OK, this is really unscientific and based mostly on my years of experience in the CRM world, some data I’ve skimmed through, a few choice Twitter interactions, and gut intuition…but I think it’s pretty accurate in some way. Basically, I believe that not only is on-premise software alive and well (SugarCRM being a great example) but that also in the SMB space, there are at least four distinct reasons why organizations do not purchase and deploy SaaS solutions for their CRM initiative.
In a recent survey (actually compiled for a downmarket competitor) only 9% of the SMBs surveyed claimed that they absolutely knew what SaaS meant as a term. That’s not a great number. And even if you know what it is, it doesn’t mean that you’re gonna buy it. I would argue that depending on who gets there first in terms of a direct SaaS vendor, or on-premise channel partner – the SMB decision maker just wants something that works. The opportunity in this set is wide open.
Even some small businesses have cultivated a model for their IT procurement and management – and SaaS may or may not fit in to the mix. I would argue that if a small business has any policy in place – it lends towards opting for more control over the IT assets – which can leave SaaS out in the cold sometimes.
3. Technology Shortcomings
Similar to the above point – sometimes SaaS will not suffice even for very small businesses. Some SaaS solutions that are more point products (just SFA or a customer service/email management tool) cannot handle the types of integration needs of more complex small businesses (and we’ve all learned that many small businesses’ IT stacks are just as complex as Fortune 500 companies) or are simply lack the customization capabilities of a premises-based solution.
4. Regulatory/External Issues
Some SMBs in various geographies and industries are held to external regulatory concerns and mandates. For example, in some industries where they tend to deal with highly sensitive customer data (health records, financial data) it is difficult to get around mandates concerning privacy and security if you have data flowing in and out of your firewall. Many SaaS products are more secure than on-premises solutions one could argue, but at times the stigma around SaaS has yet to be dismissed, and the buying decision follows as such.
So, that’s just four reasons why – in the SMB space at least (and I’m sure a lot of these are mirrored up market) – on site software will never go away.
I think a lot of CRM vendors got too caught up in the SaaS hype, believing the marketing buzz of competitors and the hollow predictions of analysts. True, SaaS is a huge growth area and one that even SugarCRM takes very seriously. But in the end, customer choice and customer success should be the real focus, not where the CRM app and data reside.