial cost incurred to set up an on-premise CRM is high, the long-term total cost of ownership is generally lower than cloud-based CRMs.

On-Premise vs. Cloud CRM

As customer data management becomes more complex, many businesses are switching to cloud-based CRM solutions. In fact, migrating more workloads to the cloud was one of the top priorities for companies in 2021, according to Flexera.

We also ran a survey of the top features customers want from their CRM. Over 500 companies participated, representing a variety of industries and ranging in size from small businesses to enterprises. What did we find? 63% of companies prefer cloud CRM, and 98% are open to the idea.

Despite the cloud’s immense popularity, some companies still swear by on-premise CRMs. Is it nostalgia over a bygone era? No. It simply boils down to two major factors — large data transfers and security.

With cloud CRMs, you need to entrust the security of sensitive customer information to the vendor. Recent cloud cyber attacks have disrupted the functioning of enterprises worldwide.

Moving volumes of big data that run into exabytes to the cloud come with its operational challenges like the need for large processing power. However, on-premise CRMs don’t require an internet connection to access company data. Users can work offline and sync data to the company database as soon as the connection is back on.

All things considered, there’s a massive swing in favor of cloud CRM solutions. Which begs the question, which deployment method is right for you?

Deployment Considerations

That’s the million-dollar question (possibly literally). It’s no secret that choosing software is a big deal and for a good reason. The process takes time, your end choice will cost you money and the capability of the software will play a significant role in how productive and profitable your business is.

CRM software is no exception. Some vendors offer a free option — good news if you’re a small business that doesn’t have pockets as deep as the Marianas Trench — but generally, you get what you pay for. Meaning the “free” tier probably comes with limitations regarding features, customer support and the like. And since CRM is all about managing your customers well, the solution you pick will go a long way in strengthening your bottom line.

It’s important to make the right choice, and the biggest question you need to answer is whether a CRM on-premise or a CRM in the cloud will best fit your requirements.

There’s no shortage of CRM vendors, so our goal is to provide some direction as you gather information. Here are some of the top questions you should be asking:

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What Level of Access Do You Need?

Will your team members all use the software exclusively in the office or will they need your customer data on the go? The accessibility of a CRM platform is where you should start your deployment evaluation.

This is where web-based CRM solutions truly shine. Storing your CRM info in the cloud means your sales reps and other employees have access whether they’re in the office, at the bagel shop down the street or waiting for their flight at the airport.

On-the-go access, full visibility and shareability: those are the real power of CRM data in the cloud. Your sales reps, executives, marketers and even your external partners or customers can all see data in real time, using any device.

Modern CRM systems let you track and manage all your customer data.

For businesses that employ traveling sales reps or CRM users who may find themselves in need of their customer data at any time, cloud based CRM software is the right answer.

On premise CRM deployment is more tethered than its cloud computing counterpart. For the most part, this limits your access to the office, where the servers reside. Although this dictates where and when you can use the system, it also almost eliminates connectivity issues.
Cloud-based CRM systems rely on the internet to work and provide access. If your WiFi suddenly goes belly-up, you can’t access your data, even if you’re working in the office.

With on-premise CRM software, however, proximity is the main requirement to access your customer data. Nothing short of a power outage can stop your ability to work with and view the data you need. If your CRM users only need to see the information while in the office, an on-premise deployment may be the better fit.

Some companies opt to set up a VPN (virtual private network), which allows remote access to a corporate network. Though a VPN serves some of the same areas that cloud computing does, VPNs and cloud computing aren’t synonymous. So you shouldn’t consider a VPN a one-to-one replacement for a cloud solution.

What Are Your IT Requirements?

How big of an IT department do you have? What’s their budget? And how many IT resources do you already have on hand? The capabilities of your IT department is another major factor in choosing a CRM deployment.

For businesses with a small IT budget and few resources (mostly small businesses), cloud-based CRM is far more viable. Why? Because the vendor hosts any cloud-based CRM solutions, they require little to no intervention from the IT department. The vendor owns the servers, handles the updates and is responsible for the general management of the platform.

If any issues come up, you don’t have to try to fix them yourself — just reach out to your vendor’s customer service. This saves time and money that you can allocate elsewhere.

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Hosting a CRM on site, on the other hand, requires a lot of IT attention. When you deploy any software on-premise, you’re essentially taking over every aspect of platform management. This means your IT department has to spend a lot of time and resources implementing and managing the system.
Typically, large businesses have the number of resources required, so they’re more likely to adopt an on premise CRM.

