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ERP vs CRM: What’s the difference?
When it comes to your business, choosing the right software can make all the difference. This article is designed to provide an overview of the similarities and differences between ERP vs CRM software solutions.
These days, it feels like the market is flush with enterprise software solutions designed to automate and improve on your business’s most essential functions. In a way, it makes a lot of sense: after all, the more effective and efficient your business can be, the more success you’ll be able to achieve.
Generally, companies seeking to streamline their business operations turn to one of two different solutions. While these offerings share some key similarities, ultimately, they’re differentiated by the unique functions that they serve within a business.
The first, called customer resource management or CRM, serves front office functions like sales, marketing, and customer service. Meanwhile, the second, known as enterprise resource planning or ERP, works with back office teams like finance and HR.
We’ll take a deeper look at what they do, why they do it, and determine which solution makes the most sense for you.
What is CRM?
Customer resource management (CRM) is software that’s designed to streamline the interactions between businesses and their customers. It’s commonly used by sales, marketing, customer service, and other “front office” teams to facilitate improved customer loyalty and satisfaction. As such, it’s also a key component in fostering long-term company growth.
Some examples of the functions commonly served by CRM include:
- Storing customer data, including purchase history, contact information, and service requests.
- Sharing customer data across departments for a more consistent service experience.
- Facilitating communications between customers and business representatives.
- Analyzing customer behavior to suggest the next best steps.
CRM solutions don’t address “back office” systems, so they aren’t involved in the functions associated with a company’s accounting or finance department, like creating financial statements or managing payroll.
The Benefits of CRM
CRM solutions support improved customer experiences. With the right system in place, businesses experience a wide range of benefits, all of which support improved outcomes over the long term. Some of the most noticeable benefits associated with CRM include:
- Deliver higher-quality customer service: These days, customers expect high-quality, individualized care. Maintaining accurate, up-to-date customer data empowers business professionals to meet customers where they’re at. For example, they might be able to adapt their communications to reach out to customers over their preferred channels.
- Unlock key customer insights: Many of the leading CRM solutions deploy artificial intelligence and machine learning solutions to analyze customer data in real time. This technology allows businesses to better understand their customers for more effective, more personalized care. For example, representatives might be able to predict future outcomes or suggest more tailored solutions.
- Streamline essential business functions: The right CRM solution will streamline or automate repetitive business practices to create more efficient workflows. Not only does it save business professionals time, but it also frees them to focus their attention on the most complex, highest-value cases. As a result, they’re able to be much more effective.
What is ERP?
Enterprise resource planning (ERP) solutions are focused on improving workflows for “back office” teams like finance, accounting, HR, and supply chain systems. Overall, they’re focused on improving company outcomes through managing operations in the most effective and efficient way possible.
Some examples of the functions served by ERP software include:
- Storing inventory, order, and supply chain management-related data in a centralized location.
- Streamlining a business’s human resources offerings for its employees.
- Maintaining a centralized source of essential financial information, including the general ledger, payroll, accounts payable, and accounts receivable.
- Planning, predicting, and reporting on a business’s financial results.
- Budgeting and strategizing to meet a business’s future financial goals.
While ERP solutions aren’t associated with more direct, face-to-face customer interactions, they’re still a key part of improving the overall customer experience. For example, effective financial management provides companies with the means to deliver high-quality products to their customers, and supporting a robust workforce ensures the delivery of the high-quality care those customers expect.
The Benefits of ERP
Though ERP serves a slightly different side of the business compared to CRM, it’s still able to offer a wide array of important benefits. Notably, it plays a large role in the overall management of a company and its resources, both human and financial.
- Better, more informed decision-making: A centralized database of the most essential information helps businesses to make faster and more informed decisions. The best ERP solutions leverage artificial intelligence and machine learning to analyze large and complicated swaths of data.
- Greater efficiency and cost-effectiveness: Automating and streamlining the analysis of financial data is at the heart of most ERP software. Automatically tabulating financial results lets financial professionals focus on more complex tasks and higher-value projects.
- Reduced risk: Data security is vital for any enterprise. ERP solutions centralize data and manage access in order to protect the most sensitive company data. Similarly, they can be used to enact financial controls in order to keep company finances safe and secure.
How is CRM different from ERP?
In order to understand the differences between these two types of software, it’s important to start off with the similarities. Both CRM and ERP systems are designed to address many of the same core business functions, including:
- The centralization of data and information: A company’s employees benefit from storing all their data in one unified “true source.” Not only does this help to avoid confusion, but it also prevents the company from making costly errors and mistakes. Both systems let companies share data across departments. Managing access works to keep this data safe from bad actors.
- Data and information analysis: AI tools make it possible for both types of software services to analyze large chunks of data. As a result, companies are able to gain better insights and make more informed decisions. Also, they can use this data to help predict future outcomes.
- Automating and streamlining workflows: Both solutions are designed to accelerate and integrate the company’s essential functions to save money and time. Professionals get faster access to more accurate data. Saving time and money allows teams to focus their energy and efforts on the most important projects.
- Improving overall business outcomes: More effective and efficient management of a company naturally lends itself to more successful outcomes. Businesses leverage both types of software in order to better plan, strategize, and execute on their processes. They’re able to provide a greater value to their customers at a lesser overall cost.
Ultimately, CRM differs from ERP when it comes to where these functions are enacted within a business. Both solutions are focused on different roles and departments within a company. As its name implies, CRM addresses the customer experience. It works to improve functions related to sales, marketing and other front-facing roles. Meanwhile, ERP systems serve “back office” teams like finance.
Can CRM be a part of ERP?
No. CRM systems don’t have an ERP component.
That said, there are some ERP solutions that are designed to address CRM functions as well. For example, a company’s finance department might need to access sales history in order to calculate commission for its sales team when completing payroll.
CRM vs ERP: What’s the right solution for you?
At the end of the day, both CRM and ERP solutions can be leveraged to deliver actionable, tangible results. Some companies use only one type of software, while others use both at the same time. The right solution will depend what area of your business processes you’re hoping to improve.
ERP systems are a great choice for companies who want to better manage their accounting and finances. As an example, you might seek an ERP solution if:
- You want to streamline your financial reporting.
- You want to use financial data to plan and predict future outcomes.
- You want to use financial data to analyze past performance.
- You want to make faster and more accurate financial calculations.
Meanwhile, CRM solutions are more suitable for companies who wish to improve on the processes associated with customer-facing roles like sales and marketing. You might look to CRM if:
- You need to organize large amounts of customer data.
- You need to analyze customer data over time.
- You’re looking to improve the customer experience.
- You’re hoping to build brand loyalty.
The Bottom Line
Responsible financial management is at the center of any company’s success, especially over the long term. With the right ERP solution in place, your company will be better prepared to stand the test of time. You’ll be able to create reports, analyze data, and make better business decisions in no time at all.
If you’re looking for a fast, effective ERP solution, you’ll want to check out Xledger’s cloud-based accounting software. It’s designed to scale and automate financial management practices, allowing your company to see results and leverage data in real time. Click here to book a demo today.
Learn more about the benefits of ERP software:
