On-premise Vs. Cloud CRM: Which Is the right solution for you?

On-premise vs. cloud CRM is a hyped debate in the corporate world, but if you understand your business, the answer is quite straightforward. Let’s settle it once and for all.


Customer Relationship Management software (CRM) is one of the top three tools for making personal connections with customers, building loyalty, and improving marketing results. 

While 87% of businesses using CRM opt for cloud-based solutions, around 22% of businesses end up switching to different CRM platforms because they find the ones they're using too complicated.

I understand that cloud-based CRM might sound like the best option, but on-premise CRM has its own pros.

So what should you go for between an on-premise vs. cloud CRM? 

On one side, the cloud offers flexibility, scalability, and on-the-go productivity from anywhere with an internet connection. 

But then, there's the familiarity and control of on-premise solutions, where your data is more safe within your own servers. 

Let’s put an end to this CRM dilemma today. 

I’ve put together a detailed, research-backed analysis of:

  1. What is cloud CRM? (It’s pros and cons)
  2. What is on-premise CRM? (It’s pros and cons)
  3. The comparison between Cloud CRM vs. on-premise CRM
  4. And finally, what’s best for your business?

Overview of CRM cloud vs on premise CRM

When comparing cloud CRM vs. on-premise CRM, it's essential to understand their key differences across various aspects. Let's cover them quickly before we go into the details of each. 

cloud vs on premise CRM

What Is cloud based CRM?

cloud based CRM

A cloud is a network of remote servers accessible via the internet. It offers storage and computing power.

Now, cloud based CRM is software that is hosted online and helps businesses manage their interactions with customers. Since it is hosted on the internet, you can directly access it from anywhere with an internet connection. 

Think of cloud CRM like Netflix. Back in the day, you needed a DVD player and DVDs to watch movies at home. Now, you just log in to Netflix and stream any movie you want.

Similarly, with cloud CRM, there's no need for complex installations. You simply sign up online and start using it from any device—be it your desktop, laptop, tablet, or smartphone.

You also don't need a dedicated IT team to manage a CRM on the cloud. The service provider takes care of everything, from server maintenance to software updates. All you have to do is pay a subscription fee.

Cloud CRM services usually have high uptime rates, meaning they are rarely down to interrupt your business operations. 

Cloud CRM providers invest heavily in keeping your data safe. They ensure using firewalls, encryption, and all sorts of fancy security measures to keep prying eyes away.

Here are a few best cloud based CRM systems:

Benefits of cloud CRM

Switching to a cloud-based CRM comes with a ton of benefits that can make managing customer relationships easier and more efficient. Here are some key advantages:

  • Cloud based CRM software can be accessed from any device, anywhere you have an internet connection.
  • The upfront cost is low since there's no need for expensive hardware or software installations.
  • The CRM allows you to add more users or features as your business grows without hassle.
  • You always have the latest features and updates without manual intervention.
  • Team members can share information and work together in real time. Cloud CRM platform improves communication and productivity.
  • Cloud CRMs have advanced security measures implemented by CRM providers to keep your data safe.
  • You can connect your CRM with other tools and services you use, like email and social media platforms. 

Downsides of a cloud CRM platform

While cloud-based CRM systems offer many advantages, they also come with a few drawbacks. Here are some of the major ones:

  • Ongoing Costs: Subscription fees add up over time and may potentially make it more expensive (in some cases) than a one-time purchase of on-premise software.
  • Limited Customization: Cloud CRMs offer fewer customization options compared to on-premise solutions that can be tailored to specific business needs.
  • Vendor Lock-In: Switching to a different CRM provider is challenging and time-consuming, as it involves data migration and potential downtime.
  • Data Privacy Concerns: Storing sensitive customer data on external servers might raise privacy and compliance issues, especially in industries with strict regulations.

This was all about cloud CRM. Now, let’s understand what is on premise CRM and why or why not to consider it.

What is on-premise CRM?

on-premise CRM

An on-premise CRM system helps you manage your relationships and interactions with customers. The difference is It is installed and run on your company's servers and infrastructure. 

This type of CRM offers full control over the system but requires more resources to manage.

Deploying an on-premise CRM involves installing the software on your company's own servers, which is relatively more complex than a cloud-based CRM. This means you need to have the necessary hardware and infrastructure in place before you can get started.

Also, security in an on-premise CRM is largely in your hands. You have full control over your data and can implement your own security measures, such as firewalls, encryption, and access controls. 

It is particularly important for businesses that handle sensitive information and need to comply with strict data protection regulations. 

You need a dedicated IT team to manage and support the system. This includes regular updates, backups, and troubleshooting any issues that arise. 

