Customer relationship management (CRM) and enterprise resource planning (ERP) are two of the most popular types of software platforms today used to manage customer relationships, processes, sales, marketing, and operations.
The CRM vs ERP debate has been going on for years now, but it's only recently that we have seen a shift in favor of one platform over the other. We will discuss what makes each platform unique and the benefits you stand to gain by choosing one over the other.
What is CRM?
CRM stands for customer relationship management. CRM is an application designed to help businesses better understand and engage with customers. It allows companies to collect contact information, track interactions, and provide personalized services based on customer preferences.
The first-ever CRM was launched in 1987 by Mike Muhney and Pat Sullivan. Back then, it was a simple tool for effectively organizing and storing customer life cycle information. Since then, CRM has grown into an entire industry and software category. There are different CRMs available today, including cloud-based solutions, desktop-based solutions, mobile apps, and web-based solutions.
A typical CRM solution includes modules such as lead generation, campaign management, database integration, and analytics. These tools enable organizations to create targeted campaigns, analyze leads, and measure results.
What is ERP?
Enterprise resource planning (ERP) is a management system that helps companies manage all aspects of their business, from manufacturing to finance. The concept of ERP systems dates back to the 1990s when it was just a basic manufacturing process and inventory control tool. Since then, ERP has evolved into a complex set of software programs that handle everything from financial accounting to human resources management.
Today, ERP systems allow companies to track inventory, automate accounting procedures, and streamline back-office functions. In addition to providing a centralized view of your data, ERP also offers real-time visibility across the organization. For example, if you need to know how much product X costs to manufacture, you can access this information directly from within the ERP system itself.
HOW ARE CRMs and ERPs related?
Both CRMs and ERPs are powerful software platforms designed to help organizations improve customer relationship management. They both provide similar functionalities, but they differ significantly in design, functionality, integration, user experience, and other features.
But there is no single best CRM platform or ERP solution out there. A company needs to decide which one works best for them based on their specific requirements. Here are some key differences between these two platforms to help you make the right decision for your company.
Functionality
Both CRMs and ERPs offer similar functionalities, but there are several key differences between the two. Some of the most important ones include:
- CRMs focus on sales and marketing activities, whereas ERPs mainly manage operations.
- CRMs primarily focus on handling customer interactions, whereas ERPs manage employee scheduling, payroll, and other administrative tasks.
Design
There are several popular CRM designs, including Microsoft Dynamics 365, Salesforce, Oracle Service Cloud, SAP SuccessFactors, and Zoho. These CRM tools have been specifically designed to meet the needs of various industries. HubSpot is an excellent CRM platform for aligning sales and marketing teams with customers, while SAP SuccessFactors is a widely used CRM solution for large enterprises.
Correspondingly, several ERP designs, such as NetSuite, Sage Intacct, Workday, and Concur, are also available. These ERP tools were initially developed for use with larger organizations, but they now work well for smaller businesses too.
Integration
Most CRMs integrate with third-party applications through APIs. This allows users to connect their CRM to external services like email clients, social media apps, and analytics tools. By contrast, ERPs usually require custom programming to integrate with external systems.
User Experience
The look and feel of each CRM and ERP differs significantly. While CRMs are typically simple, intuitive, and easy to use, ERPs tend to be more complicated to navigate.
how is CRM different from erp?
Another way to compare and contrast CRM vs ERP is by looking at the advantages and disadvantages of each. Here are some of the major benefits and drawbacks of CRMs and ERPs.
Advantages
CRM advantages
- The best enterprise CRM platform helps companies manage customer relationships by providing detailed information about contacts, leads, opportunities, and deals.
- Many CRM solutions make it easy to create new contacts, send emails, track responses, and follow up with prospects and existing customers.
- Most CRMs allow you to set goals, monitor progress, and analyze performance.
- They can help you identify what's working and what isn't to improve future campaigns.
- CRMs are great for tracking and analyzing data from multiple sources.
ERP ADVANTAGES
- An ERP provides enterprise-level functionality in a single package, offering everything needed to run a business successfully.
- An ERP has built-in security features such as end-to-end encryption that protects sensitive data.
- With the best ERP, you get a complete software suite that integrates seamlessly, resulting in a streamlined workflow.
Disadvantages
CRM disadvantages
- While CRMs provide many useful features, they aren't always ideal for every type of business.
- Some CRMs lack robust reporting capabilities.
- Some CRMs are very expensive.
ERP Disadvantages
- ERPs are complex and require extensive training before users can operate them effectively.
- ERPs tend to be very costly, with most solutions costing at least $2,000 per user per year.
How to Choose the Best Platform for Your Business
Choosing between enterprise CRM and ERP systems can be overwhelming. When choosing which tool will best suit your needs, there are many factors to consider. These include:
How Much Do You Know About Software?
Before making any decisions, it's important to know exactly what kind of software you need. If you're not familiar with the software, take a few minutes to learn about different types of platforms. This way, you'll better understand what's available and what you should expect from each one.
What Features Are Most Important to You?
Once you've learned about the various available options, it's time to consider the specific features you want. For example, if you're interested in a CRM-powered marketing solution, you might want to look into HubSpot.
What Type of Organization Do You Work With?
The next step is figuring out whether you work with small businesses, medium-sized enterprises, or large corporations. Each type of business requires different tools. For example, if your company is relatively small, you probably don't need anything more advanced than a basic CRM. However, if you're dealing with hundreds of employees, you may need something like SAP S/4HANA Enterprise Resource Planning (SAP ERP).
What Is Your Budget?
When deciding on your budget, you should consider such factors as:
- The cost of the solution.
- Any additional costs associated with implementation.
- The number of users.
- Whether you plan to upgrade later.
Get Help From Experts
If you still feel confused about which solution to go for, we recommend consulting with a reliable IT, software, and technology expert like Eternal Works. We'll walk you through all the details and answer any questions you might have.
When to Use CRM
A CRM platform is ideal for companies that sell services or products directly to customers. It helps streamline sales processes, track leads and opportunities, manage accounts, and automate tasks. You should also use CRM when you want to keep track of customers' information to provide personalized service.
When to Use ERP
An ERP is ideal for companies that handle multiple departments and have a high volume of transactions. It provides everything you need to run your entire operation, including accounting, human resources, payroll, inventory control, purchasing, manufacturing, and distribution.
Final Remarks
There are many benefits to using either a CRM or an ERP. Ultimately, it comes down to organization-specific needs and objectives. Some entities prefer one over the other, while others use both. Either way, make sure you choose the platform that works best for your company.
At Eternal Works, we're dedicated to helping organizations like yours succeed through strategic marketing and growth solutions. Whether you're looking to get more quality leads, traffic flow, or returning customers, our team will be happy to assist you. To learn more about our services, schedule a call with us today!
