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   Hosted CRM – an emerging paradigm in customer relation management (contd.)

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Advantages of Hosted CRM -

  • Relatively low startup costs: Hosted CRM is cost effective (at least initially).

  • Rapid deployment: No hardware or software to purchase.

  • Few IT resources: No IT maintenance or staffing. Many companies want to stay focused on core operations keeping the internal IT management needs of the company to minimum.

  • Ease to use and deep-enough functionality.

  • Easy Upgrading: The ease with which upgrades are rolled out is another benefit of hosted offerings: They’re automatically performed centrally, obviating the need for an IT staff to distribute upgrades to individual desktops or portable devices.

  • Hosted CRM also help in broader integration opportunities afforded by evolving Web-services.

  • Provide a platform for mobile CRM- Sales personal can log on to important CRM data in field, from any place that has Internet connectivity.

Disadvantages of hosted CRM

  • One of the advantages licensed CRM has held over hosted CRM is its purported ease of customization and integration. SalesNet's dashboard and Salesforce.com application server are allowing customization in hosted services.

  • CRM ASPs faced doubts about their security and stability: Customers were reluctant to trust crucial corporate data to an outside vendor. But the vendors have done a good job of building robust infrastructures and allaying those worries. Previous fears associated with hosted solutions have been minimize through security capabilities like firewalls, through security capabilities like firewalls

  • Regarding the cost of hosted CRM, analyst suggests that companies that engage an ASP are perhaps overawed by the low initial price tag without considering the necessary ongoing costs they may incur as the relationship period extends. Setup costs; license conversions; fees for customers or business partners; costs of reducing users; selecting the appropriate pricing metrics; arranging residual rights; training fees; data-ownership issues; integration and customization; and termination fees are often overlooked by the users of the hosted CRM and these can over a period of time tend to increase theultimate cost of hosted CRM. Some vendors don't agree that any of these expenses is a surprise. "All the costs are visible," says Dan Starr, CMO of Salesnet, which provides on-demand CRM.  

Hosted CRM vs In House Software


ASP/Hosted CRM

In House Software


Initial Investment is low

Less cost in long term use (after three years)


Easier to customize, but has limited options

More flexibility, but easier to over customize

Man Power

Usually requires just one business administrator

Requires business and IT staff


Easier to manage

More control over the applications

 Where and for whom Hosted CRM is really beneficial

If an organization has complex business processes to automate, it may make more sense to run CRM products in-house, she continues. The customization you can do with hosted offerings is limited to some extent. In any case, if more difficult coding are needed, the company would require the services of a skilled programmer. If you’re a large company where IT is a key competitive differentiator, it’s more likely that you’ve got IT workers with sophisticated and multifaceted skill sets who can handle the integration work and custom programming needed to achieve return of investment (ROI) from an in-house CRM implementation. However, for a mid-market or smaller company with little or no IT staff, will be probably better served by outsourcing customer-related processes to an ASP. The provider handles upgrades and support, and offers easy-to-use tools for some customization. Similarly if an organization has a widely distributed workforce, whether it be because of mobility requirements or due to geographically dispersed offices, an outsourced model can make a lot of sense, as users can use a browser to log-in to applications.

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