Business

ERP vs CRM – what is the difference between them?

Igor Dąbrowski

What is ERP? 

According to Oracle.com, “Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.”

Simply put, ERP, that is,  Enterprise Resource Planning refers to the process utilized by firms or businesses to coordinate, direct and manage the key facets cum components of their business activities (which could include sales, human resources, finance, logistics, and so on). 

The primary goal that spurs the usage of Enterprise Resource Planning is to improve data integrity by removing the need for data duplication and having a unified data structure in place. Consequently, having data integrity will go a long way in demystifying, accelerating, and improving the quality of a firm’s decision-making process.

What is CRM? 

Meanwhile, CRM, which means Customer Relationship Management, can be referred to as all the sets of rules, regulations, practices, and policies guiding an organization regarding customer service or dealings. These include customer behavior analysis, forecasting, and processes that are concerned with sales cum services.

According to investopeadia.com, Customer relationship management (CRM) refers to “the principles, practices, and guidelines that an organization follows when interacting with its customers.”

It should be noted that while CRM covers about everything relating to the company to customer relations, it is usually more specifically used to refer to the technology put in place to facilitate customer relations. Some of these areas of technology include cloud computing, artificial intelligence, software systems, amongst others. 

The primary goal of companies investing in CRM is that they attract more customers by creating more customer-specific and streamlined offerings. In short, such companies aim to widen their customer base by providing the best customer experience to current and potential customers. 

Originally, Customer Relationship Management (CRM) systems were specifically developed to aid sales departments in carrying out their duties and were initially known as Sales Force Automation (SFA). 

What is the difference between ERP v CRM? 

In the business world, Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) are comparable to peas in the same pod some Enterprise Resource Planning  (ERP) systems come with a Customer Relationship Management (CRM) system. Also, apart from the fact that these two systems could be integrated into a single system, they possess what could be referred to as similarities; some of which includes the fact that they (ERP and CRM systems) are both used for the fast sharing of processed data amongst a firm’s various departments to facilitate quicker communication within such firms. 

Also, both systems are made use of in the collection and management of data (like contacts, forecasts, invoices, schedules for delivery, line-item configurations, amongst others) collected by a firm. In fact, a lot of business owners usually demand the services of consultants to understand how each of them works and which is needed for what task and at what time – a further testament to the interconnectedness of the ERP and CRM systems. Perhaps, most importantly, both systems are utilized to the end that a firm’s profitability is improved. 

These similarities leave us with a very important question – are there differences between the ERP and CRM systems? If yes, what are the ERP and CRM difference? 

For the first question, a re-examination of the respective definitions for both ERP and CRM solutions shows a clear answer – yes. For the second question, a look at their respective functions reveals the significant differences between both systems. 

First, in an ERP v CRM function analysis,  it is made clear that ERP systems are developed for the collection, management, and utilization of financial data and, as such, are made use of by the finance or accounting department. On the other hand, CRM systems are developed in order to manage customer service relationships, and as such, these systems are utilized by departments concerned wait customer relationships.

Also, CRM systems are made to carry out functions like; control and automate marketing campaigns, analyze customers’ purchase preferences and patterns, automate redundant tasks, offer efficient customer services, discover new market potentials,  and so on. While CRM systems are created to carry out functions as a monitor in real-time production and supply chains, provide timely information, manage general employee information, process orders, constantly update accounts, amongst other parts. 

Furthermore, Customer Relationship Management (CRM) systems are better suited to small and medium-scale businesses. If a growing company were to make a scale of preference regarding which system should be first deployed, CRM systems should be their priorities. 

 To put it simply, a Customer Relationship Management (CRM) system is efficiently geared towards making a company more money by expanding its customer base. In contrast, an  Enterprise Resource Management (ERM) system is designed to save the company money by unifying the totality of its data structure. A CRM system has customers as its focal point, while an ERP system has the business as its focal point.

Lastly, the business world likes to the ERP as a generic system because it oversees the totality of the business in a sense. Meanwhile, CRM systems are regarded as more streamlined or specific towards just one function – improving customer relations. 

Is CRM part of ERP?

Earlier, it was mentioned that CRM and ERP systems could be integrated. However, it should be noted that the integration of both systems does not follow a random pattern. Having established this, the answer to the posed question is yes. Enterprise Resource Planning  (ERP) systems are usually integrated with an accompanying CRM system. This is, however, subject to the discretion of the consumer (or, more appropriately, firm in question). The import of this is that depending on the choice of the business making use of a Customer Relationship Management (CRM) system, a total package (CRM with ERP) could be purchased, or two separate ERP and CRM systems could be purchased. Thirdly, two autonomous systems integrated into the other could be purchased and utilized. As a result, certain companies offering Enterprise Resource Planning (ERP)  systems come in stock with a Customer Relationship Management (CRM) component. 

These days, it is not difficult to find companies offering cloud-based solutions that allow a proper, secure, automated, and efficient integration of the CRM and ERP systems. 

Is Salesforce an ERP or CRM? 

Salesforce was founded by Marc Benioff and Parker Harris in the year 1999 to  “create business software applications in a completely new way.” Today, on the company’s website, the company describes itself this, “Salesforce is the world’s #1 customer relationship management (CRM) platform. We help your marketing, sales, commerce, service, and IT teams work as one from anywhere — so you can keep your customers happy everywhere.”

From the above company statement, it is conspicuous that Salesforce offers customer relationship management (CRM) services and prides itself as the leading organization in that industry.

One of the unique features of Salesforce is that unlike some of the other CRM  systems, Salesforce does not provide an integrated ERP system.

How ERP is used in CRM? 

The relationship between CRM and ERP systems is so important to the firms making use of them because the integration of both systems results in an overall efficiency of both systems. 

This efficiency is conspicuous in the following ways, 

Firstly, the integration of the CRM and ERP system helps build a unified data structure; this means that all accounts and contacts on both systems become centralized, and locating information becomes more effortless. 

Also, the integration of both systems would obviate the need to duplicate data – a quality that saves plenty of time and energy. 

Furthermore, integrating CRM and ERP systems helps lead to more collaboration between the various departments in a firm. This would make data accessibility easier. Build a strong sense of unity amongst the employees, helping them work towards the same goals. 

Meanwhile, sales reps would find it easier to convert proposals from the CRM system into order in the ERP system. 

Above all, the integration of both systems is more cost-effective, especially in terms of maintenance. 

Summary 

  • ERP  refers to a process used by companies to coordinate significant aspects of their business. 
  • CRM refers to the totality of policies guiding a company’s customer interaction. 
  • ERP and CRM systems are sometimes jointly utilized by firms and possess some similarities but are two different systems with different functions.
  • CRM systems are usually an integral part of ERP systems. 
  • Salesforce provides ERP services. 
  • The integration of ERP and CRM systems results in an overall efficiency of both systems. 

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