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How to Choose Between Open Source and On-Demand CRM

With today’s ultra competitive business environment, companies who want to make it on top are making it mandatory for Customer Relationship Management (CRM) programs to be implemented and embraced by their employees. With such multitude of companies spread across different industries however, how do you exactly decide which CRM system to go for or not? Do you go for the most expensive system that is available out there or do you go for the one that was endorsed by some of your friends in the industry?

Obviously there would be a lot of factors that would come into play in your decision as this is easily one of the bigger expenses that your company is likely to take for quite some time, especially if you are a small to medium-sized enterprise. Not to mention the fact that you would have to sell the idea of CRM to your employees mostly with the help of this technology so that they would understand it thoroughly and embrace it with all their heart.

Basically, there are two options that are available. These are:

  1. Open Source CRM and
  2. On-demand or Hosted CRM.

Basically, the Open Source CRM is a ready-made generic program which can be trimmed and modified to fit the specific requirements of your company, while the On-demand or Hosted CRM is a web-based CRM program which can be specifically customized for your company via a remote host running a centralized CRM provider.

A third variety that’s actually becoming quite popular recently is the Open Source Hosted CRM which marries the benefits of both systems; however that would be a topic for another article.

Both systems are capable of delivering the basic necessities of what a CRM program is supposed to accomplish such as storing and integrating all relevant customer information such as names, contact particulars, customer preferences, sales histories, among other things. Both are also capable of accomplishing multiple tasks simultaneously such as collaborative selling across multiple channels, sales automation, tracking, and migration of various data, client lifecycle marketing, among others.

Open Source CRM is usually applicable to a broader range of various industry applications as most conceivable CRM-related application is already incorporated in there. Larger companies which have their own in-house IT personnel will have no concern about using this system as they have the capability to modify the program until it fits their exact requirements. This in-house IT capability will also allow them to constantly revisit and fine tune the system several times over until they perfect it. For smaller companies however which doesn’t have the capability or the means to hire their own in-house IT staff for maintenance and support, they will prefer to have this program pre-customized to their exact needs. The main disadvantage of the Open Source CRM system however is the higher initial cost that is associated with it.

On the other hand, this is exactly the main advantage of the On-Demand CRM system: low capital investment. In addition, since it is essentially a web-based system other benefits include the following:

  • No need to install and maintain the CRM system on site
  • It’s more mobile since you can access the data anytime, anywhere
  • Modularity – meaning you don’t have to purchase things in a bundle and then end up with a bunch of functionalities that you don’t really need but have to pay for anyway
  • They have affordable and flexible monthly charges
  • They are maintained by experienced professionals specializing in the CRM industry    


Jacob Jackson works for one of the leading developers of online CRM - WebCRM. He also blogs a lot about this topic at the official WebCRM Blog.