On-premise IT management starts with setting up the servers during initial implementation. You have to deal with loading data, taking care of the servers every day and problem-solving should the system go down. Although your vendor can help your IT staff with some issues, it’s ultimately up to your team to get it up and running again.

Regular data backups are also necessary to prevent data loss. Should a disaster or failure occur, equipment replacement comes at the company’s expense. Even something as basic as upgrading to a new software version can be a significant investment.

Based on all that, is the local option a waste of time and energy? It depends on your specific situation. Using a CRM on-site comes with some benefits.

First and foremost, you have more control over customization and configuration. Installing the system yourself gives you the power to make slight tweaks when needed to fit your business and the processes you already have in place better.

Greater control over customizations makes for easier integration, which is a powerful capability for collaboration across departments.

While many cloud-based CRM solutions integrate with other types of software, such as a BI platform for performing big data analysis, going the on-premise route lets you combine pretty much any system you want. You own the servers the CRM resides on, so you can more easily create gateways that allow your CRM to communicate with other systems.

What’s Your Budget?

If you’re thinking “duh, that’s obvious,” I’d agree — with a caveat.

When considering cost, it’s easy to look exclusively at the price of the system, whether it’s a one-time, upfront fee or a monthly subscription. However, the dynamics of evaluating the cost of enterprise software are a bit more complex. In other words, don’t forget to consider hidden costs: usually upfront costs involved in implementation or ongoing expenses related to maintenance.

Generally speaking, cloud-based software is cheaper from the get-go. Typically, the only cost is the subscription fee. The amount often depends on how many users need access to the system, but some cloud CRM vendors have a flat fee no matter the number of users.
This pricing model ensures that cloud-based CRMs have small upfront costs, making them affordable for businesses of all sizes. And when you’re a small business, affordability is the name of the game.

Along the same line, the upfront costs are what make on-premise CRM systems less viable for small businesses. Getting your CRM up and running locally can get pricey and include:

• The one-time purchase fee to the vendor
• Buying and installing servers and other hardware
• Paying your IT staff to make it all work

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And don’t forget about ongoing maintenance costs. Remember those hidden costs I mentioned? Maintenance can be one of the most expensive culprits since keeping the servers and other hardware running smoothly requires regular attention. And when issues come up, it takes time and money to fix them.

Once again, despite some of the cost disadvantages of a CRM on premise, it’s not all bad. Because there’s only a one-time fee to acquire the software, as opposed to ongoing monthly payments for a cloud CRM solution, using it for long enough may end up lowering your TCO. Despite the cloud’s lower short-term costs, after a given time, an on-premise platform can end up as the cheaper option.

Similarly, large enterprises commonly find having their CRM on location is cheaper because of their size. If using web based CRM software, businesses with hundreds or thousands of users may end up with hefty monthly fees that aren’t worth it.

Since businesses of this size don’t have to pay per user for an on-premise solution, the one-time fee may be the cheaper, more appealing option. The fact that they have the resources for proper implementation and management of an on-premise platform only enhances that appeal.

How Does the CRM Handle Data Security?

How can you guarantee your data stays secure?

A legitimate question, given the number of big-name breaches that have made the rounds over the past couple of years.

If you look at the criteria from the previous few sections, the average company would probably find more benefit from a cloud-based CRM. But when it comes to data safety, what’s your best bet?

Back in the day, there wasn’t much competition when it came to which option offered stronger data protection. On-premise solutions were the equivalent of Michael Phelps — demolishing their cloud-based counterparts.

Times have changed, though, as cloud providers continue to put a high priority on security. Where do things stand now? Unfortunately, it depends who you ask.

For example, Michael Dell, CEO and founder of Dell Technologies, considers public cloud no more or less secure than on-premise solutions. A 2020 report by Oracle and KPMG showed mixed results:

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• 88% of organizations use public cloud infrastructure services as of 2020.
• 75% of businesses have experienced data loss from a cloud service more than once.
• Despite that, 40% of respondents consider public clouds more secure than their on-premises environment.

If you’re wondering where that leaves you, don’t worry. While questions surrounding cloud security abound, one trend stands out among the rest: the cloud isn’t the problem. The users are.

Take a moment to ponder that. Despite the misgivings, security issues aren’t inherent to a cloud infrastructure. In fact, customers will account for a whopping 99% of cloud security failures through 2025. Yes, you read that right. That’s a lot of user error.

Many factors play into this, but understanding the differences between cloud and on-premise security is a crucial first step in taking a hatchet to that number I just mentioned. Until you have a thorough understanding of why both solutions aren’t created equal and why you should care about things like shared responsibility, cloud security can be an accident waiting to happen.

