Chapter 12

ERP VS CRM

Wondering what ERP and CRM set apart? In this article, we put head-to-head ERP vs CRM and what makes them unique, why companies are choosing them, and how you can select which system is the right for you.

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erp vs crm

What is an ERP system?

Enterprise Resource Planning (ERP) is a type of software used by companies of all sizes to integrate core parts of their business processes. Connecting business processes allows companies to streamline their processes and data across organizations, gaining better visibility and improving reporting and decision making. It enables automation and improves business processes resulting in increase productivity and saving costs.

ERP software is mainly focusing on back-end departments and processes of a business such as:

  • Finance
  • Purchasing
  • Procurement & Sourcing
  • Supply Chain
  • Manufacturing
  • Sales
what is erp - erp vs crm

Benefits of ERP system

Since digitalization is a big part of every industry, ERP strategy became at the heart of every company’s digital transformation regardless of the size and industry of a company.

And because ERP system can connect your business core process, it brings many benefits for your company. The primary benefits of implementing a robust ERP system are:

  • Improved and Speed Up Reporting: Manually pulling data from different sources and combining it not only requires a lot of your time but as your company grows it will require more workforce, thus, more prone to making mistakes and still not having all the data. ERP system centralizes your data into one database and helps you to create reports near real-time.
  • Streamlined Processes: Because ERP connects your departments, it helps you to streamline day-to-day business tasks easily and quickly with powerful workflows and automation. This can include common tasks such as automatic approval requests, PO to SO, and others. This is especially important when your company grows and processes become more complex.
  • Increased Productivity: One of the top benefits of an ERP system is increased productivity. Many employees will be able to complete their tasks using only one app, which reduces wasted time between switching the apps. It also helps automate repetitive and manual tasks and so much more.
  • Increase Collaboration: ERP software also improves your collaboration across departments which also results in increase productivity. Having a centralized database for your business enables employees to easily pull data and quickly share it with their coworkers. This also reduces human and miscommunication errors.
  • Cost Saving: Can come in many different forms. For example, ERP can help your employees, do more with less, thus avoiding extra hires to manage the increased workload. Another great example is better inventory planning and management to ensure you always have the right amount of stock to avoid too much stock, too little stock, or a longer lead time. The cost-saving benefits are endless.
  • Better Inventory Management: ERP does a great job of helping with automating tedious and manual inventory tasks, predicting and planning stock orders, tracking inventory turnover, and saving business costs by better managing your entire inventory and supply chain.
  • Detailed Analytics & Insights: Because ERP works as a centralized database it helps provide you with detailed analytics and transform them into actionable insights with the power of AI. Thus, enabling you to collect and analyze a large amount of data across different sources and get information to make the right decisions.

Of course, the benefits largely depend on the type of the ERP module and the type of module you decide to implement for your business.

What is a CRM system?

Customer Relationship Management (CRM) is a type of software that is collecting data and manages all your company’s interactions and relationships with customers and potential customers across digital and non-digital channels in order to improve customer experiences, drive better marketing results, sales growth, and provide more personalized and better customer service.

CRM System is focusing on the front-end part of your business such as:

  • Sales
  • Marketing
  • Customer Service
  • Field Service
what is crm - erp vs crm

CRM collects, connects, and analyzes all your customer data to give you insights into how your prospects and customers interact with your brand. The usual channels or points of contact that CRM collects data from are our websites, live chat, emails, phones, advertising, analytics, virtual and even physical meetings.

Benefits of CRM System

CRM systems offer numerous major benefits for companies and in many cases, it is a company’s first big investment in order to improve company outcomes and manage growth.

With that, let me share with you some of the most profound CRM system benefits:

  • Improved Customer Service: Because CRM software helps you to collect and store all your past customer interactions, it helps your customer representatives to create personalized experiences by having all the needed information. This really allows your representative to focus on your customers and their problems rather than finding out and searching for information about the customer.
  • Better Marketing Outcome: The CRM system helps companies track their marketing campaigns and see how they performed. It gives essential information like how many leads did the campaign generated, how many of them became opportunities and sales, what was the cost per lead and sales, and much more information. All this information can be utilized to improve marketing outcomes and stop those campaigns that underperform.
  • Improving Sales Outcomes: The CRM system is the best friend of salespeople. It helps to track all the interactions and automate data entry. It helps salespeople to stay on top of the game by giving reminders, showing the best sales opportunities, creating sales reports, and in many more ways, CRM helps improve sales performance and happiness.
  • Increasing productivity: CRM uses powerful automation and AI technology to help your employees to do more with less. For marketing, this can be marketing automation and collecting data from different sources, for sales it helps with discovering opportunities and fostering important relationships, and for your customer service CRM system helps to manage multiple channels at once from the same platform. The productivity benefits are endless.
  • Improving Collaboration: Having centralized data helps employees to share important data, collaborate on tasks, and quickly respond to requests without too many disruptions. On top of that, CRM standardizes data management, thus everybody speaks the same language, thus less miscommunication happens.
  • Better Reporting: Proper reporting is crucial for business leaders to make the right decision impact. CRM system helps synch all your essential data into one platform making reporting much easier and trustworthy by eliminating manual tasks that are prone to mistakes. Thus, ending up with clean data and clean and complete reports.
  • Scaling Your Processes: The CRM system is great for standardizing business processes, ensuring everybody follows company processes as you grow. This makes it easier to onboard new employees, speeds up the adoption rate, and increases new employees’ productivity.

4 Major Differences of ERP and CRM

ERP and CRM systems are focused on different parts of your business to increase profitability. As said, ERP system is focusing on the back end of your business, helping you improve business processes and reduce CAPEX and OPEX on those processes, while CRM is purely focused on increasing the profitability of a company by improving sales, marketing, and customer service.

