ERP vs CRM: What’s the difference?
Digital businesses often hear the term ‘mission-critical’ used to describe two widely-used systems: CRM (customer relationship management) and ERP (enterprise resource planning) platforms. Both help boost customer experience and drive revenue, and when used effectively allow organisations to leverage data insights to help achieve their business objectives.
But how are these systems different, and how do they create value and revenue for a company? In this guide, you’ll learn how CRMs and ERPs can independently boost your business, and work together to drive results.
What is CRM?
CRM platforms handle, track and store a business’s customer, prospect, sales and marketing data. The purpose of a CRM is to centralise information like customer interactions, survey responses, and product and communication preferences, giving each team across an organisation access to these vital insights at any given moment.
How and when to use a CRM
CRM solutions help optimise sales and marketing management through the smart use of data, providing organisations with clear opportunities to drive growth and revenue through:
- Pipeline management
A company sales pipeline will contain leads at different stages of the customer journey. CRMs allow teams to track lead progression and prioritise actions based on data like engagement, industry and size of the deal. They also give companies a clear overview of their pipeline at any given point, supporting forecasting and sales strategy.
- Sales and marketing
CRMs give all team members access to the same data and materials for company-wide alignment and visibility. So for every presentation, sales script or marketing timeline that’s put together, everyone can access and understand the process. CRMs also enable categorisation and can be used to delegate tasks.
- Customer support
CRMs support customer service teams to monitor requests and interactions with customer data analytics. That means teams will never lose an important customer detail, and are well-equipped to deliver quality support and a memorable customer experience.
- Reporting and analytics
Finally, CRM platforms have analytics and reporting capabilities that give meaningful insights into customer relationships and business performance: data visualisation, resource allocation and analysing customer lifecycle can all be instrumental in improving ROI and boosting customer engagement.
It’s important to remember that before you choose and deploy a CRM, it’s vital to have a strategy in place with clearly defined objectives for how to get the most out of your customer data.
Benefits of CRM
- Provides insights
CRMs insights include unified customer profiles, customer turnover data and campaign performance metrics can have a transformative impact on business decision-making. These platforms house insights in secure, standalone dashboards providing a single source of truth across an organisation. Business users can customise these dashboards by adding or removing data relevant to them.
CRM data supports businesses to develop strong relationships with customers. These platforms ensure every company representative can immediately access a customer’s sales history when responding to a phone call or query, giving individuals the personalised service level they’ve come to expect.
Some CRMs even have predictive analytics tools which let companies forecast future consumer preferences and behaviour, enabling companies to proactively address customer needs and anticipate market trends.
- Improves sales efficiency
CRMs centralise customer data which supports company-wide productivity and ROI as a result. During the sales process, company representatives collect a significant amount of valuable data as they chase leads, meet customers and gather intel. If any of this data gets lost, it can end up hindering the process of building important documents and contracts, like service level agreement or scopes of work.
By automatically centralising data in a CRM that the entire company can access, everything is securely stored and data availability is maintained so no opportunities are missed.
- Enhances collaboration
CRMs bring teams together, enabling seamless information sharing and making everyone’s job easier. For example, marketing departments will often use CRM data to build and optimise their campaign strategies, alongside mapping success by tracking customer interactions from inquiry to conversion.
Sales teams can then use this same data, and data gathered during the marketing process throughout the customer journey towards a sale. This collaboration is further enabled by workflow automation built into CRM systems that helps teams streamline routine tasks and processes across departments.
- Boosts productivity with AI
Automation and AI technology have powerful applications when it comes to CRM software. Generative AI tools mean that time-consuming tasks like planning email campaigns, organising sales quotes, and marketing communications can be streamlined and executed faster than ever before.
Cloud-based CRM platforms can also use language models and machine learning (ML) for AI-driven automation. These cut repetitive tasks and coordinate workflows by automating sales pipeline tracking, calendar syncs and customer feedback reports. This all means teams are freed up to focus on high-value tasks that drive higher ROI.
What is ERP?
