ERP vs CRM: What’s Their Differences [2023]
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      CRM General

      ERP vs CRM: What’s Their Differences [2023]

      CRM General
      30/10/22
      8' read
      30/10/22
      8' read

      The average company has sales, marketing, and service departments.
       
      These departments produce all the data that is used for decision-making.
       
      Each department uses a set of tools to collect, analyze and act upon this data which helps them make better decisions.

      Two of these tools are enterprise resource planning (ERP) and customer relationship management (CRM).

      If you’re new to this technology, there’s a lot of information and jargon that can be confusing.

      This article will break down these software, their key features, and the differences between them, and help you decide on the ideal system for your business.

      What Is An ERP System?

      Enterprise Resource Planning (ERP) is a software that streamlines critical business processes by automating daily time-consuming practices such as:

      • Financial processes, like accounts payable, etc.
      • Manufacturing and warehouse management
      • Human resources management
      • Supply Chain Management (SCM) and sales processes
      • Procurement
      • Project production and management
      • Risk management
      • Inventory management
      • Workforce management

      [Source]

      ERP brings order to workflow with a common database so that all the departments can create, store and utilize the derived data.

      The result is better decision-making, one of the many benefits of ERP solutions, through better data analysis.

      By connecting internal operations to the business partners and related global networks, ERP software ensures that with a collaborative workflow, your business management is efficient and agile.

      Types Of ERP Software

      On-Premise ERP

      It is an enterprise resource planning software that a company sources in-house and maintains in a physical office instead of using vendor-supplied or hosted ERP systems.

      This lets you use and control your office infrastructure to collaborate with your teams, systems, and processes.

      This software can adapt or expand depending on your business needs. For example — AccountMate, Syspro, Aquamatica, etc.

      [Source]

      Cloud-Based ERP

      Also called SaaS ERP, this ERP system is hosted on the vendor’s server that is accessible over the internet.

      It is cheaper than on-prem ERP software (but does not allow many customization options) and is mostly available on monthly or annual subscriptions.

      For example — Oracle ERP Cloud, Epicore ERP, SAP etc.

      [Source]

      Hybrid ERP

      If your business demands a mixture of both on-prem and cloud-based ERP software, then maintain some of your data on the cloud via vendor service and some through your own location.

      [Source]

      It is also referred to as the 3-tier ERP model. Your company continues to utilize the on-prem ERP (Tier-1) but adds cloud ERP systems for specific business areas (Tier-2).

      It reduces costs and is responsive to specific business needs without any complexity. For example — Oracle Netsuite, Sage Intact, etc.

      What Is A CRM Software?

      Customer Relationship Management (CRM) is a system that ensures a smooth marketing cycle by allowing you to analyze and manage customer interaction and data with a combination of various strategies and practices.

      The primary objective of a CRM software is to inject organizational trust in the customers for a healthy long-term relationship. For example — Microsoft Dynamics 365.

      [Source]

      CRM solutions help you with contact management, sales pipeline and management, and productivity for your company’s revenue growth and scalability — a few key CRM features. Employee training, relationship building, campaigning, etc. are some of the strategies developed as per the client’s requirements.

      In a single location, a CRM tool lets you:

      • Store customer data and prospect contact information
      • Identify sales opportunities
      • Manage marketing campaigns
      • Record service issues

      Types Of CRM Software

      Operational CRM

      It supports various front-office business processes and simplifies customer interaction by automating sales, marketing, and service.

      Focuses on superior customer experience and greater sales volume by generating leads, converting them into contacts, capturing the necessary details, and providing service across the customer lifecycle — like Salesforce.

      [Source]

      For example, HubSpot CRM helps with the smooth sales process by automating emails and calls and presenting them in a timeline view.

      Analytical CRM

      It manages back-office operations and enables you to take data-derived decisions by evaluating customer behavior and predicting sales.

      [Source]

      It consolidates and organizes customer information; offers personalized conversation to improve relationships with customers and potential customers; segregates customers to improve the efficacy of social media and marketing campaigns; predicts and prevents customer deflection, and helps in customer retention; analyzes performance metrics and plans financial forecasting.

      For example, Zoho CRM supervises routine processes and performances 24/7 allowing you to view and analyze the collected data.

      Collaborative CRM

      It unifies the efforts of various business functions to attain the common goal of customer satisfaction and revenue growth.

      Leverages communication channels and conversations by eliminating silos. It helps businesses improve inter-team communications. Its key working pillars are In-built chat apps; records tagging; real-time reporting; and project management.

      [Source]

      For example, Insightly helps in sharing project updates among teammates (such as post-sale deal status notifications) and highly customizable reports.

