The notion of enterprise resource planning (ERP) and customer relationship management (CRM) software seem to overlap. Both are utilized to automate a company’s internal business processes and improve the profitability of the company. But the core business logic of these two software are completely different. We, in this article, will help understand the conundrum around ERP vs CRM and answer a few top questions regarding the difference between ERP and CRM.
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Ever searched for “ERP” on Google? The sheer amount of information will make you overwhelmed and not to say, confused. So, let’s try explaining what an ERP is in layman’s term. It is a unified software system which has different modules or core components and is designed to integrate the main functions of a business across the entire organization.
Before you understand this, you need to know the various business processes of an organization. Let’s take an example here :
Suppose you own a restaurant. Your day starts with galloping customers requesting for food and waiters running here and there trying to provide them with the best service - may be through an order management module.
You handle a high amount of cash transactions. Also, a high number of credit card transactions, so you need a credit card processing integration. Helping the economy go cashless, yeah ! So, your sales rep is maybe tracking sales on a sales management module.
Inventory is a must-have for any restaurant. So, there are people working on the inventory management module.
Apart from these, you need employee management, menu management, review management, marketing system and customer management. Maybe also a comprehensive analytics of all the data.
Now imagine having ten different independent software for the above purposes. It is going to be a hell of a ride then! But, generally that’s not the case.
Generally an ERP will be responsible for all the above core functionalities - everything starting from order management to customer management to inventory and sales management will happen through one system, unifiedly.
Also, if you have some existing system, your ERP will make sure they speak to that system to know what’s going on. This means one information will never be needed to be updated again because the system shares the data, in turn enabling collaboration between the organization's departments.
Though ERP has “enterprise” in it, it is widely being embraced by mid-sized and small businesses. This has accelerated with the emergence of cloud ERP systems and this is to accelerate further.
ERP helps reduce IT costs, increases efficiency and enhances collaboration. With an ERP solution, management and employees have access to data that they can leverage to make highly informed decisions. It also automates redundant processes and dramatically saves employee time.
Now that we know what ERP is, let’s move on to CRM.
Businesses of any type, big or small, cannot run without customers. And in order to make sure that the customers are happy and satisfied, you got to have a strategy. A Customer relationship management software helps in the process.
The advatages of a CRM are many - but to sum it up in a definition, a CRM is a system that identifies, acquires and retains targeted customers for the business. It then helps build a relationship with the customer, interact with them and improve the quality of customer service.
Again, let’s take the same example. You own a restaurant and you have galloping customers since morning. You need a Central customer management module that can help you find your best customers, email them new offers and analyze the outcomes, forecast sales, predict future demand and help you create personalized restaurant marketing campaigns. All these are taken care by a CRM.
If you are starting out with a few customers, excel works to keep a tab on them. But, if you want your business to expand and last, you need a customer relationship strategy. A CRM gives you an overview of your customers and a whole lot of data. These data can be used by the marketing team to better understand the sales pipeline and make better forecasts. A CRM also helps manage all the inquiries and negative feedback in one place without losing track of even a single one of them.
Read more : How to create a custom CRM for your business
So, now that we are more or less clear on the concept of what CRM and ERP does for a business, let’s move on to the differences between ERP and CRM.
The approach that these two systems take to increase profitability of business and enhance workplace automation is different. Some differences are :
Let’s break this down :
Now an ERP can also integrate with a CRM or have an in-built CRM for seamless connectivity and efficient collaboration.
So, whether you need stand-alone ERP or CRM or an integration of both depends on how robust your requirements are. If you are running a small business and you are happy with the software you are using for your internal process but you solely need to improve your sales and marketing, you need a stand-alone CRM.
On the other hand, if increasing the effectiveness and efficiency of your internal business processes is your major concern, it is better you invest in an ERP system.
If you think, you need to maintain one single database and combine both internal process and customer data in one system, you should go for ERP and CRM integration.
Any business, big or small, needs to have processes in place before thinking of building software to automate them. Also, it needs to make profits before thinking of ways to cut costs. Start with a CRM first and as and when the business grows, integrate an ERP. We hope this article provided additional knowledge about ERP and CRM and the difference between the two. If you have a requirement of custom developing either, you can drop us a line here and we’re happy to help!
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