ERP vs CRM: what’s the difference?

CRM and ERP: definitions

ERP stands for Enterprise Resource Planning, which means it is the system designed to help you manage the resources of your business. This software tool synchronizes the work of all departments, and collects, processes, and stores all data regarding business operations, including accounting, inventory, logistics, manufacturing processes, sales, and so on. ERP system is a single environment for all employees. The main purpose of the ERP solution is to automate business processes and eliminate routine manual work and inefficient use of human resources. 

Unlike ERP system, CRM system is more focused on providing a positive customer experience and working with customers than on internal processes. It stands for Customer Relationship Management. It collects and stores customer data, including purchases, previous customer interactions, customer service requests, bills, agreements, deliveries, and so on. All the data is stored in customer cards. It also stores customer communication history – chats, calls, etc. Also, CRM system can automate sales process by automating marketing efforts – emails, calls, etc. – manage sales funnels, manage leads, and do other things about sales management. 

The main purpose of the CRM system is to provide a positive customer experience, and improve customer loyalty, customer satisfaction, and other aspects of customer sentiment. 

What to choose: ERP or CRM software?

Now that we’ve figured out what ERP and CRM systems are, it’s time to decide which program to choose. To do this, ask yourself the following question: what are the company’s goals?

You need CRM if the main place in the office is the sales department, and it is the one you want to “pump”: increase efficiency, automate and systematize processes. You need CRM if your work with clients is based on calls, letters, and meetings, and every day you think about how to find new customers and turn them into regular customers.

In Ukraine, CRM is most often implemented in the trade and wholesale sector, as well as in the service and hospitality industries. In short, wherever it is important to win customer loyalty and build long-term relationships with them.

If you need to organize the work of the entire company, not just the sales department, then this is a task for ERP. Such a solution is necessary if your interests are focused on production workshops, warehouses, logistics, etc. In this case, the shipping and logistics department should work like clockwork, and you should be able to quickly decide what needs to be done and when, on what terms to ship to the customer, what raw materials to purchase, and what resources will be needed for this.

In Ukraine, ERP programs are most in demand in trade, mechanical engineering, construction, as well as in the food and chemical industries.

CRM and ERP as a single software solution

If we consider CRM and ERP not as competing products, but as software solutions that have common features, then the question of using such programs together arises.

It should be understood that an ERP system helps to control not only production, logistics, but also the entire sales and communication process, which means that it includes and encompasses a CRM system. So, CRM and ERP exist today as a single software solution within the ERP system. In this case, CRM is one of the modules in the ERP program along with Accounting, Logistics, and others. The advantage of this solution is that you do not need to integrate third-party products and constantly make adjustments due to program updates. However, this solution is only suitable for large enterprises.

If you need to set up integration between two products from different developers, you will need the help of an experienced programmer to finalize the docking of these solutions.

In large industries, where the main task is to create a quality product and observe all the nuances of a complex technological process, ERP is usually implemented. In order to systematize transaction data and improve control over the sales department, ERP integration with a third-party CRM system is set up via API. When data is entered into one application, it will automatically appear in the other.

It is important that the CRM system has flexible settings: for example, so that you can create your own fields for entering data in different formats. And also a wide API that allows you to take exactly the data you need and transfer it to where you need it. However, when separate products interact, there is always a risk that something will go wrong. In this case, you cannot do without an experienced system administrator.

Conclusions

Thus, CRM and ERP systems are excellent software products for different target audiences. CRM is ideal for small companies from one to fifty people in the field of trade and services that have several retail outlets and are actively developing a sales department.

ERP is suitable for larger and more established enterprises with hundreds and sometimes thousands of employees. In such a solution, CRM will be only a small part of a complex information system.

Both solutions are designed to automate business processes, CRM specializes in the relationship between the company and customers, and ERP is designed to manage processes in large enterprises. If you need the capabilities of both programs, you should choose an ERP system.

Thus, ERP and CRM systems are not competing products, but two products in a single market, but for different customers. We recommend an ERP system as a guarantee of producing high-quality and competitive products, and CRM as a tool to ensure the sale of these products and the formation of a stable position of the company in the market.