Some 40% of all CRM software sold worldwide in 2012 was software as a service (SaaS) based. In addition, 50% of all enterprises in North America and Europe were expected to set aside budgets for cloud investments last year. Many businesses find cloud-based systems to be an ideal choice because they are more affordable when comparing equipment, installation, and maintenance costs.

Cloud-based CRMs do not place limitations on the availability of critical business information. And with more businesses operating in more than one location, cloud solutions offer key players access to information from anywhere. Cloud-based CRM is accessible anytime by anyone approved within the business to use it, including on mobile devices.

How Cloud-Based CRMs Works

A cloud-­based CRM system is managed digitally via the Internet by an offsite team of experts. This solution is also referred to as SaaS, because it does not require a software installation or an IT department for management purposes. Instead, you simply log in online and begin using it.

Even for businesses with an in-house IT team, a cloud-based platform may be a better choice because it allows the team to focus on innovation for the business, rather than maintaining an on-premise system. Cloud-based systems also integrate well with existing business software and workflow.

How On-Premise CRM Works

On the flip side, an on-premise CRM is exactly what it sounds like: It’s a CRM system housed at the place of business that uses it. This can mean the CRM is kept in a dedicated server room, or even in a closet. Generally, an on-premise solution requires the business to buy either a server or a computer that can act as a server. Once this takes place, the CRM software can be installed on that server, usually by an in-house IT department.

The Pros and Cons of Both

Cloud-Based Pros

• Accessible 24/7 by anyone approved within the organization.

• Accessible on the road via mobile devices

• Minimum investment needed.

• Do not require server maintenance and upgrades are often automatic.

• Scalable and secure to keep up with business growth.

Cloud-Based Cons

• Cloud based systems rely on your Internetconnection. If your Internet service goes down you may experience downtime.

On-Premise Pros

• In-house IT teams have greater control over equipment, security, and data.

• It may be all smaller businesses need for the time being.

• They are easily customizable.

On-Premise Cons

• Outages can cause major delays in using the system.

• If using as a customer service touchpoint, outages can be especially damaging.

• Can mean extra expense if IT expertise must be hired for setup and maintenance.

• Difficult to scale and upgrades can be costly.

For much more info to help you make the decision on which CRM is best for your business, download our free e-book.