Sounds like we are pretty much on the same page with regard to the need for understanding objectives and requirements before embarking on a CRM systems initiative.

Agree with your comments on hosted offerings, though I would add that due diligence is very important when qualifying service providers, particularly looking at issues around security, privacy, operations (e.g. backups) and lock-in. The first three are obvious, and should not be a problem with a responsible and experienced provider, but the latter can easily catch you out if the service is based on the provider’s proprietary home grown software. The question to ask is if I need to switch providers at some point down the line, how would I get three years worth of contact and history out of the online service into my new system. The problem is no different in principle to migrating between on-premise systems, but you need to make sure that you can get at your data in a usable format, which can be a challenge with some online solutions.

Cheers
Dale