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Hosted CRM- Definition, Advantages and Disadvantages

Hosted CRM is an arrangement where a common base is provided for providing better customer service for different business organizations. It enables the organization to utilize all or some of the features of the application service provider. In short, here the companies outsource its customer relationship management task to any of the available application service providers.

A hosted CRM is useful for small-to-medium size companies where an in-house CRM process has not yet installed. It is more suitable for a small business organization as going for a well-established CRM solution will be expensive for the firm. Moreover, hosted CRM products are much easier to use than individual CRM solutions. It also helps to increase the return on investment (ROI) by reducing the cost and allowing the company to invest more resources on the main business line. The traditional model of in-house CRM is often selected by larger firms, as it can be easily customized according to the company needs.

The major drawback of hosted CRM is that the most data of the company may be in the third party's hand. Even though, its installation is much easier, they also require significant IT resources, infrastructure, and time to deploy. Some of the other draw backs include integration with other applications, lack of customization, third party storage, and control over data.

Certain companies go for hosted CRM for evaluating its capabilities before purchasing an in-house CRM. The decision of choosing a hosted or in-house CRM depends on the size of the business, budget, customization requirements, technology strategy, and industry-sector requirements.

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