I read an interesting report from CSO Insights. The report is a study on premise-based CRM products (e.g., Siebel, Oracle) as compared to on-demand CRM products (e.g., Salesforce.com, netSuite). The result of the study shows that on-demand customers have higher satisfaction ratings, did better on budget, and had dramatically shorter implementation times.

I find this interesting because the initial assumption could be that on-demand is better than on-premise implementations. I don't think that's a fair assumption, though. I think there's an "apples-and-oranges" thing going on here.

I think that on-demand customers are different from premise-based customers, in several key areas:

  1. On-demand customers have lower customization needs. They can work with a more "vanilla" product.
  2. On-demand customers have fewer in-house technical resources.
  3. On-demand customers know that they have to give up some long-held processes in order to better conform to the on-demand product.

On the flip-side, premise-based customers probably want more control over the application, want to customize it to their needs, and may perceive that on-demand products do not provide enough flexibility or control. So in the end, these are two different types of customers.

So what does this have to do with the AMS world? Well some of the vendors (e.g., Avectra, ARC Solutions, Affiniscape) are offering on-demand products. And they're pretty slick. But I also think they are not appropriate for all organizations. You have to really know what you're getting into, and what you're willing to give up, when you commit to these products.