Is on-demand CRM better than an on-premise solution? - Yes

Security, cost, integration and speed are key issues

The many pros of on-demand CRM software solutions.

I laugh when I hear people express disdain for the benefits of on-demand software. On-demand has taken the IT industry by storm for eight years -- thousands of customers of all sizes are embracing the new model -- yet there are organizations that still insist it is a fad.

A typical question is: How do I know my data is secure? But how do you know your data is secure in the on-premise-based world -- other than hiring and maintaining a staff of security experts who need constant training on the latest issues and will eventually quit. Isn't it enough to know that global industry leaders are standardizing on-demand applications?

Face-off: Cons of on-demand CRM

This should give smaller, less powerful organizations assurance that their data is safe. A common belief is: I can't integrate to on-demand systems. Why not? Well-designed, on-demand applications come with open APIs, which are far ahead of APIs that older, premise-based systems provide. On-demand APIs support industry standards, such as Simple Object Access Protocol and XML, and they support programming languages, such as AJAX. Most impressively, on-demand applications support their APIs indefinitely, so the upgrades that typically affect premise-based integrations are nonexistent in the on-demand world.

Another common belief is: On-demand applications lack functionality and aren't flexible. Gartner estimates that more than 50% of software functionality never gets used, so functionality can be overrated. More important, on-demand vendors know exactly what functionality their customers need, because their on-demand infrastructure lets them to monitor use and adoption of every nook and cranny of the application.

Therefore, on-demand vendors can give customers exactly what they'll use. And the term shelfware is no longer relevant. Here's another thing to consider about flexibility: Most changes that are made to on-demand applications are done through very intuitive, point-and-click, configuration screens. There is no need for a computer expert to change the application. And no need to maintain separate development and test environments to roll out those changes. In the premise-based world, these environments are necessary and expensive.

I challenge you to find me an Oracle or Microsoft CRM deployment that doesn't require lots of programming. Another reason on-demand applications are here to stay is that they can launch new applications and new functionality quickly. These are called sprints, and they happen in 30 to 60 to 90 days.

While larger organizations may hold back on the amount of functionality rolled out in a single sprint, the point is that they don't have to wait months and years to go live. They also can learn quickly and continually improve the application. On-demand applications can be configured quickly, and without the cost and expense of traditional client-server-based implementations. The burden is not on making sure requirements are perfectly documented upfront; organizations can quickly model functionality in an application and then decide if it fits the requirement.

Such an iterative approach ensures that users get what they need, because they are seeing an application as a picture -- what we call a working model -- instead of making functional decisions from a pile of documentation. IT and businesses are finally aligned. On-demand applications break down the wall between a CIO's IT department and the business. There is no great technical mystery to application deployments, and smart IT executives work to improve business process, instead of worrying about uptime, storage, security and scalability.

According to a recent Gartner study, eight out of every 10 IT dollars are considered "dead money," meaning that while the spending is keeping the lights on, it isn't directly contributing to business process improvement, helping a company's competitive advantage. On-demand CRM focuses on improving business without the burden of infrastructure. That's no laughing matter.

Berridge is principal and co-founder of Bluewolf, an on-demand enterprise consulting company based in New York.

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