What is the Difference Between ERP and CRM?

What is the Difference Between ERP and CRM?

The best Enterprise Resource Planning (ERP) implementation systemizes data flow between the various business processes, streamlines enterprise-wide operations, and provides a single source of truth. Implementing the best CRM system enables efficient customer communication by managing all interactions. It, too, streamlines all processes and facilitates businesses to stay profitable.

ERP and CRM are critical storage solutions businesses use to automate their fundamental procedures. Both ERP and CRM cover several areas within the organization. This article will explore the basics of ERP and CRM systems, the differences between ERP and CRM, and how ERP and CRM work together when all the important steps of ERP implementation are followed.

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) is a software system that automates and manages the core business processes for organizations, whether it's ERP cloud or ERP. By doing that, an ERP optimizes its business performance. Organizations benefit from ERP software via data centralization and removal of task redundancies. By doing that, organizations gain improved operational visibility and enhanced profitability. ERP software can be purchased via a licensing model or through a cloud subscription

Typically, ERP systems are capable of Automation, Human Resource Management, Financial Management, Customer Relationship Management, Integration, Accounting, Data Analysis, Tracking and Visibility, Supply Chain Management, and Sales and Marketing. Depending on the flexibility of the ERP software, businesses can choose the features they need to meet their unique business requirements. 

ERP systems support industry-specific requirements too. They do this either as a part of their core function or via application extensions that integrate with the whole suite. The ERP implementation benefits and challenges are complex and time taking as it requires curating a structured approach for success, extensive planning, designing, and deployment of the solution. However, after implementation, several business functions are automated. In the long run, an ERP for small business or enterprise serves as an asset as it saves time and money, besides other resources.  

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What is Customer Relationship Management (CRM)?

Customer Relationship Management (CRM) is a modern technology that enables business owners to enhance their corporate relationships by managing customer interactions with existing and potential customers, suppliers, colleagues, and service users. The right CRM system improves operations and streamlines the business processes, enables positive customer interactions and relationships, and increases profitability. Therefore, when seeking a CRM for your business, look for a tool that improves the productivity of your business by facilitating contact management, sales management, and customer support throughout the relationship.

Organizations associated with recruiting, sales, marketing, business development, customer support, or a similar business operation can benefit from a CRM system. A CRM provides businesses a solution for storing contact information of existing customers and prospects, identifying sales opportunities, managing marketing campaigns, and recording issues with service, among other functions. 

Is ERP Part of CRM?

Organizations often rely on ERP and CRM systems to automate and manage critical business functions and handle all corporate relationships. However, the fundamental difference between ERP and CRM is that the former primarily serves the finance department and handles financial data.

At the same time, the latter predominantly manages customer data and facilitates sales and customer service departments. This is why whenever comparisons arise between ERP and CRM, ERP is referred to as the back office, and CRM is called the front office. Another critical difference between ERP and CRM is that while ERP systems include a CRM component, CRM systems never have ERP components. ERP implementation phases are also much more complex compared to CRM.

How Do ERP and CRM Work Together?

A question that often arises: if both ERP and CRM are so important for businesses today, then how do ERP and CRM work together? Do their features overlap?

Most successful companies rely on ERP and CRM to streamline business processes, manage customer interactions, and allow critical business information to be shared throughout the entire organization. However, both cover distinct areas but the results combined lead to an overall boost in profitability. A well-designed ERP system can ensure the smooth functioning of business operations by integrating departmental functions into a consolidated system. An ERP works to improves processes and automation and is designed to streamline product planning, manufacturing processes, marketing, sales, inventory management, shipping, ERP in manufacturing, and other parts. 

While most organizations may find benefits and limitations of ERP and CRM, it is the CRM that stores and handles all contact information, appointments, a customer's order history and preferences, upsell possibility, and a plethora of other information that is invaluable to those who are a part of the sales process. A CRM facilitates businesses in optimizing their customer interactions and increasing profitability. Considering the top choices for ERP and CRM, it is best to consult ERP user reviews and ratings

ERP and CRM systems need to be able to share data. A technical integration enables seamless data sharing between ERP and CRM. A CRM system built on an ERP platform offers business owners a competitive advantage. It is easier to evaluate pricing structures and manage KPIs with the integration of ERP and CRM. Configure, price, and quote (CPQ) tools require strong integration between ERP and CRM. Some vendors offer pre-built integrations too. However, ERP and CRM integrations can be expensive and difficult to maintain, particularly during system upgrades.

ERP and CRM: What’s the Difference?

One significant difference between ERP and CRM systems is their approaches to increasing profitability. An ERP strives to reduce overheads and costs via automation, while a CRM focuses on producing higher sales volume to generate more profits. There are some critical differences in the features of ERP and CRM, as well. An ERP reduces redundant tasks, lowers purchasing costs, automates employee life-cycle, improves the accuracy of financial data, and standardizes critical business procedures.

Meanwhile, a CRM prioritizes leads, automates customer service, calculates time spent on customer interactions, manages the sales pipeline, collaborates on sales pitches, manages business contacts and leads, creates data reports, and tracks customer interactions with the business. ERP and CRM also differ in pricing and licensing costs, with the latter being more budget-friendly for enterprises. 

While both ERP and CRM offer countless valuable features, some organizations can benefit more from a solution providing the characteristics of both ERP projects and CRM. This means that a solution comprising both ERP and CRM solutions such that the latter is built on the former can be much more suitable and advantageous. Not only that, consolidated ERP and CRM solutions also tend to be less pricey. 

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