Does your customer relationship management (CRM) system leave you feeling tethered to the office?
If yes, you’re probably operating with an outdated, server-based CRM.
In this article, you’ll learn the main differences between cloud and on-premises CRM tools to choose the one that fits your business better.
You’ll discover the benefits of cloud CRM solutions and how all-in-one cloud-based software like ServiceTitan can help you improve your business operations.
Want to grow your business? Click here to get a demo.
Cloud vs. On-Premises CRM: Comparison Table
You can see how these two types of CRMs compare in the following table:
To gain a deeper understanding of both cloud and on-premises solutions, we will look closer at each of them.
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What’s a Cloud CRM?
A cloud CRM is a software system for managing customer experiences and interactions hosted online.
With a cloud CRM, you centralize customer data, streamline processes, and facilitate communication. All this data is accessible via the internet without needing on-premises hardware.
To gain a comprehensive insight into the strengths and limitations of a cloud CRM, let's explore its advantages and drawbacks.
What are the benefits of a cloud CRM?
The key benefits of a cloud CRM include:
Cost-effective: Eliminates the need for expensive on-site hardware and IT maintenance.
Scalability: Easily adapts to a company's growth and allows for more users or features if needed.
Accessibility: Access data anytime, anywhere, from any device with an internet connection.
Real-time updates: Ensures everyone sees the latest customer information.
Security: Provides robust data protection and regular backups.
When Chris Nelson, Puragain Water’s national sales manager, realized they needed to change their software, the company chose a cloud CRM solution.
“We got to the point where we were seeing things fall through the cracks on the service side,” he said.
“That's how we knew that if we were going to… springboard to that next level, we needed a proper CRM to do it.”
Nelson went with ServiceTitan, the all-in-one cloud-based CRM software for the trades, and was amazed at how easy things got on the company’s service side.
“We wanted to build the program to the simplest aspect for our reps,” he explained. “We wanted it to be a simple process, so when they sold the job, regardless if it was a loan or a cash deal, it was simple, fast.”
With ServiceTitan, they did it.
“Now, it's easy for us to go to that next level and open up these new stores, keeping things organized from how they're able to do the different business units for each state, but all still be integrated into one,” Nelson concluded.
What are the disadvantages of a cloud CRM?
The key disadvantages of a cloud CRM include:
Dependency on internet connectivity: If there's an internet outage, it might hinder access to the CRM.
Customization limitations: While many cloud CRM tools offer customization, they might not be as flexible as on-premises solutions.
Integration challenges: Some cloud CRM solutions might not integrate seamlessly with other existing systems or tools a company uses.
Compliance issues: Some industries have specific data handling and storage regulations. A cloud CRM may not always comply with all sector-specific requirements.
Like all things, cloud CRM tools have both advantages and disadvantages. Each business should choose a solution that works best for them.
What’s an on-premises CRM?
An on-premises CRM is a software system installed and running directly on a company's local servers and computers.
On-premises CRM solutions require in-house IT staff for setup, maintenance, and troubleshooting.
Let’s briefly look at the benefits and downsides.
What are the benefits of an on-premises CRM?
The key advantages of an on-premises CRM include:
Control and customization: Businesses have complete control over the system and can customize it to match their specific needs.
Data security: All data is stored in-house, which means increased protection over data privacy and security.
One-time purchase: Payment involves a single, upfront cost, which might be more cost-effective in the long run for some businesses.
Performance: Direct access to your own servers means faster data retrieval and system response times.
Compliance: When you manage data storage and access in-house, it’s easier to comply with industry-specific rules.
What are the disadvantages of an on-premises CRM?
The key disadvantages of an on-premises CRM platform include:
Higher initial costs: On-premises CRM may cost more initially as you need to pay for hardware, software, and IT infrastructure.
Maintenance responsibility: All system maintenance, updates, and troubleshooting fall on the company's IT team.
Scalability challenges: Expanding the system or adding users may require additional hardware or IT resources.
