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On-demand CRM -- benefits and drawbacks

SearchCRM.com's SAP CRM expert analyzes SAP's commitment to the on-demand market and discusses tech-savvy users and the potential for on-demand software that meets user needs more quickly, especially for small and midsized businesses.

In my opinion, the jury is still very much out on whether companies like SAP, Oracle and Microsoft, which have always sold on-premise software, really understand and are committed to the on-demand CRM model. I'm also wondering if critical and complex CRM environments can be run on an on-demand platform. What is your take on this?
Information technology is currently entering a Web 2.0 phase. Most users have already learned how to use browser-based software applications. Proprietary user interfaces involve steep learning costs, and the corporate mantra is to cut costs to improve bottom lines. Companies can't afford to loose sales revenue anymore by letting the sales force, helpdesk employees or service personnel spend weeks learning a new application interface. Businesses are fast evolving and changing, and software applications or enhancements traditionally lag behind the business application changes. Companies can't afford misalignment or so called "gaps" between the business systems and software application for a very long time. For all of these reasons, the software industry is looking at cutting implementation time lines of packaged software.

On-demand CRM is a great opportunity for software companies to come closer to business expectations in terms of cutting downtime and deploying applications rapidly. On demand is a big, growing market, especially for small and midsized businesses (SMB). At the same time, most critical and complex CRM environments can't be run on an on-demand platform. The shift is towards on demand when it comes to quick implementations and easy-to-use CRM applications that are not critical to the business.

Overall, on premise CRM isn't going anywhere. The direction is towards a hybrid model, where on premise and on demand are blended to provide cost-effective CRM solutions.

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