ERP vs CRM: Comparisons and Differences (2023 Guide)
When it comes to enterprise software, enterprise resource planning software (ERP) and customer relationship management software (CRM) are two of the most popular areas to explore.
Both CRM and ERP systems are designed to help businesses manage their data and operations.
However, they differ in terms of their focus and functionality.
Knowing the critical differences between ERP and CRM can help you decide which type of system is right for your business.
By the end of this guide, you’ll know the answers to the following questions:
- What is an ERP system?
- What is a CRM system?
- What are the critical differences between ERP and CRM systems?
- Which type of system is right for my business?
Let’s get right into it.
CRM vs.ERP: What’s the Difference?
There’s a lot of confusion regarding the difference between a CRM and an ERP when it comes to enterprise software.
And it’s no wonder, given that the two acronyms are often used interchangeably, even by those in the industry.
So, what exactly is the difference between CRM and ERP?
CRM, or Customer Relationship Management, the software is designed to help businesses manage their customer data and interactions.
This can include contact information and sales history to customer service tickets and marketing campaigns.
ERP, or Enterprise Resource Planning, is software that is a bit more all-encompassing.
It’s designed to help businesses manage their core business processes, from accounting and HR to inventory and manufacturing.
While both CRM and ERP software can be beneficial for businesses, it’s essential to understand the difference before deciding which one is right for your company.
Definition of CRM
CRM, or Customer Relationship Management, is a software application that helps businesses manage customer relationships.
CRM systems are designed to store and track customer data, such as contact information, purchase history, and preferences.
Additionally, CRM systems often include features for managing customer interactions, such as sales pipeline tracking and marketing campaign management.
Companies that adopt CRM systems can use them to improve customer satisfaction and loyalty, increase sales and revenue, and streamline their business operations.
Standalone CRM systems are available, but many CRM vendors offer these various types of software as part of a more extensive business application suite, such as enterprise resource planning (ERP) or e-commerce.
Some of the key CRM features that businesses can benefit from include:
- Contact and customer data management
- Customer segmentation
- Lead and opportunity management
- Sales pipeline tracking
- Marketing campaign management
- Quotation and pricing tools
- Customer service and support
The ability to bridge the gaps between sales professionals is a significant reason companies use a CRM system.
Taking the time to invest wisely in such a system is good business practice.
CRM Benefits
There are many benefits of using a CRM system, including:
- Improved customer satisfaction: CRM systems can help businesses keep track of customer interactions and preferences, making it easier to resolve issues and address customer needs. Additionally, CRM features like automated contact management and appointment scheduling can help businesses keep their customers happy.
- Increased sales and revenue: CRM systems can help businesses track leads and opportunities, making converting prospects into paying customers easier. CRM systems can also help companies upsell and cross-sell to their existing customers.
- Streamlined business operations: CRM systems can automate tasks like lead generation, contact management, and appointment scheduling. This can free up employees to focus on other tasks, such as selling and customer service.
- Better insights and decision-making: CRM systems can generate real-time reports on sales pipeline activity, customer interactions, and marketing campaign performance. This data can help businesses make better decisions about their sales and marketing strategies.
In a nutshell, the right CRM tools can help businesses of all sizes in various industries.
Definition of ERP
ERP, or Enterprise Resource Planning, is a software application that helps businesses manage their core business processes.
ERP systems are designed to store and track information related to financials, inventory, manufacturing, supply chain, and human resources.
Companies that adopt ERP systems can use them to improve efficiency and productivity, cutting costs, and improve decision-making.
ERP Benefits
The following are some of the benefits of ERP:
- Improved efficiency and productivity: ERP systems can automate financial reporting, inventory management, and supply chain planning.
- Reduced costs: ERP systems can help businesses optimize their operations by streamlining processes and reducing waste. Additionally, ERP systems can help enterprises to manage their finances more effectively, leading to lower overall costs.
- Improved decision-making: ERP systems generate reports on key business metrics, such as sales pipeline activity, financial performance, and inventory levels. This data can help businesses make better decisions about their operations and strategic planning.
- Greater scalability: ERP systems are designed to grow with your business.
As your business expands, you can add new users, modules, and functionality to your ERP system.
This helps you avoid the need for costly upgrades or replacements in the future.
Critical Differences Between CRM and ERP
Now that we have looked at the differences between a CRM and ERP system, let’s look at the side-by-side comparison.
- Functionality: CRM focuses on managing customer data and interactions, while ERP encompasses a broader range of business functions, including inventory management, financials, and manufacturing.
- Deployment: A CRM solution can be deployed as cloud-based software or on-premise, while most ERP solutions are deployed on-premises.
- Target market: A CRM is typically used by sales reps and marketing teams, while ERP is used by various departments, including finance, accounting, and operations.
- Data visibility: CRM provides customer data, while ERP gives visibility into all business data, including financials, inventory, and manufacturing.
