How to overcome the obstacles surrounding cloud-based CRM

Cloud computing has created something of a golden age for CRM. Never before has CRM been so accessible to so many businesses – especially a smaller business that, in the past, lacked the resources needed to implement it.

While this accessibility should be celebrated, there is also reason for caution. The cloud is a new phenomenon and not all of its pitfalls are well known- especially to the line of business people who typically make decisions about CRM.

The first is a very basic failure to understand what the cloud is really about. Because of the many competing messages marketers have been floating in the recent past in order to attach their products to the trendy terminology, you could excuse a businessman for thinking the cloud was a piece of hardware, or a Software as a Service (SaaS) product.

In reality, it is neither; the cloud is a global, distributed and virtualized computing ecosystem and the software optimized to take advantage of it. Hardware, software and the underlying transmission infrastructure all play roles.

Failing to understand that may saddle you with a last-generation SaaS-based solution that doesn’t deliver the near-term savings a cloud-based solution can provide. Those vendors built their own datacenters and still must manage them; this overhead is reflected in their prices. Without understanding the cloud, you could find yourself thinking that your CRM was cloud-based when in reality it was not.

Marketing issues aside, there are two other concerns that you should keep in mind when deciding whether to take your CRM to the cloud. First, you need to understand the privacy laws surrounding customer data in the country or countries in which your business operates. Some nations forbid the storage of customer data – or some specific types of customer data – outside their borders.

This can make using the cloud for CRM illegal if it is not approached correctly. In regions like South America, it can be especially frustrating; a company operating in three countries that share similar cultures and the same language can find itself dealing with three sets of laws regarding data storage and privacy.

This obstacle is not impossible to overcome. First, you must learn the laws of the countries in which you operate. Then, you need to work with your IT department (or a consultant experienced with your region) to develop a strategy for using the cloud without infringing upon those laws.

“Private clouds” can be used in conjunction with public cloud computing to keep data within the boundaries of the law. A private cloud is a virtualized data center that resides within your company’s firewall, or it’s a private space dedicated to your company’s data within a cloud provider’s data center.

Whatever the case may be, it can isolate and control data so that its physical storage is not outside of national borders, yet it can be accessed in the same manner as any cloud computing data.

The other issue that can impact a cloud CRM implementation is budget. While the cloud minimizes up-front costs and allows small businesses to embark on CRM efforts without serious financial strain, there is a point – two to three years from the start of the engagement – when the amortized cost of an on-premise solution drops below the monthly fee charged for a cloud-based solution.

When that happens, there can be a perception within the business that you’re paying too much for CRM. In reality, the conveniences provided by the cloud – offloaded security and back-up duties, reduced IT staff overhead and hardware costs, and even real estate savings thanks to the lack of a need for a datacenter – are appealing even to large businesses.

But some businesses will want to migrate to an on-premise solution sometime in the future. The answer to this is to look to vendors who have both cloud and on-premise versions, preferably those who can already articulate the process for migrating from one to the other.

These concerns are business, legal and IT concerns – and, if handled appropriately, they will never impact your customers’ experience with your business. As with all CRM implementations, developing a strategy that takes into mind your business’s unique needs, processes and goals before you make any technology decisions is vital for success with cloud-based CRM.

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With 17 years as a technology and business under his belt, Chris Bucholtz took over the role of editor in chief of the CRM Outsiders blog in 2011. He first focused on customer relationship management as the editor of InsideCRM, then moved to Forecasting Clouds in 2009 to continue honing his views on how the discipline of CRM can impact the entire business. Before developing into a CRM influencer, Chris covered a variety of technology-related topics. He was the editor of Semiconductor Manufacturing Magazine, senior editor of technology for VAR Business, senior editor at HP World and intelligence and software editor for Telephony. After a six-year stint in the U.S. Navy, his start in journalism came as a rock columnist for BAM Magazine. In addition to his business and technology writing, Chris has written three books on World War II aviation. An avid scale modeller, Chris and his wife live in Alameda, California.

  • Great post. Amongst so much bandwagon jumping and sales patter about the new golden age of CRM being created by the cloud it’s good to see someone bringing it all back down to earth with a little reality, especially with the privacy laws. This could potentially be a big spanner in the works for the multinationals or indeed any business that deals with customers internationally.

    Some interesting things to think about.