And despite many ERP systems that come with CRM capabilities, but a CRM system provides far more features and functionalities than what’s included in an ERP system.

However, let’s have a look at the four major differences between ERP and CRM systems:

1. Users Focus

The first main difference between ERP and CRM systems is the focus on users.

ERP system is mainly focusing on users across departments such as finance and accounting, purchasing, supply chain, procurement, manufacturing, operations, and human resources. Any back-end activities your business performs will most likely be done using an ERP system.

CRM system is focusing on users across departments such as sales, marketing, field service/technicians, and customer service. Any front-end business activities regarding your employees interacting with customers and acquiring customers will be handled with help of using a CRM system.

2. Processes Focus

Another main difference between CRM and ERP systems is their focus on business processes.

ERP system manages the following back end activities:

  • Supply chain operations
  • Financial reporting and forecasting
  • Risk management and compliance
  • Tracking project progress and costs
  • Payroll
  • Accounting and financial activities
  • Warehouse and inventory operations
  • Automation and streamlining repetitive tasks
  • Collaboration with vendors
  • Lowering purchasing costs

And any other related back-end activities your business performs.

CRM system manages the following front-end activities:

  • Track marketing efforts and campaigns
  • Manage the sales pipeline
  • Automate customer service processes
  • Streamline and automate sales processes
  • Track customer interactions and touchpoints across different channels
  • Create sales, marketing, and customer reports
  • Share data and collaborate with teams for better outcomes
  • Manage business leads, opportunities, and customers
  • Creating lead scoring
  • Manage inventory based on historical data

And any other related front-end activities your business performs.

3. Core Functions

ERP and CRM systems are both robust technologies pack with full of features and capabilities that can benefit your business.

And as mentioned both of these business softwares are focused on different aspects and processes of your business.

The core functions that most ERP systems provide are:

  • Accounting and Financial Management
  • Inventory Management
  • Human Resources Management
  • Supply Chain Management
  • Manufacturing Management
  • Reporting and Analytics
  • Automation and Workflows
  • Customer Relationship Management

The core functions that most CRM systems provide are:

  • Lead Management
  • Contact Management
  • Pipeline Management
  • Field Service Management
  • Marketing & Email Automation
  • Customer Service Automation
  • Reporting and Analytics
  • Automation and Workflows

Of course, both of these software’s provide their reporting and analytics that are based on the data they collect. The same applies to automation and workflows, the functions are different based on the business processes you are going to automate.

4. Industries

Both of the systems have their benefits and most of the businesses will see improvements in their business processes using either of those.

Also, most likely larger companies will have both of these tools implemented. However, certain industries are more prone and benefit by using ERP or CRM systems just based on the daily processes.

For example, if your company is mainly focusing on client work, managing customers, then CRM will be more beneficial to you, but if your business is more based on managing your resources, money, and assets, then ERP would be a better choice for you.

So, here are some of the industries that benefit from using ERP or CRM systems:

  • Industries that Benefit Most from Using ERP Software
  • Manufacturing
  • Education
  • Healthcare
  • Constructions
  • Government
  • Food and Beverage
  • Automotive
  • Oil and Gas
  • Real Estate
  • Industries that Benefit Most from Using CRM Software
  • Retail
  • Banking
  • Hotels
  • Financial Services
  • Insurance
  • Consulting
  • Agriculture
  • Marketing, sales
  • Small businesses, brick & mortar businesses

Please note, this is only for information purposes and it ultimately depends on your business processes, needs, and challenges. Does it mean, that the service industry never uses ERP? Of course not, it’s usually at the later stage, as the business grows, they will need an ERP system to manage their back-end processes as well.

That same applies to manufacturing, usually, ERP is their first choice, just because their processes are heavily based on back-end activities, but as they grow, CRM will be necessary to effectively manage their growing clientele. So please, take this with pinch of salt.

ERP vs CRM Infographic

ERP vs CRM Infographic

What Do ERP and CRM have in Common?

Both of these business applications are made to collect data from your employees, third-party apps, and different sources to give you a better view of your business. Also, they help you to organize and clean your data, remove any duplicates and human errors.

They also help to standardize your data management and business processes to ensure everybody inserts data in the right format and follows your business processes.

Another similarity ERP and CRM have in common is their automation and streamlining capabilities. Both of these tools help respective departments to automate manual and repetitive tasks and streamline processes and collaboration in order to increase business efficiencies, productivity and improve business outcomes.

Both ERP and CRM also provide reporting and analytics reporting tools to give you insights based on your collected data to help you make better-informed decisions.

And lastly, both of these tools can be implemented on-premises or as cloud base solution, where the provider manages the server, security, uptime, and infrastructure.

Benefits of Integrating ERP with CRM?

Now when you understand the differences between ERP and CRM, you probably can clearly see why they are so important for businesses and why integrating ERP with CRM can benefit your company.

Integrating your front and back-end activities helps you to streamline your processes across the entire operation and increase your productivity. It empowers your employees to collaborate more effectively and ultimately speak the same “language” in terms of your data management.

Integrating your ERP and CRM system helps you to get a 360-degree view of your business which can result in better budgeting and forecasting, improved customer service, a more personalized customer experience, and a better understanding of your business progress.

In the end, every activity that’s taken by the front-end team has to be recorded by the back-end team, therefore, having these two systems seamlessly integrated will benefit your company the most.

Summary

ERP and CRM systems are some of the most popular business applications in today’s digital world and businesses are taking big initiative towards these technologies to enable more flexible operations.

Regardless of which solution you choose first, they both will have an impact on your business success and performance.

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