What is the Difference between ERP & CRM Software?

ERP and CRM

ERP and CRM software are valuable tools that every manufacturer needs. While both will increase the overall profitability of your business, CRM software helps you manage your customers, whereas ERP software helps you streamline all of your business processes across your entire organization.

What is ERP?

ERP (enterprise resource planning) software contains functionality for multiple different business processes such as finance, HR, inventory management and distribution. By integrating these processes, the goal is to streamline operations and to centralize information. Many systems are customizable or configurable and allow users to add modules or functionality to adhere to their unique business needs.

Large enterprises commonly use enterprise resource planning solutions, but some small businesses do opt for these solutions as well. ERP software is known for containing tools related to both front- and back-office information, along with improving internal communication and data exchange. Automation is also a key feature due to its connectivity of multiple workflows.

What is CRM?

CRM is an acronym that stands for customer relationship management. These systems are built to make customers happy, whether it’s through improved ad targeting or tailored sales communications. CRM software is a front-office tool that is used by employees in departments such as sales and marketing to increase revenue through an improvement in customer experience. After all, without a solid customer base, your company doesn’t have much to go on.

These programs are available as either standalone software or as part of an ERP solution. Some providers enable users to incorporate standalone CRM systems that have more relevant or beneficial technology to increase functionality and allow users to develop their own individualized solutions.

How are ERP and CRM related?

Both ERP and CRM systems handle contacts, companies, quotes, orders, and forecasts. Both systems manage line-item configuration, bundles, delivery schedules, and invoices. Although there is still a high degree of confusion surrounding both systems in that the average user does not know how either system connects to the other and how core functionalities differ.

For example, a prospective buyer calls you up and says that they’re not sure if they need a new ERP or CRM system. They are aware of the essential functions of a CRM system but are unsure of whether an ERP will be able to offer the same functionality. This is a classic example of misinformation due to a lack of knowledge. Most ERP systems will have some, if not all, CRM components along with the ability to integrate with a third-party CRM system. Although, generally, the CRM components of ERP systems will not be as full of features as the cream of the crop or standalone, specialized CRM marketing platforms.

The main difference between ERP and CRM softwares are their focuses. A CRM focuses solely on the customers and sales, while an ERP focuses on the business as a whole.

CRM vs. ERP

• CRM software is dedicated to customers. Its very name suggests this emphasis on customer touchpoints, customer interactions and customer management, all funneled into improved marketing presence.
• ERP software covers the entire business. ERPs contain functions that automate and manage nearly all major activities behind running a business. Rather than just focusing solely on better marketing initiatives, ERP software streamlines and improves cross-department, back-office functionality.
• Success metrics: CRM success metrics revolve around customer acquisition and retention, which leads to higher profits. Your business sets clear, quantifiable goals — such as closing 15 percent more sales, reducing sales cart abandonment rates by 20 percent or increasing e-newsletter subscriptions — then allows CRM to assist in tracking and analyzing these goals. By contrast, ERP’s success metrics span across business departments, including accounting, invoicing, order procurement, vendor management, distribution timelines and more.
• Methods to increase profit: ERP systems produce higher profit margins through cutting operational and overhead costs. CRM systems drive greater profits by increasing customer pools and therefore sales and service volumes. The former trims costs, while the latter maximizes current dollars spent.
• Typical users: ERP systems geared to cross-level production and operations logistics. ERP users are therefore typically department heads or those with executive-level decision-making roles across all business processes. On the other hand, CRM systems used primarily by sales and sales-support staff handling consumer-facing operations.