Lack of mobility: Accessing the system remotely can be more challenging without a cloud infrastructure.
Both cloud and on-premises CRM tools, then, have their strengths and weaknesses.
Let’s look more in-depth at each solution’s characteristics more in-depth and explore some examples. That way, you’ll be better equipped to make an informed decision.
Characteristics of Cloud Customer Relationship Management Software
Accessibility is a primary hallmark of cloud-based CRM solutions. With internet connectivity, these platforms can be reached from virtually any location at any time.
Besides being flexible, cloud CRM solutions are also scalable. Small business startups and expansive enterprises can adjust their usage based on current requirements.
Financially, the subscription models and lack of on-premises hardware can typically help you save costs.
Cloud CRM tools also come with real-time collaboration features. These help global teams work together efficiently with the most recent customer data.
And the system's integration capabilities should not be overlooked. Cloud CRM solutions effortlessly connect with other cloud-based tools to build a cohesive business ecosystem.
Examples of cloud CRM
Salesforce
HubSpot CRM
Zoho CRM
Characteristics of On-Premises Customer Relationship Management Software
On-premises CRM tools offer a traditional approach to managing customer interactions and data.
These solutions are part of a company’s local infrastructure and give a sense of control and autonomy.
On-premises CRM solutions provide direct management and customization to businesses. Since the software is installed directly onto your company’s servers, it’s much easier to customize it to your specific operational needs.
This setup also means enhanced data security, as all information remains within the company's premises.
With an upfront purchase model, you might find long-term cost benefits, especially if you have the in-house expertise to manage and maintain the system.
Examples of known on-premises CRM
Microsoft Dynamics CRM
SAP CRM
Oracle CRM
What’s the Difference Between Cloud and On-Premises CRM?
Cloud and on-premises CRM tools differ significantly.
Here’s a breakdown of the main differences.
Cost
Cloud-based CRM: Expect substantially lower installation and maintenance costs since all data lives in the cloud.
With a cloud CRM, there’s no need to invest in on-site server hardware and bulky equipment or pay for ongoing IT support.
Instead of locking into a years-long contract, the software as a service (SaaS) model offers more flexibility, typically allowing monthly or quarterly payments.
It not only frees up cash flow, it lessens financial risk. A cloud CRM certainly offers a more cost-effective solution.
On-premises CRM: With on-premises software, you’ll need to purchase computers and in-house data servers, as well as the installation and ongoing maintenance.
Mobility
Cloud-based CRM: In today’s climate, employees must conduct business on the go.
That means using a mobile device to access real-time customer data at home, in the office, in the field—or anywhere with an internet connection. Remote access also ensures customer data stays up-to-date and timely.
A cloud environment enables all employees, including service technicians, sales reps, and dispatch, to input and access customer data from a mobile device (not the office).
On-premises CRM: A server-based CRM offers limited mobility, typically requiring a VPN connection.
In many cases, techs must call the office to relay customer data. This wastes time and may create a poor user experience. It also makes it difficult for technicians and sales reps to make real-time updates from the field.
Security and Maintenance
Cloud-based CRM: The CRM vendor maintains the cloud servers, mandates safety and encryption protocols, and backs up your customer data. It adds an extra layer of security and prevents data loss if a device is lost or crashes.
Cloud infrastructure removes the data security and maintenance burden from the customer, reducing risk.
On-premises CRM: With an on-premises CRM, you remain on the hook for protecting customer data, which typically involves hiring an outside data center, adding costs.
Plus, you could potentially lose all customer data if the on-premises CRM crashes.
Implementation
Cloud-based CRM: Because there’s no hardware or equipment to install, you won’t have to wait as long for implementation. The SaaS model is easy to implement. This lowers downtime, eliminates the need for hardware, and reduces capital expenses.
On-premises CRM: Implementation times vary depending on the business and CRM provider.
Installing dedicated servers is not only time-consuming, it also adds additional costs.
