The Disadvantages of On-Demand CRM

Updated July 20, 2017

Software as a service (SaaS) is a popular topic nowadays, which has evolved over the past 15 years. The On-demand model has been adopted by Customer Relationship Management (CRM) vendors, who see numerous benefits from this model; however, drawbacks to On-demand CRM cannot be completely ignored. On-demand CRM has gone through several phases, which include the Applications Service Providers (ASP) model, multitenant SaaS model and Multi-Instance On-Demand Applications.

Disadvantages of the ASP Model

This model started in the mid-1990s where these providers were basically middlemen who cooperated with software vendors such as SAP. These ASPs purchased many software licenses and offered services to users based on volume pricing. As it was the first generation of On-demand software, it had many advantages. First, every user needed his own full instance of the application hosted for him. Second, the ASP software couldn’t be customised according to users’ specific requirements.

Disadvantages of the Multitenancy Model

In this model, multiple users can access the same superset of an application instead of each user using a full instance. Software vendors such as actually build and provide multitenant SaaS applications. The limits of this model include little control over the application for users, limited customisation, data security problems and downtime issues. This solution has attracted small businesses but is not effective enough for enterprise use.

Disadvantages of the Multi-Instance Model

The development of open source software and deceased server software costs has opened up new avenues for software vendors. Companies don’t have to depend on proprietary databases and servers from Oracle or IBM to run their infrastructure. On-demand CRM compared with the on-premise model still has many disadvantages. On-demand solutions have drawbacks in their customisation, for instance, and they cannot offer effective solutions where custom screens, tabs and entities are required to be built from the beginning. Owing to security concerns, customisation ability of the On-demand model is restricted to a codeless basis. On-demand solutions don’t require upfront hardware and software costs; however, they can cause higher costs when considering the two solutions over the long term.

Incremental Costs of On-demand Solutions

Incremental costs can be applicable with On-demand CRM in the event of additional storage or backing-up of data. Although CRM is provided and delivered through the web it doesn’t exclude the requirement to maintain IT resources for enhancements and administration. These costs should also be considered when deploying an On-demand model.

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About the Author

Suqing Wang started writing professionally in 2008. Her writing expertise is in education and information technology. Wang's articles have appeared in "The Engineering of Computers" and in various online publications. She has spent many years lecturing on information technology. Wang earned a Master of Engineering in computing from Shandong University in China.