ERP vs CRM – What’s the Difference? (Explained with Examples). To keep the engine of a business running in this 21st century, companies depend on different softwares and solutions. Two of such solutions are ERP and CRM. They are two different but important software’s managing the two crucial arms of every business – business processes and customer relations.
Perhaps this is your first time hearing about any or both of these solutions, or you’re familiar with them, but you’d like to learn more about how they differ. Whatever the case, you are in the right place. I have put this together to explain what each software does and how one differs from the other.
Let’s start reading ERP vs CRM – What’s the Difference? (Explained with Examples).
What is ERP?
So ERP, meaning Enterprise Resource Planning, is software that helps to manage a business’s operations, supply chain, manufacturing, Ecommerce, reporting and even human resources. Businesses worldwide use ERP to improve productivity, profitability, and overall business performance.
Features of ERP
Integration
Here the ERP provides a central view of operational, financial and business data that can be stored and analysed across departments in an organization. It provides a fully integrated platform through which you can monitor, analyse and carry out various data driven tasks. Thanks to ERP, companies don’t need to work in silos any longer.
Data Analysis
Data analysis of ERP is where it collects, processes, and analyses data from all your business operations. This includes client data, sales data, and even production statistics. This enables employees to capitalize on a wide variety of information and make better and more effective future business decisions.
Accounting
ERP systems contain accounting tools that help manage accounts, tax management, risk management, and fixed-asset management. If your business is international, ERP systems can also manage tax regulations and multiple currencies.
Automation
With ERP systems, you can automate repeatable business tasks like invoicing, order processing, reporting, and payroll.
Examples of ERP
Human Resources
Human resources and ERP it can help in the entire process of hiring and training new staff. In addition, the solution can also see to it that the new employee is productive and adds value to the team by tracking their activities. With an ERP, each employee can log in to the database daily, providing the time worked and seeing what benefits accrue.
Accounting/Financial Management
An ERP system helps evaluate, simplify and automate accounting processes. This saves a lot of time in that department as it helps them fast-track processes that typically take several hours. Some of the examples of processes ERP can help with include budgeting, payroll processing, banking operations, billing and so on.
SCM and Inventory
It is essential that processes that begin with the sales team flow seamlessly into inventory management. ERP solutions assist companies in maintaining stock levels, setting prices and locating items within warehouses by using inventory management applications. Additionally, distribution systems that use ERP with SCM (Supply Chain Management) tools eliminate costly errors caused by human error.
Manufacturing
Manufacturing departments can benefit from ERP software by using it to manage production, synchronize processes and evaluate quality. In addition, an ERP system can automatically make changes to processes based on forecasting and cost analysis. Using ERP, employees can schedule distributions automatically, saving valuable time.
Now it is time with ERP vs CRM – What’s the Difference? to learn more about CRM.
What is CRM?
Customer Relationship Management, known widely as CRM, is software that helps in the management of customer communications and storage of customer data. It is a system that manages and streamlines customer interactions coming from multiple channels. CRMs have evolved over the years into a crucial tool for every business, especially one that prioritizes customer service.
Features of CRM
Contact Management
Mainly CRM allows you to store contact information such as names and addresses in a searchable database. It also allows you to arrange your contacts into groups so you can provide a better service to them.
Sales Analytics
With CRM, you can collect and analyze data from past campaigns, polls, social media, and website traffic. Analyzing this data will allow you to produce better sales campaigns in the future.
Files Sync and Share
Lead Management
With CRM, you can identify, score, and move leads through the sales pipeline. This provides a means for managing the process of converting your prospects into potential clients.
Examples of CRM
Inbound CRM
This is an example of CRM that focuses mostly on the marketing arm of the business. An Inbound CRM in collaboration with a solid inbound marketing strategy typically leads to a highly positive result from the marketing point of view. A very popular example of Inbound CRM is Hubspot CRM.
Fully Integrated CRM
Typically, different CRMs and solutions handle various stages of customer interactions and communication, from marketing down to conversion. However, there are fully integrated CRMs that can handle most or all of these different stages in one place. Freshworks CRM comes to mind here.
