CLOUD VS ON-PREM

comfort of the existing solution, while others will struggle to

the potential of the new tool and result in a wasted investment.

Whilst subject of much historical debate, there is no question that the argument is still raging regarding Cloud versus On-Premise CRM. Rather than being biased in any one direction, unlike other Cloud only CRM providers, Microsoft provide customers with a definite choice and this really does and should matter. The most important thing when making a comparison is to weigh up the Pros and Cons for each argument depending on a customer’s specific needs. This means far more than basing the outcome on the most often overused pricing comparison argument, an all too common approach.

Cloud may well be seen as the modern option, with an ever increasing number of customers opting for Microsoft’s online CRM service, however On-Premise CRM may still offer some customers the ideal fit. In this whitepaper we are going to provide the major factors to consider when making the comparison. We certainly won’t be telling you which way to go as this is subjective and needs careful assessment,which we’ll be pleased to help you with of course - just ask!

INTRODUCTION

DATA SECURITYIt has long been considered by many industry “experts” that Cloud CRM was not as secure as On-Premise. This argument lingers on and perhaps it will always be subject to opinion, however today’s Dynamics CRM online solution is trusted by Government, Security Services, Intelligence Agencies and a great many Banking and Financial organisations, all of whom demand that CRM meets many international and industry specific compliance standards which include; ISO/IEC 27001, ISO/IEC 27018, FedRAMP and SOC 1 and SOC 2 Type 2 Reporting.

Of course the type of data you wish to store will affect compliance and the constraint demanded by legislation. With a dedicated UK data centre arriving later this year, Microsoft will further attract new Cloud customers who will be able to meet their legislative obligations and deploy a Cloud based CRM solution. So can it really be argued that Cloud is not as secure or lacks what’s offered by using On-Premise deployment? Well frankly, it’s not that clear cut, especially given Microsoft’s huge investment in the Cloud and the determination to make CRM highly secure. In the respect of On-Premise, all security measures and policies need to be defined, managed and financed by the customer internally. Customers need to invest in expertise to deploy CRM’s security and to manage and maintain it. However safe and secure any customers’ server infrastructure is, the fact remains that access to CRM is completely the customers’ responsibility. Some will see this as a good thing, others who might question internal policy or capability, may not.

HARDWARE & AVAILABILITYEnsuring the availability of CRM is usually a highly critical consideration. Failure to be able to access CRM (even for a few moments) can have a very negative effect on any business who are reliant on it to process and manage business transactions. Traditionally CRM’s availability has always been subject to the reliability provided by an On-Premise server deployment, which if configured correctly and optimally will require a backup, failover and disaster recovery procedures to be in place along with separate Test and Development environments. This will add to the cost of setting up an On-Premise solution from both a hardware and software licensing perspective. On-Premise CRM will require ongoing infrastructure management and maintenance (patching and updating) as and when software fixes and updates become available. Overall any On-Premise deployment needs to factor in the real costs of not only providing and maintaining hardware and but also the potential cost of any loss if any outage is suffered.

For many organisations the decision to adopt Cloud becomes very simple should they either not have adequate hardware infrastructure or any desire to purchase it. Microsoft Dynamics CRM Online eliminates any infrastructure spend as everything is provided for customers using Microsoft’s Cloud services. Backups are taken care of as part of the service and there is no need for failover or disaster recovery as Microsoft ensures this is never an issue. Patches and updates are automatically applied by Microsoft without any interruption to the service. Microsoft Dynamics CRM Online offers high availability backed by an industry leading 99.9% financially backed SLA. So when making a comparison, Cloud CRM offers very low upfront costs and eliminates any ongoing costs to manage infrastructure. It’s 99.9% high availability offers a level of service which many On-Premise deployments may struggle to compete with.

Overall it comes down to a combination of factors when making a comparison between Cloud and On-Premise. If organisations already have highly robust and reliable server infrastructure and the management in place to take care of the maintenance, backup and failover, then On-Premise might be the best route. If, however the cost of infrastructure and providing regular maintenance is considered too high, then Cloud will be a much preferred option.

STORAGEGiven the ever reducing cost of storage, it will not play a huge factor in the decision making process unless the volumes of data to be used is expected to be significant.

Dynamics CRM online comes with 5 GB of storage at no additional charge per tenant. Additional storage capacity is granted at no charge as an organisation increases the number of Professional User Licenses. For every increment of 20 Professional USLs, the included storage capacity increases by 2.5 GB up to a maximum of 50 GB. 100 Users will therefore be entitled to 15 GB of storage without additional charges being applied. Additional storage is then costed @ £2.50 per GB per month up to 5000 GB per subscription.

