Is CRM On Demand Really In Demand?

Take a quick look at any one of the top CRM industry magazines and you’ll find nearly half the stories are about on demand CRM. With hype like this, I assumed every new implementation was an on demand, or hosted solution, but at the Gartner CRM conference I learned I was completely wrong.

According to Gartner, on demand CRM is over hyped. In 2006, only 8% of CRM users were using a a hosted CRM solution, while the remaining 92% of people hammered away on traditional on premise solutions. Gartner Analyst, Rob DeSisto led  a session entitled, CRM On Demand: Achieving Business Value Behind the Hype, in which he revealed this telling fact:

“Through 2009, less than 10% of active CRM users will use an on demand CRM Service.”

While much of the press continues to focus on hosted CRM, the reality is that 90% of people still use on premise solutions. So why the hype?

One part is that the people hyping on demand software are extremely good at doing so, but that’s not the only part. The hosted CRM message makes a good story. Hosted CRM allows you to reduce IT involvement, limit your initial costs, and because of those two factors, gain easier budget approval. For many people that’s good enough.

That’s a good reason for the hype, but why none of the action? Why are only 10% of people going to be using hosted CRM by 2009?

The bottom line is that on premise client server technology is still superior to newer hosted CRM. People remain concerned about security issues with hosted CRM. They need additional customizations and integration which adds complexity that only an on premise solution can handle. For most businesses on premise CRM is established and the right way to go.

So if you feel alone using on premise CRM in a hosted CRM world, you’re not; 90% of people agree with you.

Comments

[Stephen K Smith]

I agree with your article. I still however feel that a hosted CRM is much more efficient and valuable to a business. Do you think the numbers will go up for people using on demand crm's?

My company recently posted a free version of our online CRM application, called Considered Sales CRM Free.

The application is based on a goal and progress oriented sales model and allows you to customize your own sales process. An account in the free version is limited in functionality, but is a good introduction to the considered sales process.

I'd like to get any feedback on the application. Let me know what you think. Perhaps this can spur some further discussion on the types of features people are looking for in a good online CRM application.

You will find the free version at www.consideredsales.com

[Steven R. Watts]

There are benefits of both hosted and premise-based CRM solutions.

However, a hosted solution has a clear advantage in taking advantage of two of direct marketing's most powerful tools-the telephone and Web. Our company, InsideSales.com, has taken the hosted solution a step further by integrating inbound and outbound telephony systems directly into the CRM. Power dialing, automatic voice message laydown, IVR, and ACD components are instantly available to users of our system.

Don't want to make this a marketing pitch, but the point is there is huge potential in using Web-based applications to link sales and marketing teams to these types of activities, and they are only possible using a hosted, Internet-based solution.