Enjoying a secure cloud isn’t Mission: Impossible — it just takes commitment on your part to ensure you follow proper measures.

All that’s to say: when considering which solution to use, do your homework. The cloud offers some advantages when it comes to security, and on-premise solutions aren’t the tech version of Fort Knox every single time. Knowing the pitfalls, strengths and everything in between for both options is your best bet to taking care of your customers’ data on a daily basis.

How Much Flexibility Do You Need?

Cloud-based CRMs and on-premise systems are on par when it comes to flexibility. By their nature, CRM solutions in the cloud have better scalability, which helps growing businesses adjust to growth they can’t predict. However, one issue is the high reliance on vendors for support, software and hardware.

On-premise systems may be harder to scale, but your business owns the hardware and software, giving you control over the solution. It’s also easier to incorporate custom applications into locally hosted systems.

How Easy is the Deployment?

Because you want it to be as complicated and cumbersome as possible — said no one ever.

Getting a system up and running shouldn’t be the tech equivalent of reading Dante’s Inferno. Easy, headache-free, straightforward? That’s what you’re looking for.

Since a cloud-based system is hosted at a vendor instead of your location, you don’t have to worry about disrupting your existing infrastructure for the deployment. After you’ve selected the solution, it doesn’t take long to set up. Adjust a few business processes and give employees app and login info. Boom, you’re done.

Granted, if you’re shifting onto a hosted CRM solution after being with an on-premise solution, it may take employees time to get used to the new look and feel. And in every case, you may find some training necessary. Luckily, many CRM vendors offer resources like customer support, user communities and eLearning options.

In contrast, an on-premise CRM is more complex and requires everything from on-site servers to an IT staff capable of installing and maintaining the necessary software. Not all companies, especially small businesses, have the resources to handle such a deployment.

Software Selection

You want to create great customer relationships while exceeding client expectations, and with the help of a CRM, you can. But doing so requires a solution tailored to meet the demands, intricacies and specific needs of your business.

Although choosing the right deployment model isn’t the end-all-be-all, it can make a difference in how successful your implementation is. Whether you need a cloud-based CRM or an on-premise solution, it all comes down to your business requirements and the resources at your disposal.

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Carefully assess the considerations below. Once you do, you’ll have a much clearer picture of what type of CRM you need.

1. Be Clear & Specific About Your Objectives

Take time to determine what CRM features and functionalities you need before investing in lots of features you don’t need or that other software already handles, like your marketing automation tool.

Example of a customized opportunity workflow in a CRM system.

2. Conduct a Feature-by-Feature Comparison

It’s difficult to conduct a head-to-head comparison before you narrow your search to a handful of options. But once you’ve whittled down to a manageable number of systems, determine which features you need and then do a feature-by-feature analysis of your top contenders. Some of the most popular features are:

• Integration with your email service, marketing automation, email marketing systems and other back-end systems
• Sales force automation
• Marketing automation
• Contact management
• Role-based user access
• Workflow automation
• Pipeline management
• Customizable reporting

3. Look for a Scalable Solution

A good CRM solution helps the business grow, which means you need to choose a service that can scale with you. If your company enters the contract at the top level, there’s not going to be any room to expand your services.

Find a solution that offers flexibility and scalability so that you can add on services, users, features and more as needed.

4. Examine the Vendors — Not Just Their Products

When it comes to a CRM software comparison, don’t compare the products and features only. Look closely at the companies behind those services.

• Which have the best records for reliability (uptime) and security?
• Which have been around longest?
• Which are easiest to work with?
• Which have strong reviews?

Before even considering the cost of the service, be sure you can have confidence in the strength and reputation of the vendor.

Future of On-Premise CRM: The Cloud Takeover

Businesses that recognize the extensive benefits of cloud CRM are abandoning the old model of using a network of onsite hardware and software systems to store customer data.

As of today, on premise CRM systems aren’t dead. But more and more companies see the value of moving their CRM to the cloud. Almost 80% of all CRM sales were cloud-based in 2020, according to Gartner.

There are several reasons why fewer companies prefer on-premise CRMs:

• Users can’t access the system remotely. For on-the-go access, you’ll have to invest in or develop a mobile app — which translates to higher implementation costs.
• Upgrading your on-premise CRM is an expensive affair.
• Recurring maintenance and administration are costly and time-consuming, particularly for small and medium-sized businesses.
• Because of their higher cost of entry, on-premise CRM solutions take their sweet time to deliver ROI.
• On-site CRMs offer little in the way of scalability. Expanding requires the purchase of more hardware, and if requirements decrease, you still have to maintain the same amount of hardware until demand goes back up.
• You need to hire IT personnel to run and maintain the system.

