Differences Between ERP and CRM

When companies look to automate their core business processes, they typically look for two main software solutions, customer relationship management (CRM) and enterprise resource planning (ERP). CRM helps a company manage customer interaction, while ERP helps companies run business processes by seamlessly connecting operational, and financial systems.

Both of the software solutions serve as important data management reservoirs. But they also look after other departments, even though they are built on the exact same platform. Companies purchase both separately and integrate them within the system when needed. However, some of the products (both ERP and CRM) come with one system integrated with the other. In this case, companies need to invest in only one and get the benefits of both.

Read on to explore the key concepts of both ERP and CRM and their differences in meeting business needs.

What Is ERP?

ERP or enterprise resource planning streamlines a company’s day-to-day functions like logistics, management, and more. ERP originally evolved from MRP, or material requirements planning. It was a way for manufacturers to manage all the resources required for operating a successful business.

The software serves as a shared database for every part of an organization. It helps in maintaining stability within the main functions of a business, like order management, human resources, accounting, etc. Also, the ERP system focuses on production, distribution, and fulfillment. There are some ERP systems that offer HRMS, eCommerce, and even CRM.

What Is CRM?

CRM or customer relationship management is a business software that manages customers’ interactions with the business. At first, the features of CRM software were developed for just sales departments. That is why it was previously known as sales force automation.

Other systems were developed subsequently for managing customer service interactions, marketing, and more. With a new addition and development process, software vendors started combining all the disciplines under a single roof and named it customer relationship management.

The CRM system also touches on the areas of sales performance and sales incentive compensation. However, these systems are mostly sold separately, as they are also complex, like the CRM system.

Benefits Of ERP

• As ERP is a single, shared database for all the financial and operational data, it is beneficial for a company. It impacts both the static monthly reporting and the ad hoc reporting requested by the leadership. The single source of both operational and financial data means that the employees can look into the reports and uncover financial insights with ease. With the integration of ERP, they do not need IT or finance teams to conduct any analysis and/or reporting.
• Now businesses can make fast, data-backed decisions that can impact everything from new growth opportunities to creating order across the company to profitability. Thanks to the ERP system,
• The financial department of an organization benefits from the implementation of the ERP system. In companies, the financial teams take into account all the income and expenses before tabulating the results. They have to compile the results at the end of each month or quarter as part of closing the books. Closing the result books with a basic accounting system or spreadsheets requires a lot of manual labor. It would take them to contact various different departments to obtain financial information and enter it manually into the database. But when there is a centralized ERP system, the monthly closing time is reduced.
• With ERP systems, organizations have greater financial control as they offer a centralized system. Also, the system offers you role-based permissions. So, those who have the right designations get access to various sensitive data, reduce financial risk, and even improve audit trails.

CRM Advantages

• Customer relationship management, or CRM, helps any business with its central repository of customer data and tracks all customer interactions.
• When businesses have such potent data at their fingertips, they can analyze the data.
• With the help of data analysis, businesses can make informed decisions about pursuing particular customers.
• The CRM also gives you updates on how the sales team performs and how to provide services to customers efficiently and appropriately.

Similarities between ERP and CRM

Before we dive into the differences between ERP and CRM, we must first know about the similarities.

• First, ERP and CRM are business software that stores and analyzes data in relational databases.
• Both the software and the services are delivered via software as a service or a traditional on-premises model. It means that the vendor manages the software in its own data centre while customers access it via the cloud.

The Difference Between ERP and CRM

• ERPs are all software solutions that help organizations manage their business processes. CRM is software that automates organizations’ customer communication.
• ERP is a centralized system that streamlines each and every process. CRM has a single platform that turns leads or customers into clients.
• If there are other terms for ERP, then it is a superset of SAP. However, CRM is like a subset of SAP.
• Enterprise resource planning is a web-based application, whereas CRM is a web-based solution.
• ERP systems put more focus on the organization, its growth, and reducing costs. On the other hand, CRM systems are completely focused on customer relations with the organization.
• The ERP system supports an organization’s back office activities, while CRM looks after the front office activities of an organization.

Are you looking for ERP, CRM, or both?

Almost all growing companies, from SMBs (small and midsize businesses) to enterprises, require both ERP and CRM at some point in time. Otherwise, a single platform for ERP and CRM is required. Companies that run their financial equations on spreadsheets or QuickBooks often choose ERP systems over existing ones. It happens when companies realize that these systems are not helping them grow exponentially.

For businesses that manage their customer relationships on different applications like spreadsheets, individual email clients, or some contact management systems, it is the same equation. Whether a company invests in ERP or CRM first, depends solely on its business model. A company with a few sets of high-value customers and complex financials might opt for ERP first. But when a company has straightforward financials and a huge customer base that requires frequent contact, it may choose CRM. However, the need for automated software like ERP or CRM is constantly on the rise. With digital transformation becoming mainstream in every industrial sector, the need for these systems becomes a survival imperative for brands.

Keep the Following Things in Mind while Choosing ERP or CRM

While looking for an ERP or a CRM software, make sure you keep an eye over these points before making an investment.

One experience does not fit all – Whenever you invest in a software product, make sure that it brings all the features to make it an absolute requirement for the business. Both of these products can be effortlessly customized and you can also reap the benefits accordingly.

Don’t wait, anticipate – A proper system enables managers to touch, monitor and adapt every one of their specific shop processes for real-time improvement that delivers greater profitability.

Strive for ‘first experience’ resolution – A high-quality management system like ConvergeHub helps companies discover and resolve problems faster. Reminders appear to inform of special instructions. Shift-to-shift information is contained on the screen. A hassle-free email system distributes messages to specific areas or persons as per the requirement. It also sends automatic notifications to the concerned recipient without any manual invention on the sender’s part. No doubt, it facilitates easy decisions and quick actions.

Respond facts to critical interactions – A high-quality CRM or ERP helps to speed up the process of the companies. While traditional planning systems are accounting based – meaning they measure cost, but do nothing to improve performance and increase production speed – a real-time management system is based on the actual “activity” of the floor. It modifies and customizes workflow in such a way that it helps in the “real world” production events, with the goal of improved performance.

Increase access to real-time information – A shop floor management system delivers real-time, continuous improvement for greater profitability and faster delivery to customers. By blending planning technology with new, factory floor activity technology, such a system affords employees the opportunity to use touch screen computers right where they need them – on the factory floor. As a result, they can enter and retrieve data on the spot, providing their clients with new instantaneous updates. They simply touch-in current job data in a real-time environment that improves accuracy and provides a faster time to discovery of problems.

The Takeaway

CRM Software like ConvergeHub comes with ERP capabilities integrated with it. For SMEs, this kind of software system is no less than a blessing. It’s redefining their customer relationship management capabilities as well as the small and mid-sized sector over the course of the past six years. CRM software for small business is undergoing a rapid series of innovations and product evolutions, increasing in affordability and reliability while simultaneously expanding in capabilities. However, considering the integrated business solution like ConvergeHub results in a wide range of business benefits.