On Premise CRM Solutions

On-premise CRM solutions involve either software or hardware and software in combination that are purchased outright and installed at the organization's location. Usually they are a software solution that runs on the organization's servers and that can be integrated with existing software to make a more customized solution.

The biggest single advantage for an on-premise CRM solution is that you own it. You own the software, you own the data, you control everything and if it is what you need then theoretically there is nothing else to purchase ever again. But, like with all software, there are licensing issues – and the most important ones are likely to do with support and upgrades. If you will need support, then you can expect to pay for it after an initial period – and it is likely to be costly.
But there are other reasons to go with an on premise solution. One is performance. With a hosted solution you are limited in control over implementation and are limited to the performance you provider can offer. That may not matter for some but if you want to be able to tune your performance and to offer things like virtualization where you might be able to scale dynamically and have much greater performance at certain times of day, for example, then an on premise solution is likely to work better.

Another reason could be regulatory – some organizations require complete and total control of data by federal or industry regulation. The most obvious example is the healthcare industry where patient data is strongly protected by HIPPA. While there are a few hosted solutions that can provide more expensive solutions to control data with proper audit trails, they are less certain, less flexible and could cost more.
Finally, on premise solutions offer the ability to integrate and customize more than even the most flexible hosted solution. If your CRM applications require extreme integration and customization, then an on premise solution may be your only choice.

Advantages 

Many of the advantages of an on premise solution have been covered already. Since it is software that you bring in house and run on your own servers, you have full control. You can choose the level of installation, the amount of integration and customization and you control the software itself and the data on your own servers. This means that you can do more customization and integration, making for a potentially more effective solution. If you already use software from a suite provider of on premise solutions then the integration may already be done and be very tightly coupled.
However, you will have higher initial costs for purchase of software and hardware, higher installation costs and possibly higher maintenance costs. You may be slower to receive upgrades if you choose not to upgrade you core software as often (at an additional cost). And you are tied more tightly in to the solution you choose so your decision must be a good one.

Cost 

The initial cost of an on premise solution depends on the needed hardware and software. While there are technically 'free' open source solutions, they still require adequate hardware and integration so they are not truly free. A typical initial cost will be at least a couple of thousand dollars and could go as high as tens of thousands of dollars. On the other hand there are no additional costs later apart from maintenance – which is not inconsiderable but could work out as a cost benefit over time versus a hosted solution for a large enterprise.