Operational CRM
Operational CRM is the closest to ERP as it also helps in streamlining business processes. In addition to its regular tasks, Operational CRM also automates marketing, services and sales. The CRM seamlessly captures and converts leads into contacts. Most people consider Netsuite CRM a good example of an Operational CRM.
Sales CRM
The idea of CRM originally began with sales as the main focus. It was over time that it metamorphosed into what it is today. Nevertheless, there are still some CRMs that have sales as their main focus. These CRMs manage the entire sales cycle, including sales teams, leads, and processes.
So with ERP vs CRM – What’s the Difference?
Differences between ERP and CRM
Some people find it difficult to distinguish between ERP and CRM. The two may have some attributes in common, but they differ in more ways than one. Let’s explore their areas of difference.
Frontend vs Backend
CRM
CRM is more of the frontend of the two in that it helps interfacing with customers daily. It is primarily concerned with front office activities such as managing customer data in the sales and customer support departments.
ERP
On the other hand, ERP deals with the backend of things, including operations and the management of accounting data. It handles everything related to financial data and the financial department as well as other back office activities.
Ease of Implementation
CRM
CRM is relatively easier to implement compared to ERP as only a department or two work with the former. It focuses more on the sales side or department of the company.
ERP
On the other hand, implementing the ERP can be more time consuming and even more expensive as every employee irrespective of IT knowledge level – has to learn and work with it. An ERP system is implemented and integrated across multiple departments.
End of Goal
CRM
The two solutions have two different end goals. For CRM, the end goal is to simplify and optimize sales and customer service processes. It aims at managing and improving business and customer service relationships as well as driving sales growth.
ERP
Meanwhile, for the ERP, the end goal is to improve productivity and product quality by managing different areas of business processes. ERP focuses on recording, tabulating, and storing crucial data points from a company’s operations to increase efficiency in business outcomes.
Cost
CRM
The cost of each of these softwares differs depending on the type and plan a company decides to purchase. Nevertheless, CRM requires fewer members and dedication, so it costs less than ERP.
ERP
ERP typically requires every team member to learn, and it takes longer to implement, so it’s safe to conclude that it’s more expensive than CRM. Also, ERP products cost more than CRM products. For instance, Salesforce Essentials for Small Businesses costs $25 per user monthly. Meanwhile, Netsuite ERP costs a base monthly fee of $999 with an additional $99 per new user per month.
Data Migration
CRM
Many companies run on different software and solutions, and there is always a need to move data from one software to another from time to time. This is another crucial point that distinguishes CRM from ERP. What a CRM does is more straightforward, so it’s easier to move data around.
ERP
ERP, on the other hand, deals with large volumes of data such as business applications, financial accounts, human resources records, inventory management, and manufacturing production. Such data typically originate from various places, making migration difficult.
Company Type
CRM
SMEs (small and medium enterprises) have great use for CRMs. CRM comes in handy for any business dealing with customers, irrespective of company size.
ERP
Since the ERP requires more time and resources to implement, it’s evident that it suits medium and large businesses more, as only such companies can comfortably afford it. Also, SMEs (small and medium enterprises) typically have fewer employees and processes that are a lot simpler, so there may not be a need for the ERP here.
Thank you for reading ERP vs CRM – What’s the Difference? until the end.
ERP vs CRM - What’s the Difference? (Explained with Examples) Conclusion
ERP and CRM are similar in the sense that they are both business solutions that collect, save and analyze data in a relational database. Also, companies can get both software as a software-as-a-service (SaaS), in which case the vendor is responsible for managing the software’s data centre, and customers get access to it via the cloud. Companies can as well get both ERP and CRM via the conventional on-premise model.
ERP is great, and so is CRM. The two are different, and they play different roles in the success of a business. But nothing beats connecting the two. Virtually all businesses that prioritize growth, customer service and seamless processes will eventually need both CRM and ERP, irrespective of size.
Therefore, if you’ve been looking at things from the angle of ERP ‘or’ CRM, it’s about time to change that to ERP ‘and’ CRM, as the two will need to work together for the best result. And the good thing is there are a couple of integrated solutions that combine the two softwares into one.
