If you’re looking for enterprise software to streamline your business processes, you’ll find that two of the most common types of systems on the market are customer relationship management (CRM) and enterprise resource planning (ERP) platforms.
While both systems can help you integrate your data and automate manual processes, they have distinct differences. Understanding those differences is the key to making an informed decision.
Is an ERP or CRM system right for you? Let’s dive in to find the answer.
What is ERP?
An ERP system integrates your core business functions. It takes scattered data and allows it to flow seamlessly from one process to the next. As it does so, it also automates many of those processes.
When companies implement an ERP system, employees can access a centralized database that provides a clear, real-time view of the company’s performance, including financial insights, resource allocation, and more. This is helpful to employees across all functional areas, from manufacturing and risk management to HR and sales.
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What is CRM?
While ERP software helps companies manage their back-office processes, CRM software is more customer-facing. Companies can create personalized email campaigns, optimize their sales cycle, and manage their eCommerce operations all in one system.
This software allows sales, marketing, customer service, and related teams to communicate with one another and with clients. At every touchpoint, they can access CRM dashboards with relevant insights based on real-time data.
Are ERP and CRM Interchangeable?
It’s easy to understand why many people assume that CRM and ERP are interchangeable. After all, they both deliver similar benefits, and much of their functionality overlaps.
But can one completely replace the other? The short answer is no, and here’s why.
At their core, ERP and CRM systems serve two distinctly different purposes.
ERP helps companies manage their financial data, their manufacturing operations, and a variety of other functional areas:
- Accounting
- Compliance
- Human resources
- Procurement
On the other hand, CRM software helps companies automate their sales and customer service functions. It’s a front-office solution that’s focused on marketing, service, and sales.
Questions to Ask Yourself to Help You Decide
If you’re wondering if your business would benefit more from an ERP system or a CRM system, here are some questions to ask yourself before software selection.
1. Do We Need to Integrate Our Back-Office Data?
If your company is running into roadblocks and productivity issues because your back office data is unorganized, then an ERP solution may be the best choice.
This software unifies your data into one, central location.
It’s particularly effective for managing financial data. Unless your company is entirely built on a sales and marketing model where all your requirements can be fulfilled by a CRM system, you likely need an ERP system.
2. Are We Wasting Time and Money on Manual Processes?
ERP can automate a variety of manual processes. This improves operational efficiency and reduces the likelihood of human error.
If employees across functional areas are spending too long on tedious tasks, then an ERP platform could be an ideal solution.
For example, if a manufacturing company is limping along with a manual purchasing process, it could use a manufacturing ERP system to automate purchase order generation, supplier management, and more.
3. Do We Need to Streamline Operations Across Functional Areas?
Companies that want to simplify and streamline all aspects of their production, financials, and inventory management may benefit from an ERP solution.
Take supply chain management for instance. This spans a variety of functional areas, so supply chain stakeholders need full operational visibility that allows them to make data-driven decisions. In this case, either an ERP system or an SCM system could be a good choice.
4. Do We Need to Organize and Consolidate Our Front-Office Data?
Are your teams spinning their wheels moving from one front-office platform to the next? If so, a CRM solution can gather all those scattered solutions into a single, centralized location.
When all your relevant data is stored in the same place, it’s easier for teams to work in tandem with one another. This reduces redundancy and breaks down operational siloes.
5. Are Our Customer Satisfaction Scores Lagging?
If your customer satisfaction ratings aren’t where you’d like them to be, the way you handle customer data could be to blame.
With a CRM system, you can quickly see a client’s entire history with your company in just a few clicks. This makes it easier to deliver targeted support when they contact you with a question or concern. You will also have the insights necessary to effectively upsell and cross-sell.
6. Do We Need an Easier Way to Attract and Nurture Leads?
If your goal is to identify, attract, evaluate, and engage new leads, then you’ll benefit from a CRM investment. This software provides data insights that help you attract and manage leads and then turn them into long-term customers.
Is an ERP or CRM System Right For You?
Ultimately, your company goals will be the deciding factor as you consider whether to invest in an ERP or CRM system.
In many cases, companies find that they need both. The good news is that CRM and ERP platforms can integrate with each other, giving you the best of both worlds.
(Learn about ERP and CRM data integration.)
To start preparing for software selection and learn how to implement enterprise software in a way that ensures data integration, contact our ERP consulting team below.
