Yes, you do want to get intimate with your customers

We all know customers are in high demand today, and retaining them even more so. The current cost-cutting culture makes this an interesting challenge as managers call for customer service with all the frills and bows, and then give you a shoestring budget on which to deliver it.

So, if the key in differentiating your company lies with the way you treat your customers and the effectiveness in which you deliver services, why is it that so many companies still don't understand their customers? Equally gloomy is that lots of companies today still don't see the value in a customer relationship management (CRM) system - we know, for example, that many still only use CRM solutions to give them an updated customer information database.

For all companies today, no matter which sector you operate in, the deployment of a fully integrated CRM solution is critical. CRM solutions not only ensure you get a complete view of your customers, but also assist you in disseminating that data across the entire organisation. These solutions can be customised to your specific business so you can better utilise the data and better cater to customers' specific needs.

Both hosted and on-premise CRM offer the same functionality, but with customisation and implementation differences, both offer important benefits. Choosing the right time to do this is important and can be determined by external factors such as your IT skill and resources available. For example, if you are creating a new post to manage the CRM software, this would then be the right time to migrate from a hosted to an on-premise solution. If your company is large enough to have a substantial IT department/infrastructure already in place, this makes an easy argument in opting for the on-premise solution. When viewed beyond the near-term then on-premise makes perfect sense.

Lower cost is perceived to be one of the most obvious advantages of an on-demand solution, commonly known as software as a service (SaaS). However, don't assume that on-demand software will always provide a lower total cost of ownership (TCO) than on-premise. Customisation and integration requirements, for example, can have a significant impact on the TCO of certain SaaS solutions.

A SaaS solution usually provides a lower TCO over a two-year period. However, the total cost associated with the solution will increase at a faster rate than that of the on-premise deployment. By the third year of implementation, the hosted will become evidently more expensive. Over a five-year period, the hosted deployment is approximately 56% more costly than the on-premise solution, which clearly must be taken into consideration when making your choice. It is important to note that, depending on the software used, it may be possible to migrate from SaaS to on-premise. The process should be a simple one, and this is worth checking when making your choice.

The best advice is to evaluate SaaS and on-premise options carefully from a medium- to long-term perspective, conducting a detailed analysis of all costs associated with both. As with on-premise solutions, feature sets and product capabilities vary significantly between on-demand providers, and it is therefore important to make a like-for-like comparison. I've seen companies go for the low-cost option and then end up losing core areas of functionality or limiting product capabilities unnecessarily.

Assess the process requirements of your organisation. Are your needs simple or complex? How will you be using CRM? Will you be using it for your sales team to maintain customer information, for e-mailing purposes, or will your marketing team be using the system to develop long-term strategies?

With on-premise, you have the benefits of full customisation and upgrade options, which will allow you to select each module on a bespoke basis. You can then integrate this across your entire business structure according to your unique requirements. If you work in a highly regulated or technical industry, such as pharmaceutical, manufacturing or retail, then a generic CRM solution, as you would get with SaaS, would not lend itself to your specific needs.

I don't view SaaS as a product, but a whole new way of thinking. It is a software delivery method, which allows us to deliver parts of our business as a service, like e-marketing, for example, where the delivery of e-mails is done via a SaaS model with an in-house CRM system. If implemented as part of an application strategy, SaaS allows you to bring products and services to market faster, improve communications with business partners, transform information flow within organisations and create unprecedented flexibility in application deployment and customisation.

But, SaaS isn't for everyone, so make sure you do your homework and know what you want. SMEs in particular should focus on their business requirements, both in terms of scale and complexity, over the long-term.