ERP vs. CRM: Which Works Best For Your Business

A Customer Relationship Management (CRM) system and an Enterprise Resource Planning (ERP) system are used simultaneously to automate processes efficiently for your business. In this modern marketing arena where automating basic processes is the key to proficiency, it is important to have the latest software and systems in place to support your team.

These two software solutions can offer methods to multiple departments in a company. They may be present on the same platform but are two separate integrations that need to be bought separately.

When looking at an ERP vs. CRM system, which one is the best for your company? Let us learn what exactly the difference between them is and which one would be the most suitable for your business.

What is a CRM system?

A Customer Relationship Management (CRM) system can be used to manage interactions your business has with customers. It is important to keep track of the different kinds of engagements you have and how to make the most of them.

Initially, the CRM was a sales tool, but slowly it has evolved into a complete platform where you can capture every interaction and use those to increase your leads and potential sales. There are different CRMs for different industries and purposes. For example, if you need a CRM that primarily focuses on the sales to funnel, you might choose the Pipedrive CRM and not HubSpot CRM. If you are in the real estate business, you might go for The Real Estate CRM, which is specifically tailored for real estate customer interactions.

Key Functions of a CRM System:

1. Contact Management- A system that will effectively manage your contact list.
2. Client Interaction Tracking- The system will also track your interactions with clients.
3. Database Management- A CRM that will manage your database in a central location.
4. Marketing and Campaign Management- Will organize your marketing campaigns.
5. Lead Management-Will help to track leads and manage them.

What is an ERP system?

What is an ERP system? To answer this question, we first need to understand what an Enterprise Resource Planning (ERP) system is.

The ERP is a system that provides a unified platform for the resources required to run your business. These resources can be financial and physical items like inventory. So an ERP system will cover your general ledger, accounts payable, accounts receivable, payroll, and financial reporting.

The ERP will also include data on inventory management, order management, supply chain data, procurement, distribution, etc. Some ERP systems also have an HR component. An example of an ERP system is NetSuite that is cloud-based.

Key Functions of an ERP System:

1. Financial Management- Manage all financial transactions and assets.
2. Human Capital Management- Effectively manage your human resources.
3. Customer Relationship Management- Some ERPs have CRM components, and in this way, ERP does have a role in CRM.
4. Inventory Management- The system will be able to monitor and manage inventory and create automatic reordering processes.
5. Supply Chain Management- In addition to inventory management, an ERP system will manage all steps included in the supply chain management process.

Benefits of a CRM and ERP System for your Business

1. Central Place to Store All Customer, Financial and Operational Data

With both of these systems, you now have a central place where you can store all of your important data. In the case of the CRM system, it will be for customer data and in the case of ERP for financial and operational data. Having this data readily available in one place will speed up activities that previously might have taken much longer. Your business will become more efficient.

2. Overview of Sales Performances and Financial Reports

These systems will provide you with an overview of sales in the case of CRM and financial stats in the case of ERP in a quick and easy-to-read format. If your higher management needs to know the latest figures, you can easily pull them from these systems and not waste time looking for them.

3. Analytics on Customers, Foresight, and Financial Planning

Analytics for customer interactions in the case of your CRM will be important when making sales decisions. In the case of an ERP system, running reports on important numbers will give you foresight and help in your financial planning

4. Increased Coordination and Collaboration between Departments

Having both of your systems in a central place and integrated will help your teams to collaborate and coordinate with each other. If you have a marketing campaign and your sales team can access all of your sales information easily, it will help make your marketing department more efficient.

Having financial data easily available will also help the finance department coordinate with each other if both of these systems are available to all staff that will further emphasize transparency and streamlines tasks within your business.

5. Increases Accountability and Financial Control

Having a CRM and an ERP system in place will also increase accountability among your staff. In the case of a CRM, if sales data is available to all employees, it will give your team insight into how sales are going. This will make your sales team feel accountable and aware of how they are performing.

In the case of an ERP system, having a centralized financial system will create more financial control and reduce risk.

6. Real-time Data and Alerts

Having these two systems will also create real-time data and notifications that can remind staff of important events. For example, in the case of a CRM system, if a phone call is scheduled with a new potential client, you can be alerted. In the case of an ERP system, you can be alerted if your inventory is falling short or if you need to check stock.

ERP vs. CRM

Some might ask, is ERP part of CRM? The answer to this is yes to some extent. There is an overlap of the two systems, and so ERP does have a role in CRM.

The ERP system is what we sometimes refer to as the backend system of the business. It will contain components for your financial, inventory, and possibly HR system. It may also have a CRM component.

A CRM system, on the other hand, is the front end of the business. It will capture all the interactions you have with your customers and drive your sales. It will not have an ERP component. Any data that is accessed that is transactional or financial will be through an integration with the ERP system.

Differences between ERP and CRM

So to compare the two systems, let us look at some of the common differences between the two:

ERP vs. CRM:

• CRMs organize your marketing efforts while ERPs organize your inventory and distribution process.
• CRMs manage the sales pipeline while ERPs manage your supply chain.
• CRMs will organize your sales process, while ERPs will provide accurate financial data.
• CRMs will automate customer services while ERPs facilitate better planning for your business.
• CRMs will tell you which products or services sell best, while an ERP will assess your business needs.
• CRMs share marketing and sales collateral while ERPs standardize critical business procedures.

Role of ERP in CRM

When having these two systems operate simultaneously, it can be difficult for businesses to efficiently manage both of them. If you do not have an ERP system that has CRM components, then you may have to integrate both of them for your business to benefit from them.

Trying to integrate them can also be challenging. The reason is that these two systems are on different software platforms. There are a few ways to integrate them. You can do a point-to-point integration, but this method is expensive and not very accurate.

Another method would be what is called a ‘swivel chair’ method, where you take data from one system and put it into another one. This, however, can leave room for data error.

There is now the option of cloud-based applications and Software as a Service (SaaS) to provide integration options. SaaS is a method of using new applications that are hosted on the internet. The software is easily available on the internet, and you do not need to deal with downloading anything and managing any hardware requirements.

To integrate your ERP and CRM system, you can use these applications to seamlessly connect both the CRM and ERP systems. These applications will synchronize data.

CRM vs. ERP: Which One Does Your Business Need?

When looking at both the CRM and ERP systems, you can see that they are essential to efficiently run your business. In regard to ERP vs. CRM, which one do you need for your business?

That is a good question and to decide that you need to think about a few things. When looking at if ERP is part of a CRM system, we found that there is some overlapping.  You can purchase an ERP system that has CRM components. We also discussed how to integrate both systems if you do not have an ERP system that contains CRM features.

In the end, it depends on what system you are currently using and what can be integrated into it. If you have not purchased either of the two software systems and you want to use a combination of both, then getting an ERP system that has CRM elements would be a good idea.