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Best On-Premise CRM

Now that you know the pros and cons of on-premise CRM, it might be helpful to look at the top solutions in the market. According to our Jumpstart Platform, the following four are the highest-rated on-premise CRM platforms:

Creatio

Creatio is a low-code application that automates industry workflows and streamlines marketing, sales and service-centric operations. Both SaaS and self-hosting deployment options are available.

Users get the flexibility to design an interface with access to a library of predefined views, widgets and templates. Other capabilities include contact and opportunity management, dashboards, and customer segmentation.

Top Benefits

• 360-Degree Customer View: Create comprehensive customer profiles and store crucial information like industry, company size, location, contacts, history and more. Monitor customer preferences and buying behavior by accessing their browsing and order history. The platform’s data scientist identifies email addresses, phone numbers, social media profiles and other details from open sources.
• Email Marketing: Want to send mass emails to clients? Creatio provides built-in integrations with email service providers that enable you to send bulk emails with a few clicks. You can also set up sending time and monitor responses and engagement rates. Leverage the WYSIWYG designer to build personalized campaigns. Analyze bulk email clicks and test multiple versions before deployment.
• Sales Forecasting: With forecasting tools, businesses can plan sales volumes based on variables like managers, accounts and industries. It helps managers analyze team performance and sales reps’ efficiency. To know more about this feature, visit our Jumpstart Platform.
• Collaboration: Stay in touch with your team members and customers within the platform. Use the communication panel to make calls, manage emails, approve documents and more. You can create personal or group tasks and link them to contacts and opportunities. Ensure everyone is on the same page by syncing tasks with Google Calendar and Microsoft Exchange.
• Segmentation: Create custom target segments according to order history, requests, responses and interests. Use filters to build dynamic groups and add a target audience to bulk emails and events.

Primary Features

• Lead Management: Identify lead generation channels and sources and store them in profiles. Evaluate campaign effectiveness by tracking lead sources. You can also check profile accuracy, connect leads to relevant accounts and search for duplicate leads.
• Product Management: Manage products and services in your portfolio, regardless of their complexity and size. Group products based on their attributes such as brand and category. Ensure your data is up to date by integrating the catalog with your ERP system.
• Contract Management: This module helps businesses manage contracts, agreements and other specifications. You can create agreements manually or automatically using standard templates. Attach photocopies, view amendment history and track details to ensure you’re not missing anything.
• Opportunity Management: Creatio automatically runs a reference process when managers create a new opportunity. It helps define tactics, identify key decision-makers and monitor competitors for every opportunity. You can also assess the possibility of closure on the opportunity page.
• Order and Invoice Management: Manage orders easily by storing documents, communications and chronological activities of every order. Integrate with your website to configure automatic invoice registration.

Limitations

• It doesn’t offer real-time notifications when prospects open your emails.
• It doesn’t support bulk view.

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Microsoft Dynamics 365 for Sales

Microsoft Dynamics 365 for Sales helps businesses optimize sales operations and marketing campaigns. It provides capabilities like business intelligence, campaign management, social insights, sales forecasting and contextual AI.

It offers a mobile version, available on iOS, Android and Windows phones. Designed for businesses of all sizes, it provides cloud and on-premise deployment options.

Top Benefits

• AI-Driven Insights: Leverage AI and machine learning-based recommendations to discover new audience segments and deliver personalized customer experiences.
• Call Reminders: With the relationship assistant module, you can view reminders in the dashboard for appointments and phone calls. Microsoft Dynamics 365 for Sales scores a perfect 100 for this capability, according to our Jumpstart Platform.
• Playbooks: Ensure your sales team consistently applies the organization’s best practices at every step. It provides role-based access that enables users to create and classify playbooks.
• Holistic Customer View: Sales and marketing teams can use a unified source of customer data to view relevant information and history across all touchpoints.
• Mass Emails: Send the same message to several recipients. Create emails with Word and Word templates via mail merge.

Primary Features

• Dashboard and Reports: Want to gauge your business’ health? Use visual tools like interactive graphs and charts to pull critical metrics. Run reports on a single campaign or compare them for a detailed analysis.
• Lead Management: You can create and define leads and access details on whether a prospect is qualified or not. Predictive lead scoring helps prioritize leads for higher win rates.
• Centralized Repository: Store and manage documents on Microsoft SharePoint. Use Microsoft Dynamics 365 Business Central to archive sales documents, quotes and return orders.
• Collaboration: Teams can collaborate with other members and departments by integrating with Microsoft Teams. It provides a private chat functionality to share documents, updates and customer information.
• Campaign Management: Create and deliver targeted sales campaigns like emails, advertisements, events and co-branding.

