The funny thing is that this type of nonchalant approach would never fly with the manufacturing or accounting departments. In reality, there are many things you can do to control sales and increase your sales team’s efficiency. One thing many companies have discovered is customer relationship management (CRM) software. CRM software helps automate and streamline your management of customer and potential customer relationships. In essence, it’s a sales tool.

CRM software is available in a multitude of flavors, but one of the most crucial decisions every company must make is whether to go with an on-premise solution, meaning software that is installed and maintained on your own network, or a hosted solution, one in which the CRM vendor hosts your data on their system and gives you access to it via your Web browser over the Internet. The decision between a hosted CRM and an on-premise one is important, and there are benefits and drawbacks to each.

For example, hosted solutions often make the most sense for small- to medium-sized businesses. Total cost of ownership is low, there’s a faster implementation time and perhaps most important, your vendor has to earn your business time and time again since it’s a “rental” service rather than a buy-and-forget solution.

One local company, Silver Cup Coffee out of Lynnwood, recently chose to go all hosted and hasn’t looked back. Silver Cup’s president, Christian Kar, recently told me that the low initial entry cost and simple setup and maintenance of going hosted made all the difference for them. Silver Cup has a limited technology budget and limited in-house IT personnel, so not having to deal with all the IT backend associated with an on-premise CRM has allowed them to focus on what’s really important, sales and customer service.

However, know that hosted might not be best for everyone. For larger companies that might already have a capable IT infrastructure in place, paying monthly or annual “rental” fees might end up costing more in the long run since the cost of maintaining an on-premise CRM solution can sometimes simply be rolled into existing IT costs. Even some SMBs might find an on-premise solution is best for them. You’ve got to consider how important access to your data is. Can you get by without it for a couple hours or maybe even a day if your Internet connection goes down? If this isn’t a risk you’re willing to take, hosted, which relies on a live Internet connection, might not be for you.

Also, consider this. Another local company, Silverdale-based Steelhead Productions, made the decision to go with an on-premise CRM a while back. They really didn’t have any reason at the time to choose on-premise over hosted, but instead based their decision simply on which CRM had the features they most needed. With time however, a previously unrealized benefit of going hosted materialized.

This is what Steelhead’s president, Sean Combs, recently shared with me, “Like a lot of other companies right now, we’ve had to reduce costs and staff over the last year. So, not having CRM service contracts has been a benefit that I hadn’t really considered before. We tend not to think about shrinking our businesses, and I know of a few other companies who struggled to restructure their Web-based CRM tools. This wasn’t an issue for us.”

So, my final appeal is this: before you invest in a CRM solution, carefully weigh all the factors of on-premise verses hosted and choose the solution that is right for you. As you undoubtedly know, no two companies are identical and if you’re having a hard time wading through the CRM waters, give a reputable vendor a call and rely on their consultants to help you decide which is best for you.

Author Bio: James Wong is a sales and customer relationship management expert and the co-founder and CEO of Avidian Technologies. Avidian specializes in creating both hosted and on-premise software solutions for users of Microsoft Outlook and Exchange. Prophet, developed by Avidian Technologies on the .NET platform, is the leading contact management and CRM software built inside Outlook. The company is headquartered in Redmond, Wash. For more information, please visit www.avidian.com.