Hosted CRM vendors offer a great deal of value when 'time to market' is critical - unlike traditional software they can be up and running much more rapidly, and generally the cost of entry is far lower. The downside, however, is that these solutions are difficult-to-impossible to customize. So probably the most critical thing companies need to do with these solutions is make sure they fit the business need AS IS - because making modifications later is very difficult.
On a similar note, integration is also more difficult with hosted than traditional solutions, although some of the vendors (most notably Salesforce.com) are using Web Services to make this easier. But companies need to know going in how important integration is, which applications need integration most critically, and then match that with the different vendors in the market.
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