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What are the key differences between ERP and CRM?

July 25th, 2019

ERP, CRM, automation, efficiency, technology, differences

In recent years, many firms have realised the importance of technology and its ability to streamline processes and provide information in real-time, enabling quick decision-making. In addition to cloud computing systems and automation tools, many companies use technology to make forecasts and integrate business processes. These systems are known as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). The technologies can be seen as two sides of the same coin as they are both used to increase profitability in the business. However, they differ in terms of their core functionalities and contribute to the efficiency of the organisation in various ways. 

What is ERP software?

In any organisation, the operations department performs the day-to-day functions that ensure the business runs in a smooth and efficient way. Enterprise Resource Planning is a tool used by companies to manage these functions. It aims to centralise and standardise information across all departments so that it becomes easier for CFOs to make high-level decisions. By collecting all the information under one system, problems faced in a certain area will automatically create alerts for other issues. This allows employees to rectify the problem before it spreads. Alternatively, the problem-solving mechanism allows employees to focus on other areas of the business and increase productivity

What is CRM software?

While ERP deals with the operations in the company, Customer Relationship Management software deals with the customer journey and interactions. It helps the organisation optimise and enhance its relationship with its customers in an effective way. With the help of CRM software companies can automate their sales, organise tasks and handle interactions with customers.

A happy customer is the key to success for companies and CRM software aims to customise and optimise the customer journey from start to finish. This ensures that the customer is happy, thereby increasing brand loyalty. The CRM system identifies target customers and guides them through the sales process that ends with the purchase of the product or service. Once they become a customer, the role of the CRM process is to maintain a relationship with the buyer until they are converted to a loyal customer. 

What are the major differences between ERP and CRM?

Although both CRM and ERP help drive the goals of the business, there are still differences between the two systems in the way they function and operate. They are as follows:

1. Purpose

Both CRM and ERP systems increase the efficiency of the organisation in different ways. The ERP system focuses on reducing the operational costs and overheads of the business by making the day-to-day processes more efficient. The CRM process, on the other hand, aims to increase revenue in the company by improving the value of sales. This is done through customer interactions to improve brand loyalty.

2. Which comes first?

The goal of any business is to maximise the value of sales and generate revenue. Therefore, many new companies build their processes and functions around the sales model. This makes the customer relationship management process crucial for many organisations. When it comes to deciding which system to invest in first, a CRM model is your best bet. The company can focus on streamlining the processes of the business with ERP once they maximise their sales figures.

3. Increase growth

A company can grow its capital in two ways. It can either be done through increased sales or lower operating costs. While both processes can maximise the growth of the company, they do it in two different ways. The CRM function increases the sales value which inadvertently leads to company growth and the ERP function reduces the overall operating costs which increases profitability.

4. Implementation

One of the few limitations of ERP is the high costs associated with implementing the technology in your organisation. However, the exact amount of time required depends on the size and complexity of the business. That is the number of users, modules, deployment locations and resources. On average it takes six to nine months to install the process. Therefore, a mid-to-small sized company needs to have the time and capital to undergo the process of implementing ERP. 

Alternatively, a CRM system takes a relatively lower amount of time to install. It is essential for all companies to have this process as it allows them to nurture their customers and increase brand loyalty. There are numerous off-the-shelf solutions available for CRM so the installation process is quick and efficient. If you choose to implement a more customised CRM solution in your business, the implementation process is no longer than a few weeks. 

ERP or CRM- the best solution for your company?

Both ERP and CRM can help increase the efficiency in your organisation but the technology that would be best for your organisation depends on the goals of the business. 

If increasing the value of your sales or improving your current marketing processes in relation to the customer journey is the goal, then your business needs a CRM system. But if the company is in a phase of growth and you are looking to streamline processes to make them leaner, then you are in need of an ERP system. 

However, in addition to having efficient business processes your company needs to have a strong relationship with the customer in order to scale and grow. This is where a customer relationship system process comes in. Many businesses are realising the importance of monitoring and optimising the various touchpoints with the customer to increase the value of their sales. Hence, when picking an ERP system for your company, it is essential to find a system that can be easily integrated with the CRM tool. 

An ERP system centralises the various business processes in the organisation so that employees can share information and communicate with each other. This enables the managers to make key decisions about the future of the company. 

Though a CRM system, the company can maintain a strong relationship with the customers through the various stages of the customer journey. This helps them understand the wants and needs of the customers in an effective way. 

Both systems aim to improve the profitability of your company but given the differences between the two processes, it is up to each organisation to decide which system (or both) will meet their specific needs and goals. 

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