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ERP vs CRM: what’s the difference? 

ERP and CRM software are two cherries on the same stem. They are different and they serve individual purposes, but they are connected. As such, some people struggle to understand the difference between the two. They also, therefore, struggle to decide which option is what they need for their own project and team. 

This blog aims to help you with this understanding and decision. We will discuss what each software does and how they individually function. Then we will outline the differences between the two and how these differences can be used to inform your decision of which one to opt for. 

Sometimes the key to meeting your goals in a software development team is finding the exact software you need. Hopefully, this new knowledge will help you with that process going forward. 

What is ERP?

ERP stands for enterprise resource planning. ERP is a management software that aims to improve the efficiency and performance of your internal processes. It does so through data analysis and data sharing. When the software is provided with data concerning your business and internal workings, it works to share this information throughout all departments of your business and provide those departments with helpful insights and alerts. 

ERP has a business-wide focus and a wide scope. The software allows any business to help improve its business processes and make them more efficient. This, in turn, improves levels of profitability by reducing overheads and cutting costs associated with inefficiency. 

CRM is one of the important systems within enterprise resource planning. ERP software uses multiple systems across a business’s database to consolidate information and data. These include CRM, SCM (supply chain management), HRM (human resource management) and more. Information from these systems is used in conjunction to provide an overall understanding of the business and its processes. 

On that note, we need to look at CRM and what it means. 

What is CRM? 

CRM stands for customer relationship management. It is software that specifically helps businesses manage their relationship with both existing and pre-existing customers. It helps businesses by automating necessary actions and interactions in order to effectively manage and nourish those relationships. 

Some tasks that we would typically see in CRM include: 

  • Managing movement of users through the sales funnel/pipeline
  • Organising marketing campaigns
  • Managing all leads and working on the conversion of those leads
  • Creating data reports
  • Tracking interactions, visits and clicks
  • Building user profiles
  • Automating customer service interactions

Overall, CRM software aims to organise marketing and sales efforts, while prioritising customer conversion and customer interaction. The software helps fill in where humans can’t and allows a fast-acting, accurate response team to be developed via software. It is impressive software that is essential to any team involved in working and selling online.  

So, now that we have a basic understanding of these two types of software and how they work, we can look at how they are similar and how they are different. With the ultimate aim of deciding which one you need for your own team right now and why. 

We will start with the similarities first.

What are the similarities between ERP and CRM?

As we noted at the beginning of this blog, ERP and CRM software are of the same family. There are similarities between the two and this causes some confusion about which one to use and why amongst development and management teams. Often there is debate around which software should be used or whether both are needed together.

To start working through that debate, let’s look at the similarities between the two software first. 

Both enterprise resource planning and customer relations management software: 

 

  • Improve the accuracy of financial data and financial records
  • Help businesses understand their customers’ behaviour and habits
  • Can identify weak spots in customer interaction and sales habits
  • Save time and effort from human members of a team
  • Automate important processes, particularly data collection and analysis 
  • Assess business needs
  • Manage inventory

Ultimately, both ERP and CRM software are very beneficial for online businesses. They help provide significant insights into internal processes and they help business owners and analysts know where to go next. The automation side of things helps to keep these next moves productive and efficient, all while being backed by concrete data. 

Many ERP software options will include CRM components, so it is not necessary to see the two as entirely separate. Instead, if it is CRM functions and goals that you find specifically attractive to your business, you will need to opt for an enterprise resource planning software package that includes this option. 

Making that decision will become even easier after you read our next section, highlighting the key differences between the two types of software. 

What are the differences between ERP and CRM?

While ERP and CRM software have similar methodologies and ways of working, they have key differences that tell them apart. Knowing and understanding these differences will be essential in deciding which side you need for your business. 

The main and overarching difference between ERP and CRM is that enterprise resource planning software analyses the entirety of a business and its workings, whereas customer relations management software focuses solely on leads, sales, and customer interaction. This is the way in which CRM can be a part of ERP but it is not a substitute for the wider-scoped software. 

ERP is a superset software that is utilised in back office activities. Its main aim is to reduce inefficiency and the costs associated with it. It was the software that came first and can be seen as an umbrella under which customer relationship management software also falls. 

CRM, on the other hand, came after ERP in the 1990s and is a subset of software that is utilised in front-office activities. Its main aim is to increase sales and profit by analysing, tracking, and deciphering user activity and leads. It is a sales-heavy software that often comes within an ERP package but cannot replace ERP as an equivalent in any way.

While the two software types may have the ultimate goal of improving business practice and assisting business growth, they have different scopes and different ways in which they approach the topic. 

How can you decide which software serves you best?

To decide which software you need, what you need to consider is:

Your current business goals

Your current weak spots and blind spots

What areas of your business need improvement 

The size of your business

If you are a smaller business focusing on making sales and building profit, then customer relationship management software should most likely be your priority. CRM can be massively beneficial to your goals and it will help you make more informed business decisions going forward. The automation of customer interaction will also provide a lot of help in getting your business off the ground and continuing to make progress. The level of CRM automated customer service is nothing a human team could match without a huge budget. 

If you are a larger business or enterprise with more complex needs, enterprise resource planning will provide the help that you need. The multifaceted system can help you to streamline your processes, analyse key data reports, and root out any defunct areas. Overall, ERP can save you time, money and effort for years to come. 

Opting for both options combined is also a smart alternative. As we have noted, the two forms of software go hand in hand. To get a robust system of assistance with your business, ERP and CRM may be the exact tag team you need. 

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