Discover the differences between a CRM and an ERP system to learn which type of business management software is right for your business.
If you are new to the world of business management software, you are likely to come across terms such as Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) a lot. Both a CRM and ERP offer powerful tools to boost the overall efficiency, productivity, and the bottom line of a business. They also have many features that overlap and, in many cases, can integrate with each other.
However, despite these similarities, there are core differences in the way these systems function. Let’s take a closer look into what exactly a CRM and ERP are, their differences, and how to select the one that is right for your business.
What is a CRM?
CRM or Customer Relationship Management is a software that manages the relationships and interactions your business has with customers and potential customers. Essentially, a CRM is a hub for collecting, storing, and analyzing your customer data.
Not only does it provide a standardized database for your customer information, but it also tracks information across every touchpoint in your customer’s journey (for instance, if they engaged with a campaign, or contacted customer support). In this way, a CRM can help you better meet the needs of your customer and build better relationships, which creates loyal customers, and which in turn translates into long-term profitability due to repeat business, either by more frequent orders or higher value of orders.
CRM software is especially useful to marketing, sales, and customer service teams, and here are some ways a well-implemented CRM system could help your business:
Improve customer service
Automate routine tasks like data entry
Easily manage all communications with prospects
Identify new leads and segment your customers
Streamline sales process and automate sales forecasting
Improve analytical data and reporting
Who can benefit from a CRM?
Small businesses that are looking to grow and seek a competitive edge in the marketplace as well as mid-sized to large businesses who want to scale more efficiently. Most CRMs are vastly versatile and can offer you flexible solutions to meet your business needs, regardless of the size of your business.
For instance, a CRM solution such as Microsoft Dynamics 365 goes a step further and allows you to get a customizable CRM application to exactly meet the needs of your specific line of business. For instance, if your focus is on boosting sales, their Dynamics 365 Sales CRM is geared to do just that.
What is ERP?
ERP or Enterprise Resource Planning is a type of business process management software that automates and integrates your day-to-day core business processes such as accounting, project management, supply chain operations, and more. By bringing them together, it enables the flow of data between them.
Instead of using multiple stand-alone software systems to manage all your business functions, an ERP system allows you to bring all these processes together under one system. ERP systems are designed around a single, defined structure that has a common database.
This is then interconnected with business processes which are driven by workflows across different business functions (operations, sales, finance, etc.) In this way, your entire business is consolidated into one fluid system. This allows businesses to boost their productivity, increase collaboration, and make better data-driven decisions.
Here are some important ways a well-implemented ERP software system can help your business:
Streamline business processes and operations
Improve financial consolidation
Maximize inventory efficiency and reduce admin costs
Optimize your supply chain and reduce planning cycles
Respond to market conditions faster thanks to data analytics
Lower management and operational costs
Who can benefit from an ERP?
The short answer is any business will benefit from an ERP. An ERP system is used widely across industries such as manufacturing and distribution, retailers, professional services, construction, non-profits, healthcare, hospitality, and more. And now, thanks to the cost-efficiency of cloud ERPs, even small to midsized businesses can easily improve their business with an ERP.
For instance, an ERP system such as Microsoft Dynamics Business Central is a cost-effective cloud ERP that is designed specifically for small to medium-sized businesses. Small to medium-sized companies can now run their entire business with a single ERP solution that will help them streamline processes, make smarter decisions, and accelerate growth.
Curious to learn more? Get in touch with our team of advisors to learn more about whether a cloud ERP is right for your business.
CRM vs ERP: So What is the Difference?
ERP and CRM software both increase the profitability of a business by using different approaches. An ERP focuses on reducing admin, management, and operational costs by streamlining business processes, while a CRM focuses more on producing greater sales volumes.
An ERP focuses on back-office activities and is oriented towards the entire business enterprise, while a CRM focuses on front-office activities and is oriented towards customer relationships.
Broadly speaking, a CRM will help you with the following front-office activities:
Managing your business contacts and leads
Tracking a customer’s interactions with your company
Organizing and streamlining marketing efforts
Automating customer service
Creating data and sales reports
Managing and prioritizing leads
Streamlining sales and managing the sales pipeline
Getting insights into which products sell best and when
On the other hand, you can perform these back-office functions with an ERP:
Streamline core business processes
Supply chain management
Distribution process management
Advanced business intelligence
Managing accounting and financials
Managing human resources and payroll
CRM or ERP – Which One Is Right For My Business?
When deciding between a CRM and ERP, you should keep the following factors in mind: needs, investment, and scale.
Another thing to keep in mind is the fact that many times you don’t have to choose. You might find that your business requires both an ERP and CRM, and the good news here is that many ERP systems are designed to integrate with a CRM and vice versa. For example, an ERP system like Microsoft Dynamics Business Central can easily integrate a Dynamics 365 solution if required.
If you are still unsure about whether an ERP or CRM is right for your business, contact us today and our team of ERP and CRM advisors can help you decide and identify solutions that will work best for your unique business needs.