Image Credit: Morgan Schefflin

Do you know how many Customer Relationship Management (CRM) systems are out in the world today? There are probably thousands, maybe in the hundreds of thousands. There are CRMs for massive corporations like Amazon, there are CRMs for small and medium businesses, and there are even open source CRMs. There are cloud based CRMs and there are on-premise solutions. What is the difference? Well, even that answer isn’t totally cut and dry.

Cloud vs. on-premise

A cloud based solution can mean a couple things. For most companies, using a cloud means using some type of Software as a Service (Saas) solution. That essentially means paying for a subscription, or contract, and viewing it through a website/web browser. One other thing to consider about the cloud solution is where the data is actually being stored. Is the data being hosted on a 3rd party vendor, or is the company hosting it on their own server? Different companies have different preferences.

The on-premise option typically involves buying the license and software to install on the company’s hardware. The company would then be responsible for all maintenance, updates, imports, etc. An example of an on-premise CRM for large companies is Microsoft Dynamics CRM. The on-premise solution is usually quite a bit more expensive than the cloud based solution. Cost is a major factor for an on-premise CRM, which is why it’s typically targeted for larger businesses. Both have their own uniqueness, though.

Which CRM is better?

Well, that is really a relative question. That’s like asking which is the better quarterback, Peyton Manning or Tom Brady? I’d take either to be on my team any day. It’s all dependent on what is best for the company that is making the investment. Both can provide its advantages and disadvantages. A large company that needs more customization will probably pay an upfront cost to have ownership and not have to pay more in the long term. They would also be able to secure it how they see fit. A smaller company, or a start-up, without a big budget would probably opt for the cloud based solution due to the lower upfront cost. There is also scalability. A cloud based solution is easier to change things vs. the on-premise solution where it severely limits integration practices.

Data integrity could also play a major factor. As an example, let’s say we have a consulting company looking for a CRM solution. They would handle several clients, some of who could be competing against each other. If that information ever got mixed up or leaked, then that company would cease to exist. They would most definitely opt for an on-premise solution because they need to be in complete control of their data. They can’t leave that type of security up to another company.

That is not to say that cloud based solutions aren’t secure. They typically have solid security. Think of it as letting somebody borrow your prized possession for a project. You know you’ll get it back, but you’re not really comfortable until you’ve put it back in its rightful place.


Each company has to decide what is best for it. Pick the most important factors first, and then it’ll become clear whether the cloud or on-premise solution is best. Don’t fall to ‘paralysis of analysis.’