Limitations

• It doesn’t offer a built-in telephonic caller to make direct calls.
• It doesn’t support SMS analytics.

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Infor CloudSuite CRM

Infor CloudSuite CRM helps businesses deliver improved customer experiences. It provides a comprehensive view of customer activities across touchpoints like sales, marketing, customer service and support.

Sales reps can manage leads and opportunities and maintain customer profiles. Integrate with Infor LN for real-time data exchange.

Top Benefits

• Business Intelligence: It offers a dedicated analytical tool that assists organizations with internal reporting and data discovery. You can share reports with customers, partners and suppliers.
• Data Import: Use the import view to transfer user records to the system. Supports files in multiple formats like Microsoft Excel, Microsoft Outlook export files and .txt — make sure to import them from a CSV list.
• Global Language Support: Modify the regional format option to display region-specific data like date, time, numbers and currency.

Primary Features

• Accounts and Contact Management: This module lets businesses create customer accounts. It can include multiple contacts owned by individual users or teams. You can make conditional groups or create a relationship between accounts after picking them individually.
• Dashboard and Reports: View and analyze data related to contacts, accounts, opportunities, tickets and more. Drill deeper by filtering results.
• Document Management: Access a centralized database for company information like product details, policies, presentations, web addresses and processes. You can download a library file using Infor CRM Web Client.
• Lead Management: Use lead qualification criteria to determine whether leads can be a potential sales opportunity. Sales reps can manually add leads into the system or import from a CSV file. Convert qualified leads into contacts and accounts and create a new opportunity.

Limitations

• It doesn’t automatically save document versions according to revision history.
• No integration with scheduling tools and messaging platforms.

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Pega CRM

Pega CRM, an offering from Pegasystems, is an enterprise-level, low-code solution that provides three broad capabilities — customer service, sales automation and a customer decision hub.

Real-time AI and automation help optimize customer interactions. Businesses can run the platform on the vendor’s cloud, personal cloud or third-party cloud.

Top Benefits

• Holistic Customer View: Create comprehensive customer profiles and store relevant web, email and social data. Use this information to detect the right moment to sell or follow up.
• Sales Forecasting: Predict sales pipeline based on categories like quarter and territory. Adjust close dates and opportunity amounts and include a sales rep’s narrative for a realistic picture.
• AI Guidance: Deliver personalized, uniform and contextual customer experiences across multiple channels through AI-guided interactions.
• Real-Time Notifications: Stay on top of things by receiving instant alerts on client activities.

Primary Features

• Lead Management: Manage a lead right from its initial capture to opportunity conversion. Source leads via bulk import, web forms and campaigns, or enter them manually.
• Custom Branding: Use the branding wizard to build a personalized user interface. Apply brand-specific details like color schemes, logo and fonts. Customize elements in user portals, work forms and reports.
• Intelligent Routing: The system’s existing APIs and embedded lead routing rules ensure you assign prospects to relevant sales reps.
• Reports: This module provides standard reports on accounts, contacts, leads, opportunities and sales. You can preview the report and edit data before publishing.

Limitations

• No call scheduling capabilities.
• It doesn’t allow sales reps to record and set up automated voicemails.

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How We Choose Products

Our team of writers and analysts at SelectHub is committed to giving you the best recommendations based on our data. To make our list, products had to meet two criteria:

1. Closely match the topic
2. Earn a top-5 analyst score in our selection platform

Our analyst scores are based on an in-depth research process using primary and secondary sources. This includes SelectHub Analyst Briefings, direct communication with vendors, and reviewing materials such as user reviews, product brochures, specification sheets, case studies, user manuals, and technical documentation.

Our platform’s Scoring Engine processes the research and computes the analyst score. The score also factors in platform settings such as industry and company size.

Learn more about our research methodology and editorial standards

Final Thoughts

Having your CRM on premise comes with advantages, particularly if you’re looking for internal management and local ownership. Just remember that before making any decisions, ask the right questions to get a complete picture of how your CRM will impact every aspect of your business from budget to IT.

To get a full view of your options, be sure to check out our free analyst report that compares the top CRM software on the market. The business decisions you make are only as effective as the information you gather, so collecting as much intel as possible will make your selection process smoother.

Do you swear by on-premise CRM solutions, or are you thinking of switching to the cloud? Why? Leave your thoughts in the comments!