Should you buy your own CRM software or pay someone else to host it for you? There’s no right answer, of course, because it depends on many different factors. But one smart strategy is to start with a hosted solution, then, if it works, expand and/or buy your own software solution.

You might want to try a hosted CRM solution if:

• Your business is small to medium-sized, in which case your CRM processes are probably simpler than what would be addressed in a customizable software solution designed for major corporations.

• CRM is new to your enterprise. Hosting first allows you to determine whether it works for you at all.

• The vendor you choose offers an application that is sufficiently configurable for your business needs.

1. Saves money. Savings accrue in labor and hardware since the application service provider (ASP) provides the resources for you. You also benefit from the economies of scale they are able to offer.
2. Saves time. Plugging into a vendor that's already up and running is always much quicker than building the CRM infrastructure yourself.

Two main disadvantages of a hosted solution:

1. You can’t customize. Beyond simple choices in the CRM setup menus, you can't change the source code to suit your own purposes, as you can with software that you buy outright.
2. You don’t control your customer data. All your data is held by your ASP. So be sure to find out beforehand what would happen if you change vendors or if the vendor is acquired by another company. And make sure your service agreement specifies the process for the return of customer data.