When you think of various software solutions, two names that pop up quite commonly are Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). Both these tools are known and used for the role they play in increasing your company’s revenue and productivity. Improving automation is also a crucial feature of both the software. Both ERP and CRM overlap with each other in some areas, but the scope and procedure used by them to perform their functionalities are completely different.
So, what are the core functionalities of ERP and CRM? What are their main features? Should they be treated as separate, stand-alone systems? What are the benefits of each? What are their similarities and differences? Does your business need both ERP and CRM? Well, find out answers to all these and more in this comprehensive A to Z guide on ERP vs. CRM.
Table of Contents
Understanding Customer Relationship Management (CRM)
In simple words, CRM software can be described as software that helps to manage and streamline the different ways in which existing and potential customers interact with any business. Along with managing the customer relationship, CRM also offers different features and tools which enable the business to increase their sales by converting the potential leads. With the help of CRM software, businesses can access various customer-facing, sales, and marketing functions on one screen. It also works as a crucial data repository of your customer details, thereby helping you to handle and maintain a good relationship with your customers.
Here is an example of how the standardization and easy access of CRM software within an organization is beneficial to different teams. If a sales representative has a call with any potential lead, they can enter all the required information in the CRM software. This information can then be used by the marketing department as well to provide relatable content, such as newsletters. The customer service reps can check if there are any outstanding service tickets for any customers, and depending upon the customer value, the severity of the ticket, etc., can route it to the appropriate service team.
The various functionalities and features of CRM help in achieving every organizations’ major goal – enhanced customer relationships.
Features of CRM
– Automation and improved management of marketing campaigns
– Evaluate purchase patterns
– Streamline various processes, such as sales, marketing, etc.
– Automate all the unnecessary tasks
– Determine any new leads
– Provide exemplary customer support
– Contact management
– Tracking of all customer interactions
– Easy and enhanced management of campaigns
Benefits of CRM
The main benefit of any CRM software is that it serves as a central repository of customer data and customer interactions. With the help of this repository and analyzing tools, the organization is well-prepared and capable of identifying customers who can bring in more revenue for them, analyzing the sales team’s performance, how to improve their customer service efficiency, etc.
Apart from this major benefit of engaging with their customers, some of the other benefits of CRM include:
– Grow more efficiently and achieve greater scale
– Determine new business insights from the data gathered
– CRM software is can be accessed on mobile apps, web interfaces, and also offline
– Safeguard all your business data by storing them on cloud
Understanding Enterprise Resource Planning (ERP)
In order to run a productive and profitable business, manufacturers used to use the Materials Requirement Planning (MRP) which enabled them to manage and understand all their business resources. The Enterprise Resource Planning has evolved from this MRP. Similar to a CRM software, the ERP software is also a shareable software which acts as a central repository of data accessible by different departments in a company.
ERP’s primary focus is on finances and it includes the General Ledger (GL), accounts payable and receivable, payroll, and financial reporting. ERP software are majorly used as a means to improve the efficiency of the various business processes. However, it is not limited only to finances. ERP also includes management of inventory, order, supply chain, and service data. Procurement, distribution, production, and fulfillment are also part of ERP. In fact, some of the ERP software also provide Human Resources Management Systems, e-commerce, and CRM.
Similar to how the CRM software works, ERP also enables standardized and centralized sharing of data with all the departments. Employees can enter all the information in the ERP software and if there is an issue in any one area, it will automatically flag all the other related areas. This in turn helps the departments to start working on solutions before it becomes an issue for their department. Instead of focusing on the operations, ERP allows businesses to focus on data, thereby streamlining their business processes across the various departments.
Features of ERP
– Provide all the business process information in real-time
– Receive alerts on time about ongoing and potential issues
– Plan enterprise-wide strategies
– Update all accounts
– Monitor the supply and manufacturing chains
– Better management of hiring initiatives
– Manage a plethora of information related to employees, payroll, finance, benefits, etc.
– Process orders
– Inventory management
Benefits of ERP
Just like CRM, an ERP software’s main benefit is its usage as a central data repository that can be accessed by different departments within the organization, in real-time. This dynamic storehouse of data plays a crucial role in generating different reports, such as static monthly reports, ad hoc reports, etc. As the sole source of all financial and operational data, it makes it easier for the employees to analyze reports to gain financial insights instead of depending upon the IT or finance teams to retrieve and evaluate the reports.
Another important benefit of ERP is that because it allows departments to collaborate in real-time, it allows the organization to take quicker decisions based on reliable data, thus impacting the profitability, growth opportunities, and efficiency of the business.
Some of the other benefits of ERP include:
– Faster financial close
– Automation of manual work, such as data entry, gathering financing information from different departments, using entry-level accounting systems and spreadsheets, etc.
– Greater financial control, ensuring that only the intended roles have access to sensitive data
– Reduce financial risk
– Improve audit trails
Similarities between ERP and CRM
There are quite a few similarities between ERP and CRM, such as:
– Both these software are vital data repositories.
– They allow employees from different departments to collaborate and improve efficiency.
– Both the software analyzes data in a relational database.
– Both software is either delivered through an on-premises model or software as a service (Saas).
– Both focus on increasing the profitability of the company.
Key Differences between ERP and CRM
Below are some of the major and minor differences between ERP and CRM.
– Between the two software, ERP was developed before CRM.
– ERP software focuses mainly on back-office functionalities, while CRM focuses on front-office functionalities.
– ERP software’s primary focus is to improve efficiency of businesses processes across the various departments within an organization while CRM software’s primary focus is on tracking every client and customer interaction and improving the customer service efficiency.
– ERP focuses on reducing costs whereas CRM focuses on increasing leads and converting them into sales.
– ERP uses various systems and software such as CRM, Human Resource Management, Supply Chain Management, etc., to consolidate data of different functional departments of the organization.
– ERP focuses on how best to use the resources within the company while CRM focuses on what it stands for, i.e., customer relationship management.
Comparison between ERP vs. CRM
Below is a snapshot of the comparison between ERP and CRM.
| ERP | CRM |
| This software is integrated pre-packaged software that allows the company to manage and monitor the businesses processes within the organization | This software allows companies to track every transaction and interaction with existing and potential customers. |
| Developed in 1960-1970 | Developed in 1990 |
| Superset | Subset |
| Focuses on Customers | Focuses on Enterprise |
| Utilized in back-office activities | Utilized in front office activities |
| Aims at reducing costs | Aims to increase sales |
ERP vs. CRM – Choosing Between the Two
When it comes to choosing between ERP or CRM, it can be difficult to decide on which software your business needs. Every company aims to increase its sales and profitability, and CRM is the best and ideal software for this. Every organization also aims to cut down on their costs and make their various business processes efficient, which in turn will help the organization to become profitable. This is possible with the help of ERP software.
So, what should you choose – ERP or CRM? Well, ideally you need both this software as a CRM software will help your business to increase its sale and the ERP software will help your business to streamline its operations and reduce the costs. So, instead of investing in two different software, the best option is to opt for ERP software with CRM integration. You can avail several benefits, such as:
– Investment cost is less
– Unified repository ensures that all the information is available in real-time
– Easier customizations, third-party tools integration, programming, etc.
By using ERP and CRM together, businesses can maximize their sales and growth.
Go ahead and check out our list of ERP Software here, and find out what suits you the best!