Depending on the local infrastructure investment already made and ongoing agreements with 3rd party suppliers, local storage may be a very inexpensive option. But consideration should be given due to the fact that this technology will need to be refreshed at some point in the future but this will be a shared cost across the users of this infrastructure.

Creative solutions are available for alternative storage to CRM on the O365 platform such as moving email attachments and other large files from CRM to SharePoint where storage costs are significantly lower than CRM. Or even a hybrid Cloud solution could be suitable where the local storage investment can be utilised and accessed by building appropriate integration.

At time of writing there is also another limitation preventing the copy (full or minimal) function in instances that have more than 100 GB of storage, meaning that restoration instances from these environments need to be done in a manual way. If On-Premise the import database function can be used to copy environments regardless of size.

INTEGRATION SUPPORTCRM integration with back-office systems has always been considered easier with On-Premise and far more complicated with the Cloud based offering. The question that we are often asked is “Why would we want to build complex integration pieces in the Cloud when we can integrate directly with the backend data using On-Premise CRM?” In many ways this question still holds true with the current Dynamics model until you start looking at the many integration solutions offered by 3rd party providers. There are some great offerings from the likes of Scribe and Kingsway which simplify the process of moving data in and out of the Cloud, suddenly migrations are simplified. These solutions also open up many other possibilities including integration with backend reporting solutions (removing the need for FetchXML only reports).

Microsoft’s Adxstudio brings portals into the mix, so you no longer need an expensive development team to build a customer portal (and maintain it), you can do it yourself from a point and click interface. If no third-party solutions are available in order to meet your integration needs, then the comprehensive web services API allows a development team to build that final piece of integration functionality. Microsoft are expanding the functions available all the time, and to date provide a rich interface platform using standard technologies.

The decision of going On-Premise because of a need to integrate with back end systems no longer holds as much sway as it used to now that integration is easily achievable with a Cloud based CRM deployment.

CRM integration with back-office systems has always been considered easier with On-Premise and far more complicated with the Cloud based offering. The question that we are often asked is “Why would we want to build complex integration pieces in the Cloud when we can integrate directly with the backend data using On-Premise CRM?” In many ways this question still holds true with the current Dynamics model until you start looking at the many integration solutions offered by 3rd party providers. There are some great offerings from the likes of Scribe and Kingsway which simplify the process of moving data in and out of the Cloud, suddenly migrations are simplified. These solutions also open up many other possibilities including integration with backend reporting solutions (removing the need for FetchXML only reports).

Microsoft’s Adxstudio brings portals into the mix, so you no longer need an expensive development team to build a customer portal (and maintain it), you can do it yourself from a point and click interface. If no third-party solutions are available in order to meet your integration needs, then the comprehensive web services API allows a development team to build that final piece of integration functionality. Microsoft are expanding the functions available all the time, and to date provide a rich interface platform using standard technologies.

The decision of going On-Premise because of a need to integrate with back end systems no longer holds as much sway as it used to now that integration is easily achievable with a Cloud based CRM deployment.

VERSIONS & FUNCTIONALITYWhilst Dynamics CRM’s core functionality is typically much the same for both Cloud and On-Premise deployments, it should be recognised that Microsoft’s focus is Cloud-First. This means Cloud CRM customers will benefit from regular new and improved functionality being released, which is typically made available way ahead of those using On-Premise CRM, often by several months. So this means the “latest and greatest” won’t be available for On-Premise customers, this includes the recent Microsoft acquisitions from Adxstudio (Portals), FieldOne (Field Service Management) and Fantasy Sales Team (Sales Gamification). Unlike Cloud, On-Premise customers also need to consider the cost of purchasing additional licensing to support the use of some of Dynamics CRM add-on products. In the case of On-Premise, customers who want the use of Microsoft Dynamics Marketing (MDM) will have to purchase Azure Cloud Computing Services which are included to Cloud CRM customers as part of the subscription charges.

When upgrading CRM, the process is very different when comparing Cloud to On-Premise. Firstly, Microsoft take care of the upgrade process for Cloud customers and the entire process happens typically without any business impact. Customers are offered dates for upgrades which they can defer for a period of time before eventually being forced to upgrade. Given the constant improvements to functionality there is no real argument to defer the upgrade at all. The great thing about Cloud is that things are taken care of and any upgrade is an incredibly easy experience. The other major benefit for Cloud is that customers will always be up to date with the very latest version and the functionality it contains.