- Reporting: CRM reporting is typically focused on sales metrics, while ERP reporting is more comprehensive and includes data from various departments.
The right ERP system helps forecast the product’s lifecycle while providing complete data to show trends and help with predictive analytics.
Key Similarities Between CRM and ERP
Now that I’ve gone through the key differences between CRM software solutions and ERP systems, let’s look at some of the key similarities:
- Both systems are designed to optimize and automate key business processes. This results in streamlining business processes and workflows, and leads to improved operational efficiency.
- Both CRM and ERP software systems are database-driven. This means that they both rely on storing information in a central location so that authorized users can access it.
- Both approaches can be used to generate various types of reports and analytics that can help businesses make better decisions.
Common Myths About CRM vs.ERP Systems
When choosing between a CRM software or an ERP system for your business, quite a few myths start floating around.
Knowing what these myths are and differentiating what’s true (and what’s not) is essential when deciding.
Let’s debunk some of these myths:
- ERP is only for big businesses: In the past, this may have been true, but now many cloud-based ERP options are perfect for small to medium businesses.
- CRM is only for sales and marketing teams: CRM can be used by any team with customer interactions, including support, success, and operations.
- ERP is too expensive: The price of an ERP system depends on the size of your business and your specific business needs. Also, your profitability should increase after implementing an ERP system correctly, not to mention there are now many affordable options on the market.
- CRM is too complex: CRM systems have come a long way in recent years and are now much more user-friendly.
- ERP is only for businesses in specific industries: ERP can be used by companies in any industry, from manufacturing to healthcare to retail.
Does My Company Need A CRM, ERP, Or Both?
The answer to this question depends on the specific needs of your business.
If you have a lot of customer interactions and need to manage customer data, then a CRM system is a good choice.
An ERP system is better if you need to manage inventory, finances, and other back-office operations.
And if you frequently need to address both current and potential customers, you may need both a CRM and ERP system.
Understanding what critical business procedures are involved in the sales volume and marketing process is key to deciphering if a CRM, ERP, or both are required for your business.
Which Departments Can Benefit From An ERP Or CRM System?
The following are some of the industries that can benefit from an ERP or CRM:
- Supply chain management: ERP and CRM systems can be used to manage supply chain operations by tracking inventory levels, managing supplier relationships, and streamlining order fulfillment.
- Financial and operational systems: Correct financial data is critical for any business. ERP systems can give finance-related departments visibility into all business areas, from inventory levels to accounts receivable. This can help companies to make better decisions about where to allocate resources.
- Customer service departments: Customer service departments need to be able to track customer interactions and data. CRM systems can give customer service reps visibility into the customer journey to provide better support.
- Salesforce automation: The sales process can be complex, with multiple steps and touchpoints. CRM systems can automate critical sales processes, from lead generation to quote creation to order management. This can help sales teams close more deals and increase efficiency.
ERP vs. CRM: FAQ
What Is Business Management All About?
The goal of business management is to ensure that all the moving parts of a company work together efficiently and effectively to achieve the company’s objectives.
To do this, businesses need to have systems and processes to manage different aspects of the company, such as finances, operations, human resources, and marketing.
ERPs and CRMs can both be used to manage different aspects of business management.
How Important Is Having The Correct Customer Information In Business?
All departments need to have the correct customer information to do their jobs effectively.
This is where a CRM system can be helpful.
A CRM system can give all departments visibility into the customer journey to provide better support and service.
What Does Procurement Mean?
An entire organization’s ability to purchase goods and services is called procurement.
It includes requisitioning, receiving, and paying for those goods and services.
The key features of business solutions included in an ERP help in procurement by helping businesses track and manage vendor relationships, automate purchase orders and streamline the invoicing process.
This can help companies save time and money by reducing the need for manual processes and improving visibility into the procurement process.
What Is Supply Chain Management (SCM)?
SCM is all about managing the flow of goods and services from suppliers to customers.
It includes coordinating and organizing sourcing, procurement, manufacturing, logistics, and distribution.
What Are Some Top Software Solutions To Check Out?
Pipedrive, Monday, Salesmate, Freshworks, Salesforce, Hubspot, Microsoft Dynamics, Oracle, and SAP are some popular software solutions for those looking for a CRM and/or ERP.
You can also check out my comparison articles detailing HubSpot vs. Salesforce and SAP vs. Oracle for more information on these platforms.
Wrap Up.
Knowing the difference between an ERP vs.CRM is essential for any business that relies on customer data and interactions.
The core functionalities of ERP software are accounting, supply chain management, project management, and human resources.
Standard features of CRM software include sales force automation, client management, contact management, and lead generation and management.
Both small business and enterprise companies can provide the right customer experience and make the best business decisions with the help of one (or both) of these systems.
Further reading on AdamEnfroy.com: As companies scale, their needs grow as well.
Knowing what the best enterprise CRM software in the market is and how to choose the right system can ensure such companies get the ROI they’re after.
