ERP vs CRM: Do You Know the Difference?

ERP vs CRM: Do You Know the Difference?

If you are looking for ways to improve and automate your business processes, you probably found two leading software solutions – enterprise resource planning (ERP) and customer relationship management (CRM.)

Both serve as vital data repositories, but there are many differences to consider when deciding which solution will serve your needs best.

In this article, we'll cover the core features and benefits of ERP and CRM and how they differ so you can make an informed decision to help your business run smoothly, improve customer relationships, and close more deals.

What Exactly Are ERP and CRM?

Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) both emphasize the planning of business resources to increase its efficiency, effectiveness, and economy.

But, each platform focuses on different areas.

What is ERP?

ERP software eases and optimizes an organization's day-to-day functions, from logistics to management. It integrates all the services needed to run the company – finances, accounting, order management, supply chain management, production, distribution, marketing, and more. Some software also offers human resources management, customer relationship management, and e-commerce.

erp example

ERP acts as a centralized system to streamline all the processes and information flow within an entire organization. Its applications are web-based and can be accessed through any interface. That makes up-to-date information available to all the company divisions at any time.

According to the 2020 ERP Report, 95% of companies found implementing ERP systems improved their business processes.

But what exactly are the improvements you can expect? Let’s talk about the benefits of ERP, so you get a better understanding of how it can help you.

Enhanced Business Reporting and Planning

Having all the essential real-time data consolidated into one place gives you a clear overview of the whole business. As a result, you can create custom, always up-to-date reports that allow you to make better decisions and plan your activities accordingly. No more guessing, but a data-driven business.

ERP software will be simply responsible for monitoring the growth of the whole organization.

Cost-effectiveness

Because ERP connects different technologies used by each part of a company, they help eliminate costly duplicates and incompatible technology. Since you have all the actual data in front of you in real time, you can control if money is not flowing in the wrong direction and optimize costs.

Improved Coordination and Productivity

ERP applications allow different departments to communicate and share information more easily within the company. That leads to improved internal communication, lighter mailboxes, and maybe even fewer meetings. As a result, coordination improves, and the team's productivity rises.

Better Data Security

The number of reported attacks by cybercriminals in recent years have rapidly increased. However, ERP is a great way to protect sensitive data from getting into the wrong hands. ERP systems put special emphasis on data security, providing multiple layers of overlapping security technologies.

But of course, there might be differences between various solutions. So when choosing ERP software, pay attention to its data security measures to ensure your data is protected at the highest level.

Improved Data Quality

Having correct quality data is vital. After all, an ERP system can be only as good as the data flowing through it. Unfortunately, there is ample room for mistakes in duplicate entries, forgotten fields, invalid e-mail addresses, and incorrect addresses.

However, even though the human hand is necessary at this stage, the ERP system will notify you about missing fields, incorrect addresses, and other possible errors when uploading the data.

Examples of ERP systems: NetSuite ERP, Scoro, AcTouch, Acumatica, Rossum, Kechie ERP, and Tipalti.

What is CRM?

Customer Relationship Management is a software system that tracks all communications and helps nurture relationships with potential and current clients. All your clients’ and leads’ data is in one place, easily accessible from anywhere.

A CRM consolidates all communication streams (calls, e-mails, text messages, chat, and meetings), documents, purchases, quotes, and tasks associated with each contact. The data is constantly updating automatically as your leads and customers take action.

crm vs erp: example of a crm dashboard

That’s possible thanks to integrations with other software like e-mailing systems, social media platforms, phone systems, and much more. For example, one of the most known CRM software, HubSpot, offers hundreds of integrations. As a result, your entire team always has all the client's data by hand, so they can close a sale or deliver outstanding service.

The fact that 91% of companies with ten or more employees use a CRM system showcase its importance for business success.

Let's talk further about the benefits of CRM, so you can see how it could help your business as well.

Proactive Customer Service

CRM enables you to make the first move to help your customers before they even feel they need to reach you. For example, you can notify your client through an email that it’s time to put their device into service because it’s been a certain time since they bought it. Or you can craft personalized offers based on their past purchases.

Reaching out to customers through the proper channels and giving them the relevant information in a brief manner is possible through CRMS.

Proactive customer service plays an essential role in increasing customer retention as well as customer delight.

Simplified Collaboration

As you can collect, organize, and share customer information across the whole company, the collaboration of your teams improves. No more data will be lost in various spreadsheets, e-mail attachments, or group chat conversations. With suitable shared inbox software within a CRM everyone can access the centralized source of all data at any time.

Centralized Database of Information

Whether the client reached you before on the phone, e-mail, social media, or another platform, you have all the information about previous communications with the company. Your customer support team doesn't have to ask for the order number, the client's previous requests, or any information they provided last time they called. That improves your customer's experience but also increases your team's productivity.

Improves Customer Retention

A centralized database gives your customer support team a solid tool to surpass your client's expectations and deliver a high-class service. And as statistics show, 77% of consumers say good customer service is critical to earning brand loyalty and generating business. So make sure you don’t fall behind your competition and earn your customer’s loyalty.

Examples of CRM systems: Close, HubSpot, Salesforce, Zoho, Pipedrive, Dynamics, EngageBay, Freshworks.

ERP vs CRM: How Do They Differ?

The core difference between a CRM and ERP is their purpose. CRM platforms manage the relationship with potential and current clients of the organization, while ERP manages the entire organization's business processes. Sometimes you can hear people refer to an ERP as a back office and CRM as a front office. However, some ERP software also includes a CRM system.

If you are deciding between these two solutions, there are key differences to consider.

CRMs Focus on Increasing Sales, while ERPs Focus on Reducing Costs

CRM makes your sales team well-equipped to close as many sales as possible, and your customer support team delivers an experience that creates loyalty to your brand. It allows you to give personalized offers that are hard to resist and make your customers buy repeatedly.

On the other hand, ERP is focused on optimizing processes within the company and reducing unnecessary costs. Some of the features might end up increasing sales, but that’s not the aim of the solution.

CRMs Focus on External Processes: Customer Service and Sales, ERP Mainly Focuses on Internal Processes and Management

CRM helps you better manage all the communication streams outside of the company. It also improves your internal processes, as it holds all the data about your customers and leads in one place, making it easy for your team to collaborate and share information. But the goal is to enhance external communication.

Meanwhile, ERP focuses on internal processes and management to optimize your business, reduce unnecessary costs and make better decisions and planning. It captures all important departments' activities in one place, so you always have up-to-date data to manage the company most efficiently.

ERPs Consolidate Data from Multiple Tools, Including CRM

ERP is termed as the superset of SAP (System Analysis Program Development), meanwhile, CRM is a subset of SAP. ERP consolidates data from customer relationship management, human resources management, network and consumption management, supply chain, finance, and other areas. It’s a place where all the company data should be stored, including your customer’s information.

Thanks to many possible integrations, the data uploaded to ERP can be automated.

ERP vs CRM: Which is Better for Your Business?

Unfortunately, there is no simple answer to this question. Each solution is focused on different areas and will help you improve the business in different ways. Both are important, and if your company is in a growing stage, you will probably need them both.

If you have more than 100 contacts in your database, you can not handle them effectively without a CRM system. And if your company is so big that you can not personally overview all the activities, ERP is incredibly helpful. Integrating your CRM and ERP will provide a powerful tool to optimize internal processes and external communication so your business can thrive.

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