Calvin Do, CIO of color equipment manufacturer EFI, knows firsthand the limits of SaaS integration to enterprise processes. For example, he's discovered that SaaS providers don't typically support single sign-on, an obvious enterprise need. And they often don't support APIs of other enterprise applications, at least not out of the box. For example, connecting Salesforce.com to Oracle and SAP applications requires buying additional connector software or creating your own connectors via Web services. The limited cross-vendor integration is why Do initially restricted his SaaS deployments of Salesforce.com and talent management application SuccessFactors to department-level applications. (He later added an enterprisewide deployment.) In the department-level applications, integration is handled at the data-exchange level and via simple API calls to trigger, for example, a data upload and the related process.

The trick: Don't let on-demand CRM's advantages blind you. Enterprises must carefully consider the scope of their on-demand CRM goals and whether potential software has the integration capabilities to fit with the larger software portfolio.

"You can't simply outsource CRM. It will ultimately need to integrate into your people, processes and technology," says Isher Kaila, research director for CRM at Gartner. "Only a minority of implementations out there have gotten this [trade-off] right," he adds.

Where On-Demand Works
A primary advantage of on-demand CRM continues to be that IT needs to expend little effort to deploy, maintain or integrate the application. Typically, the vendor does most of the work at its site: maintaining the code base, managing the servers, handling security and ensuring availability. This reduced effort also means business units don't have to wait long to get the CRM functionality in place. That's a powerful incentive for many CIOs trying to satisfy backlogs of user demands.

Still, on-demand CRM software doesn't work for everyone since it cannot be customized for complex business processes, says Gartner's Kaila. (It can be configured, of course, within the bounds set by the vendor.) Furthermore, on-demand CRM software is typically less capable than self-hosted applications, even when both come from the same vendor, Kaila notes.