Feature updates
Cloud-based CRM: Your CRM vendor can activate new features remotely and make them available to all users.
That ensures employees always have access to the most up-to-date features and requires no financial commitment or lag time.
Similar to downloading the latest versions of a web browser or apps, cloud-based feature updates occur regularly and automatically. No additional work for you.
On-premises CRM: With an on-site CRM, the vendor must manually install new features or upgrades on in-house servers.
It not only takes longer, but it may be so cumbersome that you avoid installing new updates altogether.
Data and Metrics
Cloud-based CRM: Business owners in the trades need convenient access to real-time customer data.
A cloud platform makes it easy to look up customer details, check technician performance, and track marketing efforts from the office or the field.
Not only is data accessible from anywhere, but it also updates whenever a tech enters a customer note or a sales rep closes a deal.
With a cloud solution, employees will always have the most accurate data at their fingertips.
On-premises CRM: With an on-premises solution, data is only as accurate as the last time an employee made an update from the office.
Data could be behind days or even weeks, which could cause mistakes and amplify inefficiencies.
ServiceTitan helps HM Plumbing store, organize, and access customer records in the cloud.
“Knowing that ServiceTitan is cloud-based is great because I don't want all this information on my computer system,” Karen Hill, vice president of HM Plumbing, said. “I want somebody that's going to manage it for me. And that's what ServiceTitan is for me. It's my IT department.”
Service and Support
Cloud-based CRM: Cloud service providers typically offer same-day and or 24/7 customer support so you can resolve any CRM-related issues quickly and conveniently (no IT department required).
Also, support teams can address problems remotely—even while you’re in the field or with a customer.
On-premises CRM: With an on-site CRM, you’re at the mercy of your vendor’s business hours.
If you have a problem and your CRM provider lacks 24/7 support, you’ll have to wait days or weeks for someone to physically show up and address the problem.
Now that you know the key differences between cloud and on-premises CRM, let’s look at how you can choose the right CRM solution for you.
How to Choose Between Cloud and On-Premises CRM
Choosing your CRM depends on your business needs.
Here is some guidance on how to choose the best CRM.
Choosing a cloud CRM
A cloud CRM might be more adaptable if you're a startup or a growing business that anticipates rapid changes in size or structure. The scalability of cloud CRM can meet your growing needs without massive overhauls.
Cloud CRM typically operates on a subscription model, reducing the need for a significantly large upfront investment. So, this could be the right choice if you're looking for a pay-as-you-go model.
In today's work-from-anywhere environment, the accessibility of a cloud CRM can make a big difference.
Accessing the CRM from anywhere is a priority if your team is remote or always on the move.
If you lack a large IT team or infrastructure, cloud CRM tools remove maintenance, updates, and troubleshooting stress.
Choosing an on-premises CRM
Cloud solutions are customizable, but if you need advanced customization, on-premises CRM tools might be more helpful.
While the initial setup might be costly, an on-premises CRM can be more cost-effective in the long run––specially if you have the in-house expertise to manage and maintain it.
The No. 1 Cloud CRM for the Trades
ServiceTitan’s cloud CRM solution helps HVAC, electrical, plumbing, and other skilled trades optimize their CRM.
Our end-to-end system can help with the following business needs and more:
Contact management
Client interaction tracking
Scalability and customization
Mobile access and support
Database management
Marketing and campaign management
Workflow automation and employee management
Seamless integration with direct mail, email marketing, project management, financial reporting (QuickBooks), invoicing, billing, and other tools
Sales automation and lead management
Now Over to You
Having learned that cloud CRM tools offer scalability, flexibility, and cost-effectiveness and recognizing that on-premises CRM software is customizable, secure, and compliant, the question now is: which option suits your needs best?
Take the opportunity to explore ServiceTitan before making your final decision, and discover how an all-in-one cloud field service CRM solution can enhance your contracting business growth.
Grow your contracting business, period.
ServiceTitan Software
ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.
