CRM vs. ERP: Similarities, Differences, And How They Can Help Your Business

Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) bear similarities and differences, though their core functionalities are very different from each other. Before we move on to a comparative study between CRM and ERP, let’s just understand the two concepts first.

Customer Relationship Management (CRM)

As the name itself suggests, the CRM software manages the relationship with the clients or the customers. So, it is a combination of systems as well as processes that are used for managing an organization’s interactions with all its current and future customers. The CRM software systematizes, automates, and harmonizes sales, marketing, and customer service. In short, CRM includes all areas of customer experience in a bid to keep them loyal and happy.

Enterprise Resource Planning (ERP)

From the name “Enterprise” itself, you can draw the conclusion that ERP has more to do with managing the business. ERP is all about swift sharing of standardized information amongst the various departments of the organization. The employees enter data into the ERP system and in the process, create a real-time, company-wide snapshot. The benefit of ERP is that snags in any area will automatically generate warnings in other areas most likely to be affected. So, planning begins even before an occurrence becomes an issue. ERP drives the focus on data and provides a system to streamline the business activities throughout the organization.

Similarities Between CRM & ERP

1. Profitability – The ultimate goal of both the CRM and ERP software suites is to increase the profitability of the company. In that regard, both work actively towards generating more revenue.
2. Streamline Business Operations – Both the software suites are designed to streamline the various operations of the business. CRM drives focus on sales while ERP on actual business processes.
3. Real-time Information – Both the software suites are designed to take advantage of real-time information. This improves planning and increases the effectiveness of processes.

CRM Vs. ERP – The Core Differences

At a glance, CRM & ERP may look alike, but there exist core differences between them in relation to their functionalities.

1. Area Of Operation – CRM allows the business to track every interaction and transaction with the clients and the customers. ERP supports the company in managing its business processes, all across the company.
2. Utilized In – CRM is mostly made use of in carrying out front office activities while ERM is prominently used in conducting back-office activities.
3. Oriented Towards – CRM is oriented in the direction of managing the customer relationship with the company. As against this, ERP is concerned with the company’s resource planning to ensure its optimum utilization.
4. The Difference Of Approach – As mentioned above, both CRM and ERP work towards increasing profitability. However, the manner in which they approach this goal is different. The focus of ERP is on reducing overheads so as to cut costs. To achieve this, ERP focuses on making efficient business processes that do not require heavy expenditure. On the other hand, CRM drives profitability by increasing sales.

CRM & ERP – How They Can Help Your Business

Together, CRM & ERP are a force to reckon with. Combining these two forces will give you better sales processes, accurate product forecasting, and easy access to pertinent information stored in a single location. However, let’s try to assimilate its usefulness from the point of manufacturers and sales personnel, the two major forces behind every business.

• Manufacturers – Sales are not an integral part of manufacturing. So, you may feel no need for the CRM tool. Integrating the CRM and ERP system gives businesses progressive tools for restructuring and reorganizing relationships amongst the sales, operations, and back-office personnel. Through automatic updates, both systems will regularly sync with one another to keep up to date. What it means is that any changes in the CRM system will automatically reflect in the ERP system and vice-versa. So, data will always be consolidated and reliable. Integrated platforms can sustain multi-level adjustments and are enhanced to deal with various technological innovations in a constantly changing business environment. For example, the most recent information regarding the availability of a product can give you a more accurate picture of the shipment dates. In short, simple data from the ERP system will assist CRM by meeting deadlines faster.
• Sales Personnel – As a sales personnel, the CRM tool will bring to the forefront those campaigns that are successful in increasing sales while it is the ERP tool that will direct you to the best selling products. Together, this data will assist operations in more accurate product forecasting. It also makes for optimum inventory management. Having access to order history from the ERP system, the sales personnel can supplement the customer data from the CRM tool to close deals with an improved success rate.

Wrapping Up

Having a well-integrated system of CRM and ERP in place gives a competitive advantage to the business. This is primarily because an integrated system makes for a unified and streamlined workflow. It does away with duplication of work and associated problems like data redundancy errors etc. With a perfect integration, you will always have concrete data to support your findings and decisions. In the end, it is the best formula to create a win-win situation for your company.