It’s hard to ignore the appeal of cloud and SaaS solutions in today’s business world, given the plethora of options available, the low cost of entry, on-demand scaling and the notion that your IT department will be liberated from ongoing software maintenance and management tasks.
But just because any marketing or sales task can be hosted in the cloud doesn’t mean it should be.
While cloud solutions bring many benefits, there are also caveats. Making the right decision for your company depends on a variety of factors, including the size of your company, the complexity of your data and use cases, and the nature of your existing systems.
Assess Your Systems, Security and Marketing Needs
For instance, large enterprises with scores of legacy systems don’t always benefit from replacing those applications with ones in the cloud, particularly if they require heavy customization.
Marketers also have unique needs and requirements. Since they may or may not require real-time data, marketers may or may not want the ability to create new campaigns on-the-fly and they may or may not have strict requirements around customer data privacy and management, although most do.
Think Beyond Cost Analysis
Many companies start — and end — by analyzing costs. Here, unlike some other areas of cloud software such as infrastructure or big data processing, the decision whether to use cloud is far from black and white.
A general rule of thumb is this: if the source data for your marketing campaigns lives in the cloud, use a cloud-based application. If the data lives behind your firewall, it doesn’t make much sense to move that data to the cloud to use it.
Think Cloud for B2B and SMBs
Cloud-based sales and marketing systems are generally an excellent fit for B2B companies, as well as most SMBs. Their prospect and customer bases are rarely larger than one million records, making cloud-based systems the most efficient and manageable option for small IT departments or for companies without IT department at all.
Once you have made the decision to use a cloud-based CRM, it’s likely that any other core applications such as email marketing will be included in the platform. And it won’t make sense to connect that marketing suite with other internal or SaaS systems if you can help it. For most small companies, cloud marketing — and cloud everything for that matter— will be the best option across the board from cost, management and risk perspectives.
Large Enterprises Should Think On-Premises
But say that your company is a large B2C brand with millions of customer profiles. In that case, the cloud becomes less desirable for marketing execution. B2C marketers’ needs for broad data access and flexibility means that SaaS will almost always be more expensive and less flexible.
Let’s consider three reasons for this seemingly counterintuitive reality:
1. Syncing problems
Your IT department will need to replicate and export customer data from multiple internal systems into your cloud vendor’s system. Transforming that data for compatibility with your vendor’s platform, shipping the data and managing the syncing process between the cloud system and your internal systems on a regular basis will be complicated, time-consuming and expensive.
Someone will need to ensure that everything happens with accuracy. For mid-market and smaller enterprise customers, the cost-benefit of this effort might be worthwhile but for larger enterprises it is invariably not. In fact, large companies tell us that it can take 50 percent more IT resources to run marketing software in the cloud than to run it behind their own firewalls.
2. Marketing downtime
What’s more, even though large companies using cloud-based marketing systems will only be uploading a subset of customer data to the cloud, they won’t be getting rid of their massive internal databases. It’s just too expensive and time-consuming to replicate everything, but it also means that when a marketer wants to do something new, he may or may not have the data available in the cloud.
In that scenario, marketers must wait days or even weeks to initiate their campaigns. With all the data and systems living in the same place however, such delays rarely occur.
3. Data insecurity
Beyond the cost of storing and managing duplicate customer data sets both internally and in the cloud, there are security risks.
Cloud vendors may not necessarily have poor security, but different data sets with differing security standards and policies pose a risk in themselves. In fact, in some sectors such as financial services and healthcare, CEOs won’t even consider housing personally-identifiable information (PII) data in the cloud because of the lack of control.
Evolving from Cloud to In-House
The cloud versus on-premises decision gets even cloudier if you are a midsize company. There is an inflection point that all midsize companies hit as they grow where it will become more expensive and inflexible to use cloud-based marketing systems, but if you’ve grown with cloud software, it may also be hard to move data and systems back in-house, too.
For all companies, evaluating the cloud platform’s features and capabilities is not something to take lightly. A SaaS system must work well for all clients, regardless of size, vertical or other special needs.
This is the lowest-common denominator problem that we’ve heard about before: You can’t customize the system much without great expense and the features may not be as sophisticated or rich as you might like. You are giving up those benefits to have low-cost, low- maintenance software that is frequently updated.
Could a Hybrid Approach Be the Answer?
Mapping the software to your current and future business needs is critical to determine how much flexibility your company really needs. If you want zero limitations, keep all the data and systems internal, giving your system immediate access to your data and allowing marketers to be as creative and proactive as they wish.
There’s also some movement toward a hybrid approach for marketing software. There are solutions available today which allow you to take advantage of the efficiencies of cloud for computing-intensive tasks, while keeping your customer databases in-house.
Figuring all this out isn’t easy and there is no right answer. Yet one thing that most marketing executives can agree on is sticking to the end goal: creating and nurturing a “single source of truth” about their customers. This requires an integration strategy which can connect all the data silos inside and outside of a company and create a unified profile of customers to support personalized engagement across your business channels.
Choose the cloud, on-premises or hybrid approach that delivers on that promise for your company and your budget and you’re on your way.