Any business leader at some point in their journey has wondered what are ERP and CRM, and which system they should choose for their organization. Both ERP and CRM solutions are similar in their purpose — to increase income and productivity. However, they diverge in ways in which they achieve these goals.

Keep on reading to learn what’s the difference between ERP and CRM, the systems’ crucial benefits, and which one, or both, you need for your company.

What is CRM?

Customer relationship management (CRM) systems help organizations manage their interactions with customers. CRM systems collect data from various communication channels like social media, an organization’s website, email, phone, marketing materials, and chats. Companies use the data to learn more about their target customers, how to better accommodate their needs to increase customer loyalty and boost sales. 

CRM systems are most often used by sales and marketing departments. Marketing departments use the gathered information to create campaigns, customized emails, and other marketing content. Sales teams members input fresh data (like meeting notes) into a CRM system after calls with prospects.

What is ERP?

Enterprise resource planning (ERP) systems help organizations manage and streamline business processes. The software usually consists of various integrated applications which companies use to compile, store, handle, and interpret information from a range of business activities (such as accounting, HR, inventory control, and more).

ERP allows for the quick distribution of data throughout multiple departments. A company’s employees enter data into the ERP system which gives an organization-wide live image of the business processes. This allows the employees and the business leaders to see arising issues and fix them rapidly. Besides, when executives need to make a decision or understand the root of problems, ERP systems will provide the required data to support the first, or unveil the latter.

Deciding between custom vs off-the-shelf systems

One of the first decisions that you will face when purchasing any or both of the systems is going to be the type. 

There are lots of companies like Oracle that sell off-the-shelf ERP and CRM systems. Off-the-shelf systems are known to be faster and cheaper to implement, hence, are a good fit for companies with a limited budget. 

On the other hand, some companies offer custom CRM development services (or ERP), and such systems provide seamless integration, unique and tailored customization as well as maximum capabilities for your business.

There’s also a hybrid option which is essentially when an organization purchases a ready-made system but custom adds or integrates apps or modules.

Let’s break down all of the pros and cons of the custom and off-the-shelf types.

Key benefits of CRM

Data is one of the most vital tools for growing your business in today’s digital world. Data comes from Google Analytics, apps, social media, and various business software. Despite having lots of data, you can’t use it raw. For data to be informative and reliable, it first needs to be filtered, organized, and analyzed. In addition, it needs to be available across your organization in a standardized format so that it can be utilized effectively.

CRMs compound extensive analyses of your clients’ activities, online or offline, to create a clear image of their needs. Hence, your CRM system can be used to gather, organize, and customize data in reports for various departments’ needs. 

CRM platforms let your marketing and sales departments keep track of all prospect information in a central database over a long period of time. This grants swift access for multiple teams across your organization and allows them to manage data effectively in a shared space.

A database capability of CRM systems saves companies lots of time because employees have all of the information they need in one place, compared to going through thousands of files to compile the data.

In addition, all internal or external communication can also be done through a CRM system. This helps your sales team members to have complete and comprehensive records of customers’ journeys, like all emails, calls, and activities. It will also remind sales staff whether they need to follow up on certain prospects or whether it was done by another representative, thus, improving internal communication. 

Another key benefit is the possibility of creating tailored relevant messages and emails for prospects based on their actual needs, due to the constant flow of information and insights about your audience and market into your system.

CRMs provide automation and optimization of processes throughout the enterprise. First of all, it cuts the time it takes to exchange emails with clients and nurture them with drip campaigns. 

Secondly, CRM software helps create personalized automation for customer-centric interactions across sales, marketing, and service. 

Lastly, CRM systems give you the capacity to be more productive and efficient, as well as achieve greater results. With the help of a CRM platform, your sales representatives will be able to concentrate on selling the right services and products to the right customers. Marketing will have more time for data analysis, for trying out various strategies based on analysis, and for building campaigns that are meaningful to the target audience

Key benefits of ERP

Small and medium-sized enterprises (SMEs) face numerous challenges, one of which is trying to scale their business. This task calls for flawless data monitoring and controlled scalability of operational structure. Lots of SMEs fail when trying to expand due to poor planning or resources. ERP is a paramount software for companies that are seeking to branch out while keeping control over their processes. Many SMEs also continue depending on spreadsheets that tend to block their growth due to a restricted range of operations.

ERPs, on the other hand, provide companies with a wide scope of capabilities (automation, enhanced reports, forecasting) that will meet their growing needs and manage more intricate processes every time.

Moreover, because ERPs provide comprehensive insights into the business processes and control the businesses’ scalability dimensions, SMEs save money on operational costs.

ERP systems’ modular constitution is one of the key benefits. There’s an array of common modules, like finance and accounting, HR, workforce management, or procurement. Aside from the basic ones, ERP development companies offer many tools and applications that can be implemented into an ERP in accordance with what your company needs, building a perfect system.

The enhanced visibility and insights that come with ERPs are guaranteed to have a great influence on your enterprise. When ERP is implemented throughout the entire organization and multiple departments report to it and add data, the system becomes a central database and a single source of truth. As a result, your company’s internal communication will largely improve.

This enables ERP to produce useful factual reports and analytics that will help business leaders make data-supported decisions. In addition, ERP systems help leaders see and judge how each department is functioning, successes and issues across the company in real-time without the need to go through numerous emails in search of reports. 

ERPs provide your employees with the instruments they need to generate more exact forecasts. By having more accurate forecasting reports, organizations can effectively reduce business costs, make reasonable estimates, as well as better plan what is needed from inventory and sales

Another advantage of enterprise resource planning software is the decreased amount of paperwork thanks to the convenient space for fast and simple report submission. 

Last but not least, a robust ERP system allows for remote locations to be in sync which is crucial for today’s digital business environment.

What is the difference between CRM vs ERP?

CRM and ERP solutions have different methods and approaches to increasing profitability. CRM software focuses on escalating profits by attracting more customers and generating bigger sales volume. ERP systems work to decrease overhead and reduce spendings by enabling processes to be more efficient.

CRM software is used to:

  1. Automate customer service
  2. Track where leads come from
  3. Monitor customers’ interactions 
  4. Cooperate with different departments to sell and share information
  5. Handle sales pipelines
  6. See what sells best or worst (and in what time periods)
  7. For managing leads and streamline the sales process
  8. And arrange successful marketing campaigns.

ERP software is used for:

  1. Standardizing data and procedures
  2. Automating processes
  3. Planning streamlining
  4. Handling human resources and payroll
  5. Improving the accuracy of data and reports
  6. Decreasing redundant tasks and paperwork
  7. Reducing costs
  8. Supply chain management
  9. Accounting and finances

Do you need CRM or ERP or both?

Almost all developing companies sooner or later will need both ERP and CRM solutions. Organizations that manage their data, accounting, and finances with spreadsheets or similar instruments, eventually start considering an ERP software solution, because they realize that those tools can obstruct their growth or are just too basic for their increasing needs. This also applies to companies that run their customer relationships in hundreds of separate emails, chats, spreadsheets, and systems.

Nevertheless, what you’ll purchase first will be determined by your business model. 

#1 If you’re satisfied with the tools that you use for your finances and HR, both are uncomplicated, but you have a substantial client base that needs constant monitoring — go for a CRM solution first.

#2 If your financials are complex, your business processes are becoming inefficient, and your client base is small but high-value — consider purchasing an ERP software first.