CRM vs ERP: Know the Differences

When businesses want to automate their main business tasks, they usually consider two main types of software: enterprise resource planning (ERP) and customer relationship management (CRM). ERP helps companies manage their finances and operations by linking everything to one central database. On the other hand, CRM helps companies keep track of how they interact with their customers.

Both ERP and CRM are important because they store important data. They also involve different departments within a company. Sometimes they’re built on the same system, but usually, businesses buy them separately and then connect them where needed.

This article will explain the main features of both CRM and ERP, how they’re different, and whether a business needs ERP, CRM, or both.

What is CRM?

CRM, or customer relationship management, is software that handles all the ways a customer connects with a business. At first, CRM tools were mainly for sales teams and were sometimes called sales force automation (SFA). Then, other systems were made to handle customer service and marketing, especially in call centers (later known as contact centers when phones were just one way to reach customer service).

Over time, software companies started combining all these tasks into one system, which they called customer relationship management. Some CRM systems also include tools for managing sales performance and compensation, but these are often sold separately because they’re more complex.

What is ERP?

ERP, or enterprise resource planning, grew from material requirements planning (MRP), a way for manufacturers to handle all the resources needed to run their business smoothly. ERP is like a central hub for an organization, where all parts can access the same database.

At its core, ERP manages finances, including things like the general ledger (GL), accounts payable, accounts receivable, payroll, and financial reports. But it also handles other areas like inventory management, order management, supply chain management, and data for service-based businesses. ERP deals with procurement, production, distribution, and order fulfillment too. Some ERP systems even include tools for Human Resources Management Systems (HRMS), CRM, and online sales.

How are ERP and CRM Similar?

Both ERP and CRM systems handle similar tasks like managing contacts, companies, quotes, orders, and forecasts. They also deal with things like line-item configuration, bundles, delivery schedules, and invoices. However, many people still find it confusing to understand how these systems work together and how they’re different.

For instance, imagine someone is considering getting either an ERP or CRM system but isn’t sure which one they need. They might know what a CRM system does but wonder if an ERP system can do the same things. This confusion often comes from not knowing enough about the systems. Most ERP systems include at least some CRM features and can even connect with third-party CRM systems. However, the CRM features in ERP systems might not be as advanced as those in standalone CRM platforms.

Similarly, ERP systems with CRM features usually offer marketing and sales automation. But they might not have extras like call center support or social media management. While these extra features aren’t essential for the system to work, they can affect how easy it is for users to do their tasks.

What’s the difference between ERP and CRM?

The main difference between ERP and CRM systems is how they aim to make a business more profitable. ERP focuses on saving money by automating tasks and making processes more efficient. It helps cut costs and streamline operations. On the other hand, CRM focuses on increasing sales by managing customer relationships better. It stores customer data so that everyone from the CEO to sales reps can use it to improve customer relations and loyalty, leading to more sales and profits.

Features of ERP vs. CRM:

ERP Features:

Managing distribution processes

Handling supply chains

Providing service knowledge

Improving financial data accuracy

Planning projects better

Automating employee tasks

Standardizing business procedures

Reducing repetitive tasks

Assessing business needs

Managing finances and accounts

Lowering purchasing costs

Handling HR and payroll

CRM Features:

Organizing marketing efforts

Managing sales pipelines

Tracking time spent on sales

Streamlining sales processes

Automating customer service

Tracking customer interactions

Sharing marketing materials

Creating data reports

Understanding product sales

Prioritizing leads

Managing inventory based on sales history

Collaborating on sales

Managing business contacts

Sharing customer profiles with coworkers

Tracking lead sources

CRM vs. ERP FAQs:

Can ERP replace CRM?

No. ERP and CRM have similar benefits, but they serve different purposes and can’t be swapped out for each other.

What’s the difference between CRM and ERP?

CRM focuses on sales, service, and marketing (front-office), while ERP deals with accounting, operations, and HR (back-office).

Can your ERP connect with your CRM?

Yes, with proper planning, your ERP and CRM systems can link up to share data, manage customer relationships, and help your business grow.

Who should use an ERP?

Any business looking to centralize back-office data and automate finance, operations, and HR tasks.

Who should use a CRM?

Any business aiming to centralize front-office data, improve customer experiences, and enhance products and services.