ERP vs CRM: What’s the Difference?

Exploring the functions and benefits of ERP and CRM software.

ERP vs CRM: What’s the Difference? post image

If you’re comparing the benefits of ERP vs CRM software, let YourShortlist guide you towards the right choice for your business.

Across both small businesses and global organisations, Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) software are implemented to help increase the profitability of business operations.

However, both CRM and ERP have different purposes and provide different advantages when it comes to improving your business processes.

Read on to find out how each type of software can benefit your business and what to look for when comparing ERP vs CRM systems.

What is a CRM System and How Does it Work?

Customer Relationship Management (CRM) software helps a business manage its database and interactions with its customers, enabling better communication and a more transparent, data-driven, and hands-on sales process.

When implemented effectively, a CRM system helps increase business profitability by improving the sales team’s performance and increasing sales volume.

If you were to compare ERP vs CRM systems, the focus of CRM is ensuring that customer needs are met efficiently and on time and that all their interactions with the business are logged and monitored.  

Customer relationship management software is generally used by customer service, marketing, and sales departments to increase customer satisfaction, drive more sales, and increase the likelihood of repeat business.

Overall, CRM software is best suited for:

  • Automating customer service interactions
  • Automating email marketing campaigns
  • Identifying new business opportunities and sales leads
  • Managing sales pipelines
  • Reducing repetitive work by streamlining the sales process
  • Reporting on key customer relationship analytics

Better Sales Performance

‍The bottom-line benefit of a CRM system is that it centralises your business’s sales information which, in turn, allows the sales team to manage all accounts, leads, opportunities, and customer-facing interactions in one system.

When well-documented, customer information can become a tool for building trust between a business and its potential or existing customers, such as by enabling personalised email campaigns.

Improved communication between both parties increases the chances of closing a sale, encouraging a good review, or ensuring a complaint is dealt with in a timely manner.

CRM software can be invaluable in improving returns for the company by enabling a better organised and managed sales team and pipeline.

What is an ERP System and How Does it Work?

Enterprise Resource Planning (ERP) software is designed to manage back-office processes such as finance, distribution, and ordering within a single, integrated system to streamline its operations, increase productivity, and lower operational costs. 

ERP software is ideal for larger, rapid-growth organisations, however there are many cloud-based ERP systems on the market that are suited to small-to-medium businesses (SMBs).

The software sees adoption in industries such as manufacturing and professional services and is an important tool to connect an organisation’s financial and operational systems through one central platform.

When comparing ERP vs CRM, if you want a solution that provides real-time business data, shares information seamlessly across departments, and integrates multiple processes and technologies together to enable greater oversight, then ERP is the best solution.

The benefits of ERP systems include the following:

  • Managing human resources
  • Connecting and integrating multiple departments within the organisation
  • Streamlining workflow to help you deliver more orders on time
  • Tracking and monitoring your inventory and finances from one location
  • Reducing inventory and ordering costs while eliminating purchasing errors
  • Lowering operational costs through better project planning
  • Automating processes to increase output
  • Tracking performance, productivity, and progress through the use of accurate data
  • Improving data integrity and financial controls to reduce overall risk
  • Improving job costing as well as the accuracy of financial data while simplifying the accounting process

The Relationship Between ERP and CRM Systems?

Both ERP and CRM systems allow businesses to manage their contact databases, forecasts, orders, and quotes.

Depending on the CRM system, it may also allow you to manage delivery schedules, invoices, and line-item configuration, all of which are often included in an ERP system.

Importantly, both types of software can be integrated to provide a complete overview of your sales process, from the point of sale and order processing through to the purchase, delivery, and after-sales experience.

While both systems are identifiably similar, there often remains some confusion as to how both systems connect, as well as the difference in their core functionalities.

For example, while an ERP system with CRM integration will offer sales and marketing automation, essential features such as call centre support and social media management may be missing or require additional integrations.

And even though the absence of some features does not pose a problem to the system’s performance overall, it can reduce capabilities for the user and therefore require additional software integration and investment from the business.

ERP vs CRM Systems: Key Differences

While there are many similarities between the two software types, when comparing ERP vs CRM systems, it’s important to know the differences in terms of functionality and how each can benefit your business.

  • CRM software makes it possible for businesses to trace interactions and transactions with their clients and customers, while ERP software enables monitoring of their supply chain and distribution network.
  • CRM software streamlines customer-facing communication and databases, while ERP systems consolidate operational systems including CRM, HR management, and supply chain management.
  • CRM systems are designed to manage relationships between the business and its customers, while ERP software enables an organisation to allocate resources to ensure they’re used as best as possible.
  • CRM ultimately is focused on increasing sales for the business, while ERP systems have an emphasis on reducing costs for the organisation.

‍ERP vs CRM: Which is Best for My Business?

There is often a debate regarding which software – ERP vs CRM – a business should invest in first and foremost.

The choice is entirely dependent on the functions you require, as both systems can increase efficiency and profitability for the business, but through different methods (as detailed in the previous section).

For businesses that are looking to primarily improve their marketing and sales process, a new CRM system would be the ideal choice.

On the other hand, if the task is to conduct a complete overhaul of the various types of software being used by the company because the business is expanding, then a new ERP system is the better option.

There’s a lot to consider concerning the various aspects of ERP vs CRM software before settling on the right choice for your business, and of course, depending on your budget there is always the option of implementing both systems in tandem.

The important step to take when deciding on ERP vs CRM software is to speak to a technology expert that can make the decision clearer for you and provide a comparison of all the option on the market.

Choosing the Right Software with YourShortlist

When you’re deciding on ERP vs CRM software, the technology procurement experts at YourShortlist can help to make the process quicker, easier, and more cost-effective for your business.

We can match you with your ideal ERP or CRM provider from our database of over 2400 trusted technology providers, all completely free of charge.

We can help you understand the key benefits of ERP vs CRM and which software would be most suited to your business, providing a bespoke shortlist of Partners that are experienced in providing solutions for your industry, with no obligation to purchase.

This will not only streamline your procurement process, but also enable you to find software that is easy to implement in your business within your required timeframe.

If you’re looking for the ideal ERP or CRM software to improve your business processes, get in touch with our team today to discuss your requirements.