Defining an ERP System
An Enterprise Resource Planning (ERP) system is a complete software solution, which provides functionality for all facets of a business. An ERP system can be broken down into sub-systems, or related groupings of functionality, called modules. For example, some popular ERP modules are; Financials, Customer Relationship Management (CRM), Human Resources or Human Capital Management (HCM), Product Lifecycle Management (PLM), Manufacturing, Enterprise Performance Management (EPM), Project Management, and Warehouse Management, Supply Chain Management (SCM). All of these modules are integrated and share a common database. This integration enables all departments to coordinate, collaborate and share information.
A centralized database makes information more reliable, more accessible, and easier to share. An ERP system can only be considered an ERP system if it contains at least two modules. There is no limit to the number of modules an ERP system can have. In fact, some of the large ERP vendors offer solutions with twenty to thirty modules.
The Differences and Similarities Between a CRM System and an ERP System
CRM systems and ERP systems are not the same. A CRM system does not provide functionality for all facets of a business. For example, a CRM system does not have SCM functionality. However, like an ERP system, a CRM system is a company-wide solution. CRM solutions focus on managing customer relationships and interactions while ERP systems focus on managing entire enterprises.
A CRM system is considered, by some, to be a module within an ERP system. CRM systems provide salespeople, customer support personnel, and marketing departments the opportunity to up-sell and cross-sell products. An ERP system provides all employees with functionality to manage their departmental needs. Both ERP and CRM systems help businesses reduce costs, streamline processes, take advantage of real-time information, and enable businesses to become more profitable.
Some businesses only have ERP solutions, some only have CRM solutions, and some businesses have both. This means that these solutions can work independently of each other or they can be integrated. Many of the large ERP vendors offer a CRM solution. However, some vendors only offer one system; ERP or CRM. Both CRM and ERP systems vary, in terms of functionality, by vendor. ERP and CRM vendors typically offer CRM and ERP systems based on the size of a business. Less robust and less expensive CRM and ERP solutions are made for small businesses while robust and more expensive solutions are made to meet the needs of large businesses.