I’d strongly advise you review both options before jumping to the web, and consider that ‘Cloud’ means very different things to different suppliers.
For larger more established firms with staff based in the office most of the time it’s often much more cost effective to ‘BUY’ the software and ‘BUY’ the hardware – ‘like in the old days’.
Note that most ‘web-based CRMs’ can’t actually ‘sell’ you the software even if they wanted too – the business model being that you rent it month in month out forever (suppliers love these deals – typically over 5 years they’ll get 3 times the revenue)
People rarely review the real costs of hosting – £100 per person per month is about right for a fully hosted cloud server with MS Office/Exchange support with a CRM, so if you have 10 staff that’s £60,000 over 5 years – pick a supplier that allows you to ‘RENT’ ‘HOST’ or BUY’ – business changes fast!
Some questions which you may want to ask;
Web-based CRM’s are very cheap (on the surface at least – see above), but where will you store all your other data? Sage Accounts, Shared / Public Folders, historical data, video editing tools, etc.?
Will a Web-based CRM actually give you the ability to chuck out the server and fire your IT guy and make the saving you’ll need to fund the 3/5 year contract, or will it need to stay for other purposes?
Can the supplier give you the level of support you are used to – will you be a small customer or their biggest!?
Credit check/Financial stability – there are often lots of small fish in the Cloud market – tread carefully (but biggest isn’t always best either!)
Where will your data be stored? (In the same country? In the same hemisphere?)
‘Get out of jail card’ – What is your strategy when it’s time to leave a supplier that’s got all your eggs?
Hope that helps.