      ERP vs CRM

      There are many similarities between ERP and CRM software solutions. Both are types of software tools that allow an entire organization to better manage its operations.

      The biggest difference between these two systems is that ERP systems help business owners manage the entire supply chain of their business, whereas CRM systems focus on customer relations.

      Core Principle

      ERP systems are designed to help companies manage all of their business operations in one centralized location. ERP systems have been around for decades and have been used by large-scale businesses to book transportation, purchase inventory from suppliers, manage inventory, and track projects.

      CRM systems, on the other hand, help companies manage customer relationships with their company through selling products or services.

      For example, a customer may be interested in purchasing a new laptop computer from you but first needs to fill out an online form with personal details about themselves and their family members so that you can create a profile for them in your CRM system so that you can send them offers and promotions directly related to what they want or need.

      Complexity

      ERP systems are typically used in larger companies with more than 1,000 employees or revenue above $5 million per year.

      They tend to be more complex than CRMs because they manage the entire business process from purchasing all of its materials to paying employees and coordinating with suppliers.

      CRM systems are usually less complex and geared toward small-business owners who want to better understand their customers’ needs and behaviors.

      The software will help you track what works best with each of your customers so you can continue to provide good service while increasing sales and profits.

      Capability

      ERP systems can be used for financial management, human resources management, and other functions in an organization.

      They also typically include an online portal where customers can access reports (comprising real-time data about their interactions with the company or customer support representatives can get help from administrators if they need it.

      CRM systems have more limited capabilities than ERP systems because they don’t have a full view of an organization’s business operations.

      They may only include certain fields that are relevant to their function (e.g., accounts receivable). But they do more than show the information as a report(s) on the dashboard; they also make it easy for employees to access it and use it as part of their daily workflows.

      That’s why they’re often referred to as business intelligence tools.

      Infrastructure

      Although ERPs typically run on their own servers and often require an IT department to install and maintain them, CRMs can be connected to a cloud-based system or hosted on-premise servers.

      The latter is especially useful for businesses that don’t have a dedicated IT department or need to save money by doing all of their computing in-house.

      ERP And CRM Integration — To Integrate Or Not To Integrate?

      ERP and CRM systems have generally been used separately, but integrating them can help businesses to take advantage of both their benefits.

      Typically, there are five common points of this integration — Quote and order management; Payment management; quote, pricing, and inventory organizing; Sales order history; and Contact and Account.

      By integrating the two, you can attain —

      • Improved predictability. Integration helps sales reps predict more accurately and make more definite plans.
      • Elimination of Data Duplication. Redundancy can be eradicated with a collaborative workflow. This helps sales teams avoid duplicating the reports prepared by finance teams.
      • Increased end-to-end visibility of business processes.
      • Control and visibility — can be achieved only when ERP and CRM work as a cohesive unit.

      ERP and CRM integration does pose some challenges. Forced standardization across the business process can limit creativity and deal closing.

      You need to ensure that the data being exchanged is accepted in the same format by the system (a process called data transformation). It also requires cleaning up of outdated data, i.e, erasing the customers who haven’t been availing of your services for years.

      ERP or CRM?

      While CRM and ERP systems serve different purposes, it is possible for a single business to utilize both.

      However, choosing one or the other is likely to be dependent upon the needs of a particular business.

      [Source]

      If a company needs inventory management, customer service solutions, and order processing capabilities all under one roof, an ERP system might be best suited to these needs.

      Conversely, if they also need customer segmentation and personalization support along with marketing automation, they might prefer to use CRM as well.

      If you have a small business with high-value customers or a large corporation and complex finances, it would undoubtedly gain from the ERP system.

      Also, an ERP system would be a better-suited option if you have a business in the following niches — Manufacturing, Distribution, Wholesale, Healthcare, enterprise, E-commerce (retail, apparel, footwear), or Financial Services.

      But if your business has a huge customer base (requiring frequent contact) and straightforward finances, CRM might be a better-suited option.

      It would also be a better pick if your business falls under the following categories — Sales and Marketing, Hospitality, Digital Agencies, Banking, or Brick and Mortar business.

      As you can see, there are many questions to consider when comparing an ERP solution with CRM systems; however, ultimately it is the needs of your business that will dictate which system makes the most sense for you.

      Wrapping Up

      All in all, CRM and ERP software are both business management systems that have similar goals in the business world: transparency, organization, and order. They’re both important tools that can help business owners run their systems more efficiently.

      The key is to identify the various features offered by available systems and see which is most likely to benefit your company.

      Whichever service you ultimately choose, you’ll be able to find a solution that’s perfect for your needs.

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