Unlike cloud-based systems, where the provider handles maintenance, an on-premise CRM requires ongoing attention and resources from your organization. This means more money out of your pocket.

However, one of the key characteristics of an on-premise CRM is the high level of customization it offers. Since the software is hosted on your own servers, you can tailor it extensively to fit your specific business processes and needs. 

It offers a more personalized and integrated solution compared to off-the-shelf cloud-based CRMs. 

Some of the best self hosted CRM systems include:

Benefits of on-premise CRM software

on-premise CRM software

On-premise CRM systems have unique strengths that are particularly appealing to certain businesses. 

Let's explore the key benefits of on premise CRM software: 

  • You have complete control over the CRM system. You can customize it as you want. 
  • After the initial setup and licensing, there are no ongoing subscription fees.
  • On-premise CRMs can be seamlessly integrated with other on-site systems and provide a cohesive business solution.
  • Storing data locally can help meet compliance requirements and ensure data privacy, which is crucial for businesses handling sensitive information.
  • With a self-hosted CRM, you can potentially achieve better performance and faster response times, particularly for large-scale operations.

Downsides of on-premise CRM

Likewise any other solution, there are some potential disadvantages of using an on premise CRM as well. Some of them include: 

  • Higher Initial Costs: On-premise CRM systems require a significant upfront investment in hardware, software licenses, and implementation. Not to mention the fixed costs in terms of employee salaries for self-hosted CRM management.
  • Limited Accessibility: Since the system is hosted on your own servers, accessing it remotely may require additional setup and is less convenient for remote or mobile users.
  • Maintenance Responsibility: Your organization is responsible for maintaining and updating the CRM software. It requires dedicated IT resources and expertise.
  • Scalability Challenges: Scaling up an on-premise CRM may require additional hardware and infrastructure investments. It is a less flexible solution for businesses experiencing rapid growth.
  • Potential Downtime: On-premise systems are susceptible to hardware failures and technical issues, which can lead to downtime and disruptions in business operations.

On-Premise Vs. Cloud CRM: Which one to choose?

When deciding between on-premise vs. cloud CRM, you will need to consider factors such as 

  • Company size
  • Budget
  • Customization requirements
  • Data security needs, etc. 

Heads up: There's no one-size-fits-all answer in the cloud CRM vs. on-premise CRM debate!

Here's a breakdown to help you decide which one is the better fit for your business. 

Cloud CRM

Cloud CRMs are ideal for most businesses, especially startups and small and medium-sized businesses (SMBs). They're affordable, user-friendly, and offer the flexibility to scale alongside your company's growth. 

Here’s when you should go for a cloud CRM: 

  • Easy setup and low maintenance is your priority: Cloud CRMs are ready to use as soon as you sign up. No IT headaches with installation, updates, or server maintenance!
  • You're looking for a cost-effective solution: Cloud CRMs have lower upfront costs compared to on-premise solutions. They also come with predictable monthly fees so your budgeting would be easier.
  • Scalability is important for your growing business: Cloud CRMs are designed to grow with your business. They’re ideal for businesses experiencing rapid growth or prone to seasonal fluctuations. Adding more users or features is a simple process, so you're never stuck with a system that can't keep up. 

On-Premise CRM

On-premise CRMs are a good fit for large companies with the resources to manage them in-house, and a strong need for data control or extensive customization. 

However, when it comes to cloud CRM vs. on-premise CRM, keep in mind the ongoing IT burden.

An on-premise CRM might be the way to go if:

  • You have a large and experienced IT team: On-premise CRMs require in-house IT expertise for installation, maintenance, and updates. So, a dedicated IT team is a must.

  • Data security is your absolute top priority: For industries like finance, legal, and healthcare, having complete control over where your data is stored might be crucial. However, it's important to remember that cloud providers invest heavily in security measures as well.

  • Deep customization is essential: On-premise CRMs offer more flexibility to tailor the software to your exact needs. This can be valuable if your business has very specific workflows or processes. 

Formaloo - The best CRM solution for your business!

Want to build a perfect CRM that aligns with your unique business needs? Look no further than Formaloo's Custom CRM! 

In this debate of on-premise vs. cloud CRM, it does not matter which option you lean towards because Formaloo can help you in both.

Formaloo offers both: Secure cloud storage with granular permission settings and an on-premise option if you prefer to store data on your own servers.

With Formaloo, you can build custom CRMs that seamlessly integrate with your existing workflows and empower your sales, marketing, and customer service teams. 

The platform is easy to use, customizable, and is trusted by leading teams across 30+ countries.

So sign up for free today or contact us to get started. 

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On-premise Vs. Cloud CRM: Which Is the right solution for you?