ERP Vs CRM: How They are Different?

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While automating business processes, owners often look at two major software solutions, ERP and CRM. But they often get stuck deciding which one is better, and how do they even differ from each other.

Are you also struggling to make the same decision between ERP vs CRM?

Well, we have everything that you need to know about ERP and CRM. We will be discussing what ERP and CRM mean, their respective functions and benefits, their differences, and similarities, and how you should choose the best-suited solution for your business.

difference between erp and crm

What Is ERP or Enterprise Resource Planning?

ERP, Enterprise Resource Planning is a software that offers a single platform to integrate different business processes like finance, admin, HR, etc. Along with automating key business processes, an ERP system also offers tools for front and back offices that promote seamless internal communication and exchange of information.

Its main aim is to streamline different processes and centralize data. Business can become a lot more efficient by aligning different processes and improving workflows.

The businesses are now switching to an advanced version of ERP, i.e., cloud-based ERP system. The next-generation cloud ERP with improved capabilities is easier to manage and provides real-time reports and analytics. Moreover, ERP systems on cloud servers ensure higher uptime with enhanced security against data security threats.

Suggested Read: What is the Difference Between Cloud ERP and Traditional ERP?

What Is CRM or Customer Relationship Management?

CRM, aka Customer Relationship Management, is a software that helps in strengthening your communication and relations with your potential and existing customers. It is used by the front-office departments like sales and marketing to boost conversions, increase revenue, and improve customer experience.

It helps different teams in the organization like sales, marketing, and support teams to enhance customer experience. They can access all the information using a centralized platform to determine the status of the potential customer in the buyer journey and act accordingly.

For example, if a prospect has asked a sales representative to follow up after a week, the sales representative can set a reminder in CRM itself for the follow-up. This way no follow-ups are missed, and the prospect is given the required attention.

Similarly, while cross-selling or up-selling if a customer wants to know about some newly added features, a customer care executive can assign this task to a sales representative in the CRM itself. This will result in immediate action and efficient workflow.

Suggested Read: List of Best CRM Software for Small Businesses in India


What are the Benefits of ERP Software?

What are the Benefits of ERP Software

An ERP offers a bunch of benefits that can help you in streamlining several processes within your organization:

  • Increases Efficiency: ERP allows you to automate routine and manual tasks, which gives space to your team to focus more on revenue-generating activities. It helps in saving costs and time invested in mundane work and eliminates the chances of errors.

  • Facilitates Collaboration: ERP systems help in connecting different teams, improving communication, and keeping employees engaged. Every employee gets customized log-in credentials and access based on their role. Everyone can keep track of the happenings in another department and collaborate on important projects.

  • Offers Real-Time Updates: ERP software allows you to have real-time updates to add, collect or analyze information on a centralized platform. With access to real-time information, you can generate more accurate and useful reports. It ensures cross-functionality among diverse departments and better coordination.

  • Improves Customer Service: With all the customer data being available on a centralized platform, it gives multiple departments instant access to the status of a customer.

    You can check if they have raised any ticket, any follow ups required, are they facing any issue, etc. With an ERP, the concerned person can be assigned the task in real-time to solve issues quickly and improve customer experience.

  • Highly Customizable: ERP systems can be customized to a great extent; you can integrate a couple of modules or all the modules that your business requires. It offers you the flexibility to choose according to the nature of your business.

    For example, some businesses will require a transportation module, whereas some will require an inventory management module.

What are the Benefits of CRM Software?

What are the Benefits of CRM Software

CRM helps a business to earn some loyalty points by keeping a regular connect with prospects and customers. It gives huge benefits to your business as listed below:

  • Centralized Information: CRM system provides a centralized platform for all your prospects and customers’ information. It provides the status of prospects in the sales funnel, which helps in closing the deal faster.

  • Automate Routine Tasks: CRM automates regular tasks like logging calls, sending emails, or scheduling meetings, everything the software can do for you. It also enables you to set reminders, so that you do not miss your important tasks or scheduled follow ups.

  • Create Customized Marketing Campaigns: With a real-time status of each prospect, the marketing team can create more concentrated and targeted campaigns. The customer segmentation feature of CRM helps in generating reliable and authentic leads by the marketing department.

  • Drive More Sales: Targeted customer segmentation and lead generation drive more sales to the organization. With regular reminders and follow-ups, no prospect gets missed or delayed. CRM software enables you to generate reports and insights, check overall and individual sales performance, and work on the loopholes.

  • Track Communication at all Levels: Empowered with a centralized platform, CRM enables everyone from the top management to executive-level employees to track the communication with every prospect. This helps in identifying pain points and getting feedback to create strategies for the future.

  • Encourage Collaboration: CRM enables different teams like customer service, sales, and marketing to work together to achieve common organizational goals.

    A qualified lead generated through a marketing campaign is further delegated to a sales representative. This lengthy process of finding a lead and converting it into a customer requires all the teams to work together and aim at the same target.

  • Promotes Transparency: Two or more sales representatives work on the prospect, which makes it difficult to identify that who converted the prospect to customer. But with CRM, every representative enters their prospect status, which makes it clear for managers to analyze individual performances.


