CRM Online vs. On-Premise -The Choice is Yours

Louise Alderton, 29 March 2011

In my last few blog posts I have reviewed questions posed to Microsoft Dynamic CRM General Manager, Brad Wilson from a recent interview conducted by Software Advice. These questions covered trends in the CRM software industry, Microsoft’s competitive pricing strategy for Dynamics CRM 2011 and challenges Microsoft partners can expect to face in the cloud era. Now I will move on to the next question in this interview around the choice of deployment model, cloud or on-premise, available for customers.

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Microsoft Dynamics CRM offers a ‘Dual-Deployment Model’ where you can choose to deploy you Dynamics CRM application either in the cloud or on-premise. As the ‘Cloud’ increases its awareness and popularity more and more customers are choosing to migrate towards this offering while others still rely on traditional on-premise deployments.

 “Currently, what percentage of customers choose the cloud model for their CRM deployment?”

Microsoft don’t break out specifics in this area but Gartner or Forrester and other research organisations would tell you that probably about between 20- 30 per cent of business in the CRM category is in cloud delivered applications today.

“How do you think this will change in the next 5 to 10 years?”

Over time there will be increasing Software as a Service (SaaS) or Cloud penetration in all segments of the business. For small businesses especially they’re less apt to build and run IT assets internally and so will lean toward consuming CRM as a utility, as a cloud-based service. At the other end with enterprise or large organisation you are more likely to see people deploying on-premise because they have competence in running IT at scale. However, this is likely to shift. As the cloud applications increase in awareness and popularity organisations will be more comfortable with the idea and may look to the switch.

Microsoft’s strategy is to make sure that everyone can engage first through a cloud delivered product. It’s simply the fastest and easiest way to try the product. Partners are encouraged to get customers to go online first and then once they have experienced the benefit of it they can then choose whether cloud or on-premise will suit them best. Microsoft Dynamics CRM online or on-premise are essentially the same product, the same code-base so any investments a customer makes in customising and tailoring the product can accrue to any deployment model they want.

“As the customer moves from one model to the other, is one path easier than the other?”

It’s really not much different, because it is the same code-base, the same configuration model, the same APIs. However, it’s probably most natural for people to go ahead and start in the cloud because the service is already running, it’s already there for you and then from there you can make the choice to what is best suited to your organisation.

 “How does the pricing differ in the cloud vs. on-premise?”

In an on-premise we have a traditional perpetual license and then on-going software assurance. You are purchasing the software and having a price for us to provide the upgrade support and so forth. In the cloud it’s subscription pricing from the get-go. Based on a user-subscription license, where you’re not buying the software upfront you are consuming a service and paying for it as you use it.

You can check out the video in full here.

* Image from http://www-psych.stanford.edu/~mcslab/about-research.php