CRM and ERP – Know the Difference

Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) are allowing the businesses all over the world to automate and streamline their business processes. Although ERP and CRM appear to be similar, there are significant differences between the two that one must understand. What are they?

Both CRM and ERP have one goal, to automate businesses and help companies all around the world become faster and more efficient and foster their growth. While both Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) are important for a business, let us take a look at some of the key differences between both.

What exactly is CRM?

CRM is a useful and popular software that aims at increasing sales and managing all marketing related activities. It allows the sales employees to manage their customer data, along with a horde of other information regarding their customers. It captures all the sales efforts taken by the employees, and helps in interacting with the customers.  CRM also plays a pivotal role in smoothening the sales employees’ relationship with their clients. Follow up with the client becomes much easier using CRM. Salesforce is a popular CRM solution.

CRM can perform the following specific tasks:

  • CRM allows you to send messages or mails, in a predetermined manner, to the customer – this could be a simple reminder mail or a quote for a product.
  • CRM allows the sales employees to create powerful and large databases of their customers. This becomes critical especially if a particular employee happens to leave the company. The repository of customer data is available to everyone, even to the new employee.
  • CRM is very useful is maintaining good communication and fostering healthy relationships among sales employees. There are several circumstances where, the same client is approached twice by sales employees. This is not only unprofessional, but it also creates a sense of internal competition among employees. With CRM in place, each employee gets allocated with a set of customers, and this is all documented well.

What exactly is ERP?

ERP is another useful software that also has similar outcomes like CRM, but uses a completely different approach. ERP manages the business information. It enables interaction between departments, thus fostering information sharing between sales, marketing, operations, finance, and other departments. It allows real time status update for certain important resources and products which enable the sales team to sell better. A popular example of an ERP vendor is SAP.

Following are some of the specific tasks that ERP can perform:

  • ERP allows integration with sales, wherein employees can give their feedback about customer demands which in turn influences production goals.
  • ERP allows payroll and human resource management – it provides an updated view of all finance parameters – all at one click.
  • All supply chain management, manufacturing, and warehousing inventory can be extracted easily from your ERP software.
  • An important area where ERP comes in handy is for business analysts. It has become very easy to pull out huge volumes of critical data from an ERP software.

CRM and ERP – Know the Difference

What are some important differences?

While in most cases, the two software solutions are compatible with each other, there are also scenarios where an ERP solution may include a small CRM component for the sales team. This will not be a dedicated CRM solution though.

Depending on the size of the firm, you may decide to use only CRM or both CRM and ERP. A smaller firm may need only a CRM software. A bigger firm will definitely need an ERP solution.

“CRM focuses on customers, ERP focuses on business processes”

A CRM solution focuses only on increasing sales and focuses on customers. An ERP solution focuses on cutting costs of the entire business unit and making the business more efficient and profitable.

ERP software is a data warehouse for all the business activities, from production to human resources. A CRM software is a warehouse only for all customer data.

While CRM can be said to be more of a front office activity, ERP is more of a back end activity.

Two sides of the same coin

An efficient CRM helps boost sales by supporting the sales teams, with customer data, prospects, and leads, and understands the buying patterns to grow sales. However, even though an ERP also ultimately boosts sales, its approach is very different. ERP supports the business side, namely operations and manufacturing. ERP focuses on reducing costs related to production and helps increase efficiency.

In other words, both these solutions aim at improving productivity, efficiency, and sales. However, one should not get confused as these two have different structures and functionalities. Both ERP and CRM takes you to the same destination, but the route differs. Does your company use a CRM or ERP software? Leave a comment.

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Author : Shruti Shah Date : 01 Oct 2015