On-Premise is a very different experience altogether. The first step is for a customer to understand what version they are entitled to upgrade to. Providing they have maintained their Enhancement Plan (Software Assurance) cover they will be entitled to upgrade to whatever the latest release of On-Premise version is. Should customer’s enhancement plan have lapsed, they may not be entitled to any upgrade at all or may only be entitled to older version updates that were covered by their now expired enhancement plan. Depending on which version is currently in use, customers may also have to upgrade to a newer version following a step change path, going through a series of previous versions before arriving at the latest version release required. This can often be a highly complex procedure requiring a great deal of effort, potentially additional infrastructure and much patience. Sometimes it really can be easier to start over, making use of the latest functionality using a “clean” build and a migration plan, rather than the attempt to shoe horn an outdated design into the newest version.

When comparing upgrades it is worth noting that On-Premise customers can of course choose when they want to upgrade – it’s not Microsoft’s decision. These customers will never be forced to upgrade at any point in time and they can even choose to continue to use CRM after their version is unsupported by Microsoft. Whilst CPS would not recommend any customer relies on an unsupported CRM system, the simple truth is they can if they want to…it’s their choice!

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Let talk about costs, after all that’s the biggest consideration when making a comparison. For Cloud CRM it’s really simple; you decide what licenses you need, how many you need and then simply subscribe to pay per month per user (subject to an initial 12-month contract). Typically, the cost of a monthly subscription based on a “Professional” user license is around £40 per month, with lower pricing available for existing Office365 customers.

On-Premise licensing involves purchasing both user licenses and also a server license. In order to make a comparison it is easier to provide total costs based on an example. Let’s look at the totals based on a 30 user requirement (Professional CRM) over a 3-year period.This is assuming CRM customers have no prior agreement with Microsoft and purchase via On-Premise licensing under an Open Licensing agreement with 3-year enhancement plan included.

Any purchase of On-Premise CRM provides a perpetual license; meaning customers own the CRM licensing and can use it on an ongoing basis. Software assurance is typically charged at 16% per year and can be renewed annually at the end of the initial period of cover if required. This will enable On-Premise customers to upgrade without additional licensing costs being levied. The costs above for On-Premise CRM do not include any infrastructure costs, licensing for SQL database and any additional licensing costs for non-production environments, the cost of maintenance or any upgrade services that may be required. Online CRM costs on the other hand cover everything, including version upgrades, a non-production instance, backup and disaster recovery etc., so the total cost is much easier to calculate based on known factors. How much it costs to maintain On-Premise CRM is open to much debate and as such, in reality, is a much harder cost to quantify.

LICENSING

DURATIONON-PREMISE

CUMULATIVE COSTCLOUD

CUMULATIVE COST

12 Months

24 Months

36 Months

£52,672

£52,672

£52,672

£14,580

£29,160

£43,740

https://www.microsoft.com/en-gb/dynamics/crm-purchase-online.aspx

CONCLUSIONThere is no hard and fast right or wrong answer when attempting to address the common question of whether CRM Online or On-Premise is best. As you will have read there are a number of factors which will determine the outcome and any decision. The most important thing to consider is which of these factors relate to you and your specific circumstance and which solution is best suited to the needs of the business, right now and tomorrow. If you have invested in new infrastructure, have the people and skills to manage business applications and are not concerned about keeping up to date with the latest version available, then On-Premise might make a lot of sense, especially if your capital budget spend is greater than your operational expenditure. If, however you want to reduce capital costs, prefer a fixed monthly cost, wish to eliminate the overhead (and perhaps headache) of managing applications and would prefer stress and cost free upgrades, then CRM Online is the most obvious choice.

CPS are well placed to help you to determine what option best suits your business needs. We offer a range of services to support and guide customers throughout the CRM implementation and in addition provide a range of ongoing training and support services. Not only can we help you implement CRM, we can also help you to manage the change that this solution will bring about. As a fully accredited Prosci Change Management practitioner and Microsoft Gold partner, it is our job to ensure that the single most important CRM factor is realised; this is to ensure any investment in Dynamics CRM, whether Cloud or On-Premise, is a very successful one!

About the Author

Mike Spink

With over two decades of experience in his field, Mike takes great pride in providing clients with solutions that make significant improvements to the

effectiveness and ultimately the success of their organisation.

+44 (0)1628 895600

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