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ERP vs CRM: What is the difference?

ERP VS CRM

Enterprise resource planning (ERP) and Customer Relationship Management (CRM) systems come top of mind for businesses seeking to automate their processes.

The two software systems share lots of similarities but are also inherently different. CRM is a system that facilitates interactions between customers and businesses. ERP increases business efficiency by connecting the various operational functions into a central system.

Below, we shall discuss some of the main distinctive features of ERP vs CRM systems to determine which one is best for you.

ERP system

ERP is a system designed to manage your business by integrating information across different departments into one database. The ERP handles data relating to inventory management, billing, finances, etc. 

It thus helps managers to understand and manage all these aspects of business by providing such information in real-time. 

Many ERP systems are configurable, enabling users to add more functionality to fit their unique business needs.

CRM system

The customer relationship management (CRM) system focuses on improving the customer experience across all stages of transactions. The system helps to track customer data through interactions, which is shareable across all departments.

Based on this data, sales and marketing teams can then provide customized solutions for clients. It also forms a basis for following up on potential customers.

For example, if a salesperson meets with a prospective client and collects some information, the marketing team can access it and then use it to draft communications.

ERP vs CRM systems: Are they the same?

These systems share multiple similarities even though they are essentially different. ERP and CRM systems are business software that store and analyze data company-wide. Unlike the traditional on-site model, many such systems are now cloud-based.

Both the CRM and ERP systems can handle quotations, orders, customer contacts, among others. Product configuration is possible for both systems though you will need to integrate the two to maximize related functions in most cases.

Most ERP systems have many CRM functionalities, although they may not be as comprehensive and dedicated stand-alone CRM systems. For example, an ERP system may offer sales automation but lack customer community management tools.

How do you decide on the right system?

Your choice of system depends on your unique business needs. Some businesses choose to use one, while others often use both.

Using one or the other may pose some problems. Companies need to manage their business with the company-wide solutions that ERP systems offer. Yet, they also need to increase sales and revenue, for which CRM systems are necessary.

When to choose a CRM

If your business only needs simple product configurations, the CRM system would be the best for you. You may have few products which can easily fit into a set of custom fields and do not require their own "object types" in the IT system.

Such a small number also makes it easier to manually input the different values for forecasting, billing, etc. So, a CRM is sufficient.

Additionally, if your main goal is to increase sales and profits, then the CRM system may work just fine for you. It is key to maintaining customer relationships and thus nurturing leads to help you reach that goal. Just ensure that other areas of your business, such as accounting, are also handled.

When to choose an ERP system?

On the other hand, if your business has complex product configuration needs, you may need an ERP system. This occurs when you have multiple products, special discounting schemes, or need to track product history, among others. 

Also, if you want to empower your customers with self-service abilities, the ERP works best. With such capacity, customers can add and remove products themselves and even create their own product configurations without contacting you.

An ERP system is best if you prefer to automate most parts of your product configuration. With this system, you can automate the processes of adding products, generating and sending quotes, invoicing, among others. On the customer end, they can receive and approve billing documents automatically.

When do you need both a CRM and ERP system?

Many businesses will at one point need both the CRM and ERP systems as they grow. With larger operations comes more departments and more data to be configured and shared. 

A CRM alone would be insufficient to handle the other aspects of business management like inventory and billing. Similarly, an ERP stand-alone system would rob you of the capabilities to properly engage your customers, which could, in turn, affect your sales.

The solution lies in integrating both ERP and CRM systems.

Benefits of integrating ERP with CRM

An integration would help your business to maximize returns from both systems. For instance, customer records from the CRM elements would help your sales team to make the right decisions regarding invoicing, billing, and the like.

It thus facilitates more harmonious operations and cuts out avoidable errors that could cause losses.

Integration between CRM and ERP would facilitate accurate information sharing. Since all the data is available to all departments, you will be able to reduce duplications. It will also help you generate accurate quotes and invoices in less time. 

Furthermore, an ERP/CRM integration would enhance your planning abilities. With the accurate and integrated data both systems provide, you would be able to make better forecasts.

Conclusion

Both ERP vs CRM systems are essential tools for improving business. Their inbuilt capabilities help your business save resources and work more efficiently.

However, they vary in several ways, as explained above. 

Your task is to determine which system would be best for your business based on your needs. Yet, as you continue to grow, you might eventually need an integration of both software.

Sharpspring is a great option for customer relationship management. Even if you already have an ERP system in place, you still need a way to communicate with the customers throughout the process.

With SharpSpring’s integrations, you can use your ERP data to trigger communications and follow up with customers. The data helps with segmentation to ensure customized and relevant communications with all your customers.

Contact us today and learn more.

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About the Author

Yusuf Young

Yusuf helps companies use Marketing Automation to grow B2B sales. In his role as a Marketing Automation consultant implementing systems such as HubSpot and Salesforce, he discovered the need for better services at a lower cost. Today, he runs FunnelBud to make the fruits of sales and marketing technology available to businesses worldwide.

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