So you’ve heard of ERP vs CRM but aren’t sure what the difference is or which system is best for your business? Don’t worry – this easy-to-understand guide will give you the details you need to make an informed decision.
Let’s dive in and take a look at the definitions of “ERP” and “CRM,” what these software options actually do, and which system is best for you.
- What Does “ERP” Mean?
- So What Is “CRM?”
- A Brief History Of ERP And CRM Systems
- What Can ERP And CRM Systems Do For You?
- ERP And CRM Integration
- Key Features Of ERP vs. CRM
- ERP vs. CRM: Which System Is Right For You?
What Does “ERP” Mean?
ERP is an acronym for Enterprise Resource Planning – it’s software used by businesses and organizations to manage and automate time-consuming daily activities like these in one place:
- Accounts Payable
- Human Resources
- Project production and management
- Sales processes
- Supply networks
- Sales volume
- Risk management
ERP solutions utilize a common database rather than separate standalone systems and bring order to workflow chaos so that all users — from clerks in the back-office to the CEO — can create, store, and use the same data derived through common processes.
Imagine being able to automate all the time-consuming daily tasks that come with the territory of running your business. Instead of losing time every day completing simple, repetitive tasks or running reports from multiple systems, you can focus your time on the actual running of your business.
ERP software helps companies achieve success by connecting financial and operational systems to a central database, while CRM helps manage how customers interact with their businesses.
Who Can Benefit From Using ERP Solutions?
Businesses or organizations in need of managing time-consuming daily activities in one place can benefit from an ERP system.
These activities include business needs like:
- Human Resources
- Project production and management
- Sales and invoicing
- Supply chain management (SCM) and supply networks
- Risk management
So What Is a “CRM?”
Customer Relationship Management (CRM) is software that manages all the company’s interactions with customers and potential customers. This type of software solution can contain basic customer information and data like:
- Telephone number
- Date of birth
- Email address
CRM software systems also manage communication details — email correspondence and behaviors of customers — and track engagement, so sales reps know where to go next with a customer. You’ll be able to answer questions like
- Have potential customers read your emails?
- Are there outstanding customer service tickets?
- What kind of activity does this customer engage with on social media?
- What was the customer’s most recent satisfaction level?
- What needs to happen next with this customer’s experience?
A CRM collects customer data across all channels, streamlining data in one centralized place – ultimately improving your sales, customer experience, satisfaction levels, and retention.
Check out this quick one-minute video describing ERP vs CRM.
Who Can Benefit From Using a CRM System?
All kinds of businesses use CRM solutions to manage customer relations:
- Solo freelance operations
- In-home ecommerce
- Small businesses
- Mid-size businesses
- Enterprise-level corporations
No matter which category you fall in, a CRM system can assist your company with managing customer relationships with a high level of integrity.
A Brief History Of ERP And CRM Systems
ERP emerged during the 1990s to answer the call for an expanded system beyond materials and manufacturing needs. ERP extended the scope of material requirements planning (MRP) systems and offered business management solutions to other types of companies requiring a broader range of possibilities.
Finally came “Postmodern ERP” systems. These systems allow companies to choose multiple standalone products for integration in order to meet their specific needs without having to pay for a larger ERP system they may not need.
Read more about ERP systems and how they work here!
CRM software functionality was first developed for sales departments and was sometimes known as sales force automation (SFA). Other systems were soon developed to manage customer service interactions and marketing in areas like call-centers. Sales teams were able to see information specific to their customers, which led to targeted communication and boosts in profitability.
Through acquisition and development, software vendors began to streamline these disciplines under one umbrella, called customer relationship management.
What Can ERP And CRM Systems Do For You?
These two software options have several similarities in the way they help manage business processes.
Let’s take a look at five ERP and CRM benefits:
1. Improved Customer Service And Satisfaction
When you have records of past purchases and communication, you’ll have a clear understanding of where a customer stands, and they won’t have to repeat their experiences to multiple sales reps. This leads to increased customer ease and satisfaction.
2. Increased Profitability
Anytime you’re able to streamline business processes it becomes easier to analyze sales data. This leads to increased knowledge of your customer’s behaviors and ultimately increased sales. Both ERP and CRM systems allow you to monitor inventory and receivables to ensure you’re where you need to be.
3. Better Customer Retention
As a business manager, you know customer satisfaction is essential. CRM tools can significantly improve retention numbers by allowing sales reps to analyze a customer’s activities – if you do lose a customer, you’re able to identify and address pain points quickly. ERP software allows you to provide real-time information to ensure customer interactions are smooth and accurate.
4. Improved Analytics
When your sales, finance, and marketing information flows to one location, it’s much easier to analyze data and make business decisions based on easily accessible reports. You’ll have access to live information — and you'll engage in more accurate forecasting of your business needs and direction.
5. Increased Efficiency Levels
The ability to automate day-to-day tasks allows your team members to stop spending time on menial tasks and start focusing on the most pressing issues within your organization. Both ERP and CRM systems allow you to analyze dashboard reports to keep your company at the top of its game.
These systems also improve time management. Since your team members use real-time information, the need to confer with multiple departments, request update reports and information, and wait for responses is eliminated.
ERP And CRM Integration
Can ERP and CRM software be integrated?
In fact, integrated ERP and CRM systems cost less than purchasing the software separately.
Integration of the two management systems means all information is updated in real-time, without having to wait for batch uploads or middleware connections. This means simpler, faster business processes – allowing you and your staff to focus your time where it matters.
Key Features Of ERP vs. CRM
|Customer Service/Contact Center
|Supply Chain Management
|Warehouse Management and Fulfillment
ERP vs. CRM: Which System Is Right For You?
Based on the advantages of ERP and CRM software, it’s likely most businesses will benefit from the use of both systems.
Companies utilizing entry-level accounting software make the switch to an ERP system once they discover those systems are limiting their growth and slowing progress.
The same can be said for businesses managing customer relationships in multiple places – communication documented in various emails, spreadsheets, or databases.
The decision to invest in ERP, CRM, or both systems will depend on the needs of your business. A company with a small number of high-value customers and complex financials might benefit by first investing in an ERP system, while a company with relatively straightforward financials and a large customer base requiring frequent contact might do the opposite.
|Might be better suited to ERP
|Might be better suited to CRM
|Manufacturing Distribution & wholesale
Services, services resource planning, financial services Enterprise
Retail, apparel, footwear
Small business, family businesses, brick & mortar businesses
While some industries may benefit from one system more than the other, keep in mind a large number of businesses choose to go with both ERP and CRM based on business needs.
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Where Do You Go From Here?
Hopefully you feel more equipped to choose between ERPs and CRMs based on my detailed breakdown. Feel free to comment with your ideas or how you see these two tools working in tandem.
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