In order to achieve the same benefits from CRM as large enterprises, small businesses can employ a cloud strategy to gain all the operational and short-term cost advantages of SaaS (Software as a Service) CRM, and additional benefits available only through the cloud.

Analysis

Everyone’s raving about CRM in the cloud these days, but the lofty talk is really about servers on the ground and services on the Web. Initially, it was a rent-versus-own argument. There are pros and cons to both approaches, but when it comes to rescuing small businesses from a recession-made dry spell, the cloud is almost always the rainmaker’s choice — and the cheaper price tag is not the top reason.

The most notable tick on the pros side of CRM in the cloud is price, and that affordability has everything to do with ditching hardware. “Cloud computing is a relatively new term referring to scalable, virtualized computing resources available on the Internet,” explained Preston Lee, CEO of OpenRain, a Web 2.0 development and design firm. “Vendors take large servers and run many self-encapsulated 'virtual' servers on top, renting or leasing each. Since many cloud-based services, such as servers, can be allocated, decommissioned and upgraded on demand, small businesses often look to the cloud to save money on otherwise costly hardware.”

However, price is no longer the sole attraction. “An often-missed aspect of the cloud is that it provides more than just elastic infrastructure with a shared-cost model,” said Miko Matsumura, vice president and chief strategist at Software AG. “Advances in social CRM and social BPM are leveraging the network in ways that impact the top line as well as the bottom line."

Freedom from responsibility for backup, physical security of the computing infrastructure and other hardware-related concerns has long been used as selling points by SaaS CRM vendors. The cloud offers similar benefits, but it also promises new capabilities, said Michael Salsburg, a distinguished engineer for Unisys and a member of the Computer Measurement Group, a non-profit, worldwide organization of IT professionals.

How does this translate into value for small businesses? According to Salsburg, cloud computing has three key benefits for SMBs (small to medium-size businesses):

Elasticity: Resources can be provisioned and de-provisioned in real time to meet workload demands.
Utility: Resource usage is provided on a pay-as-you-go basis, as opposed to the traditional approach of incurring the upfront capital expenses and ongoing operational expenses, even if the resources are under-utilized.
Ubiquity: Services from the cloud are available from the Web, enabling user interfaces that go beyond traditional workstations and include cell phones and other appliances.

In order to compete with very large enterprises, CRM for small businesses would require a major investment in fixed capital costs (servers, storage, networking components) as well as operational costs (administrators for various software components, operating systems, databases, secure configurations and processes, etc.).

A cloud-based approach can level the playing field for small businesses, Salsburg said, “much in the same way that eBay levels the playing field between cottage industries and major vendors.”

There’s another important aspect to leverage: linking disparate CRM components.

“Many companies do not have a single solution for call center, campaign management, list management, analytics/data mining, Web personalization, e-commerce transaction management and email,” explained Justin Honaman, a strategic business process and technology professional and author of "Make It Happen! Live Out Your Personal Brand." “A benefit of using the cloud as an architecture concept is that you can link disparate systems together to essentially create an integrated CRM solution in the cloud. Many companies are using the cloud concept to pull together information that drives their business decisions.”

Recommendations

Much like the concept of SaaS, cloud computing is more of a delivery approach than a CRM-specific approach, so the decision to go with it instead of another delivery model is one that requires some IT input. If you don’t have an IT department, you’ll need to fully understand cloud computing in order to make the decision to use it. Focus' “Cloud Computing 101” provides a useful place to start learning about the concept.

Using the cloud is not for everyone, but companies that are comfortable with it can find themselves with a better integrated CRM solution while at the same time dodging the hassles of dedicated in-house infrastructure. It could also make the initial investment in CRM easier.

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