What Is The Difference Between ERP And CRM Software?

by | Oct 30, 2023

Here’s a question: Should you get enterprise resource planning (ERP) software, or should you opt for customer relationship management (CRM) software? You’ll probably say, “We’ll take whichever is better.”

We wish it were that easy, but it’s not. You see, enterprise software solutions have different strengths, and what’s better for one business may not necessarily be the better option for you.

What is the difference between ERP and CRM software? Read on to learn the answer in this straightforward ERP versus CRM guide. Consulting an independent ERP consultant or CRM advisor will also help deepen your understanding of these two types of software.

CRM and ERP: In a Nutshell

Customer relationship management software is a program, system or solution that enables a company to manage and automate the ways customers interact with their business. By doing so, CRM software allows a business to effectively and efficiently manage its relationship with its customers.

Enterprise resource planning software is a program, system or solution that enables a company to manage and automate its operations. By doing that, ERP software helps a business effectively and efficiently manage its resources.

CRM: What It Does

The following are a few of the core functions of CRM software.

1. Capture leads

CRM lets you capture leads for storage in centralized databases. CRM also allows you to qualify and classify leads and has features to track their progress through your sales cycle.

2. Record customer information

CRM records customer contact information (e.g., name, mobile number, email address, address) and customer demographic information (e.g., age, location, occupation).

3. Track customer activities

CRM tracks customer activities (e.g., calls, emails, chats, purchases, returns, concerns) and creates an integrated customer profile that anyone in customer relationship can refer to for up-to-date and complete historical information on a client or a customer.

4. Classify customers

CRM lets you create customer classifications and provide an easy way of tagging customers with the correct classification. This ensures your sales and customer service people will take proper care when dealing with high-value customers. Customer classification is also an easy way of telling which privileges customers can enjoy.

5. Gain insights and track metrics

CRM software can track metrics like how long it takes before a lead converts, which activity triggered most leads to convert, what issues most customers have, what channel most customers prefer, etc. Insights like these can be very useful to customer service, sales and marketing teams, as they can lead to data-driven innovations and strategies.

6. Automate workflows

CRM software can automate repetitive tasks, like sending follow-up emails or invoices. It can alert salespeople about follow-up calls and visits they need to make. It can also be integrated with other software, so it can trigger even more automation (e.g., marketing automation).

CRM essentially keeps and stores all customer information in one place, ensuring that the sales, marketing, customer support, and any other front-facing team or department have the information they need to:

  • Nurture and convert leads
  • Increase sales
  • Retain customers
  • Resolve customer concerns
  • Answer customer inquiries
  • Improve the customer experience
  • Maximize customer lifetime value

ERP: What It Does

The following are a few of the core functions of ERP software.

1. Centralize business intelligence and data

ERP systems collect business information into a centralized database accessible to company leadership and the different departments that need the information. There’s no need for a back-and-forth between the factory and the accounting department when the latter can access factory data through the ERP.

2. Provide end-to-end business process integration

ERP can integrate various business processes and departments. For instance, it can unify inventory, procurement and manufacturing.

3. Track company resources and information

ERP can track your human resource capacity, equipment, sales, inventory, expenses, revenue, and all other information you wish to track. ERP systems are modular, so you can add as many modules and integrate as many departments as you want to collect all the information you require.

4. Automate operational workflows

The centralization of data and integration of different departments can lead to workflow automation. Rules can be set so certain data/levels at one department can trigger activity in another.

To illustrate, if inventory data indicates that stocks are getting low, it can trigger the placement of a manufacturing order at the factory. This, in turn, can lead to requests for quotes getting sent out to suppliers, even an actual procurement order for supplies. It can also schedule overtime or put in a request for contract hiring at the human resources (HR) department.

5. Provide real-time operational information for decision-making

If the C-suites need to know how much revenue has come in and what the company profitability is like, they don’t have to wait weeks for a response. The finance department can readily generate a report using real-time (or near real-time) data from all the connected/integrated business departments.

ERP essentially keeps and stores all business process information in one place, ensuring all business departments have the requisite financial and operational information they need to:

  • Minimize costs
  • Maximize profits
  • Improve efficiency
  • Increase productivity
  • Improve operations
  • Improve employee experience

CRM and ERP: Similarities and Differences

What is the similarity between ERP and CRM software? CRM and ERP both collect and store information and enable companies to automate specific tasks and functions. They can both positively impact a company’s bottom line.

What is the difference between ERP and CRM software? The difference between CRM and ERP lies in their focus. CRM focuses on managing and automating the company’s front end (i.e., how it relates to its customers). ERP focuses on managing and automating the company’s back end (i.e., how it operates and finances itself).

CRM’s focus is on how to acquire and retain customers and how to make them happy. ERP’s focus is on how businesses spend and produce/deliver their products and services. Ultimately, CRM and ERP can boost profitability.

CRM vs ERP: Which Do You Need?

It depends. Generally speaking, we recommend getting both or an ERP system that has a CRM module.

That said, it is true that different businesses have varying requirements. Therefore, we recommend thoroughly assessing your operations before deciding on the software you need.

Affility Consulting is an IT consulting and business consulting solutions provider that offers various services including ERP project advisory. We can assess your business and help you choose the best-fit enterprise software according to your specific requirements. Contact us to learn more about our enterprise software advisory services.