ERP focus on problem-solving and improving operational efficiency across day-to-day business activity.
For supply chain management, accounting, forecasting and other processes, ERPs integrate different applications to provide an organisation with a single source of truth, shining a light on inefficiencies, and enhancing internal and external communications.
When to use an ERP
- Handling big data
Basic programs and manual approaches are insufficient when it comes to handling and analysing big data. ERP systems are built to process, store and analyse large volumes of data across different departments, providing a well-rounded view of the business’s position with comprehensive information and interactive dashboards.
- Financial reporting
ERPs can also automate data entry and consolidate financial data from different ledgers, invoices and purchase orders. This reduces the risk of manual error and streamlines financial recording. ERPs also make it easier for team members to quickly view outstanding balances and invoices to optimise accounting processes.
- Consolidating software expenses
Organisations need effective systems to stay competitive, but software costs can significantly impact the bottom line, particularly when adding up separate licensing costs.
Consolidating relevant business applications into an ERP should therefore not only streamline operational costs by boosting efficiency, but also reduce the cost of IT processes by integrating key functions under one roof.
- Managing supply chains
ERP systems contain dashboards and reports for businesses’s supply chain operations, enabling real-time inventory tracking. They leverage data points like historical demand, seasonal variation and sales forecasts to predict and analyse inventory levels, such as allowing a business to see which SKUs are performing the best. ERPs can also schedule manufacturing to meet predicted order volumes, ensuring production runs smoothly.
Benefits of ERP
- Centralised data
Centralising real-time data improves business performance. It gives organisations a clear and accurate overview of manufacturing processes, allowing teams to track jobs from the initial quote to purchase order, production schedules, and logistics, all the way to invoicing. When data is stored in a central ERP hub, teams can also better communicate and collaborate while logging tasks and flagging any issues on an easily accessible dashboard or interface.
- Cost savings
ERPs can lower costs significantly. They get rid of the need for paper trails, manual data entry and other administrative functions. Their insights capabilities identify savings opportunities, and identify high-cost areas and their causes e.g., overproduction. ERPs also track inventory to help reduce waste and storage costs, and enable clear manufacturing and procurement workflows.
- Data security
Data’s value makes it vulnerable. ERP systems centralise all relevant data, removing the need for siloed documents that are owned by individual employees, increasing the visibility and protection of assets. They also enable access control to limit permissions so staff only see the data they need to do their jobs—adding another layer of security.
- Compliance
By providing a unified view of operations, and operational data, across the organisation, ERPs make it easier to monitor processes and ensure accurate reporting for compliance purposes.
The difference between CRM and ERP
While modern organisations will make use of both CRM and ERP platforms, there’s a key difference: ERP is more finance and operations focused, with the accounting departments getting the most value out of resource planning systems. CRM on the other hand is primarily a tool for sales, marketing and customer service. This is why two are called “back office” (ERP) and “front office” (CRM) systems.
There is also sometimes overlap. ERP systems, for example, can have certain applications for sales, marketing and customer service—although in general these are managed more effectively with CRMs, which do not have the same capacity to deal with manufacturing or resource planning and supply chain management. But their potential to integrate can give organisations a real advantage over competitors by ensuring the whole business is able to collaborate.
ERP and CRM integration
CRM systems can also work in harmony with ERP platforms, helping organisations deliver a frictionless service, and share valuable data. Their key areas of overlap include securely holding, managing and sharing customer data, product information, sales histories, pricing, discounts and payments information.
It can make sense, therefore, to unite these platforms, providing a sole data model for organisation-wide access. Linking the front-end CRM data with the back-office ERP process also helps organisations to not only enhance customer experience, but also optimise budgeting, forecasting and predicting future demand levels.
Xpedition recommends Microsoft Dynamics 365 Business Central for ERP and CRM integration, as it provides a scalable and cost-effective solution which can easily be deployed alongside customer relationship applications. Find out more about Microsoft Dynamics 365 Business Central or chat with the team to see how your business can take advantage of these systems side-by-side.