Key Functions of ERP

Key Functions of ERP

Initially, ERP was adopted by businesses to majorly manage inventory and control systems. Later, ERP software vendors added more functions and made itself suitable for every size of the organization irrespective of the industry. Let us have a look at the functions an ERP can perform today:

  • Financial Management: The finance management module of ERP software helps track the money flow, expenses, purchases, invoices issues, or anything that involves a financial transaction.

  • Human Resource Management: This module of an ERP allows you to manage all the activities related to your staff that includes payroll, onboarding, training, etc. It helps in automating salaries, reimbursements, deductions, bonuses, and more. The software saves time and minimizes the chance of errors.

  • Inventory Management: With this module, you can keep track of all the inventory, whether it is just for office use or stocks items in warehouses. This module can even provide real-time inventory updates, which help in taking customer orders accordingly.

  • Supply Chain Management: This module works in sync with the inventory management system in real-time to ease manufacturing and distribution processes. Along with helping in solving real-time problems, the tracker helps you in predicting issues that may occur in the future.

  • Business Intelligence: This is a module that can help you in extracting reports in desired formats like tables, graphs, pie charts, or any visual representation according to your preference. This enables the management to make more-informed and facts-based decisions and strategies.

  • Customer Relationship Management: An ERP also enables you to manage your customers’ and prospects’ information to enhance sales and marketing processes. It can help in tracking prospects’ status, buying habits, feedback, your top-performing products, and pain points that need to be addressed.

Key Functions of CRM

Key Functions of CRM

Being highly customizable, most of the CRM solutions offer these basic functions:

  • Quality Lead Management: A business receives leads from multiple platforms like social media, inside sales, emails, but often they are missed or are not targeted timely. The lead management function of CRM helps in keeping track of the status of leads and filtering them based on quality.

  • Contact Information Management: Apart from leads, a business needs to maintain records of the contact information of existing customers as well. It will help you to stay connected with them and make the most of the opportunities around cross selling or up selling.

  • Generating Reports & Analytics: This function of a CRM helps in generating reports to analyze the effectiveness of different campaigns and identify what works for your business.

  • Automating Administrative Tasks: This function helps in automating tasks that no longer need human intervention like assigning tasks, raising invoices, sending emails, etc. This gives more time to your staff to work on sales-driven activities.


What Is the Difference Between ERP and CRM?

You might feel that majorly ERP and CRM work alike and perform the same functions. But they do differ from each other, the major difference between ERP and CRM is that CRM focuses on increasing sales whereas ERP focuses on reducing costs.

ERP primarily focuses on finance-related activities and CRM focuses on customer service-related departments like sales and marketing. So, the ERP is often used by back-office and CRM is used by front-office workers.


Similarity Between ERP and CRM

Both the solutions, ERP and CRM, help in storing and analyzing data related to customers, suppliers, and other business processes at a centralized platform.

Further, both CRM and ERP can be deployed on-premises or on the cloud. Integration with other business solutions helps both these software tools perform well and give desired results.

However, CRM focuses majorly on improving sales and marketing performance. ON the other side, ERP solutions help streamline overall processes whether it’s finance management, supply chain, inventory, or sales.


Whether You Need ERP or CRM for Your Business

So, now the question is, what should you choose for your business?

Well, this can be a tough decision to make. If you are looking to increase your profits, you should go for a CRM as it will help chase quality leads and boost sales.

But it is not possible to achieve this without precision and inter-departmental data, which only happens with an ERP. Reducing costs will not solve the purpose, until the organization creates strategies to increase profits.

So, what should be done?

Do not let ERP or CRM work in isolation, because together, both can do wonders for your business.


Benefits of ERP and CRM Integration

Benefits of ERP and CRM Integration

You can have the best of both worlds through the technical integration of ERP and CRM.

ERP and CRM integration will allow all the departments of the front and back office to work in coordination. For example, a sales representative will need access to customers’ data and history while cross-selling or up-selling.

Similarly, the finance department will require access to calculate the sales commission to add to the payroll. In addition, this integration will give the management an added advantage to have an overview of all departments and prepare pricing strategies and understand different KPIs.

Another important business process, configure, price and quote (CPQ), demand tight integration of CRM & ERP to access information from both the systems. Many larger CRM & ERP vendors can offer you prebuilt integrations to smoothen the implementation process.

However, ERP and CRM integration can be expensive, but it offers limitless advantages that cannot be ignored.

In A Nutshell

Both ERP and CRM have individual benefits, it is you who must decide to go for a standalone system or an integrated version. CRM & ERP integration will help streamline operations and reduce costs to maximize your business growth. All you need to do is just understand your business requirements and then choose wisely!

FAQs

  1. Is CRM part of ERP?

    Some ERP systems do include CRM module and allow a business to organize and automate sales data, including customer data. Moreover, a standalone ERP can be integrated with a CRM to experience the best of both worlds.

  2. What is the difference between ERP and CRM?

    The major difference between ERP and CRM is that ERP focuses on streamlining different departments to reduce costs, and CRM focuses on enhancing customer relationship and increasing sales.

  3. Who should be using ERP?

    Organizations that are looking to reduce costs of manual work and want to streamline the workflow should go with ERP. ERP modules such as inventory management, supply chain management, finance management, and human resource management help in streamlining major business operations.

  4. Who should be using CRM?

    Organizations need CRM software to strengthen their relationships with existing customers and drive maximum sales by attracting new prospects.

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