Companies often wonder what the difference is between a customer relationship management system (CRM) and an enterprise resource planning (ERP) system. The two systems are similar yet are different in many ways. Both are valuable business solutions that improve both revenue and productivity. Both increase the overall profitability and help to grow your business, whereas, CRM software helps you manage your customers, and ERP software helps you streamline all of your business processes across the organization. Overall ERP and CRM integration helps businesses to grow and target the right customers.
Let’s compare in detail. Kindly read till the end to understand the differences in detail.
What is ERP software?
An ERP system combines the everyday business processes of various departments, including finance and logistics. ERP systems also usually include customer relationship management functions.
Companies often purchase new modules, such as a supply chain management module, to meet their specific business needs. ERP software is available through on-premises, cloud, and hybrid options, with the latter blending on-premises and cloud.
What is a CRM system?
A CRM system collects and stores information from an organization's customer-facing functions, such as marketing and sales, and potentially automate some parts of the customer journey. Its purpose is to help companies better manage and understand their customer or client information.
Through a CRM system, users can track customer-related communications and leads, generate sales projections, create sales funnels to nurture prospective customers, and manage invoices, among other functions.
Also Read: Why ERP is necessary to grow businesses?
Key differences between CRM and ERP software
While CRM and ERP systems share similarities, including their product types -- both are available in on-premises and cloud versions – and their potential usefulness for data analysis, key differences exist between CRM software and ERP software as well.
CRM systems specifically support customer-related business functions and overall processes, while ERP systems are designed to manage an enterprise's full range of functions and processes. Also, CRM software supports tasks related to the front office, which are the departments in a company that interacts with customers directly, such as sales. However, ERP software supports mostly processes carried out by the back office, or departments that don't interact with customers, such as the finance department.
In addition, since CRM systems focus on a company's customer relationships, CRMs often have more advanced customer-related capabilities than those offered by ERP systems. Company leaders may opt to purchase a CRM system in addition to ERP if they believe their new ERP software's CRM features will be inadequate or if their ERP system's CRM features are deteriorating to meet the organization's needs.
For instance, if a company has thousands of customers, the organization may require more than an ERP system's comparatively basic CRM capabilities to manage its customer relationships.
Which one you should choose?
Nearly all manufacturing companies, from MSMEs to multinational enterprises, need both software systems. At the end of the day, both CRMs and ERPs help you improve your business’s profitability—but they each do it in different ways, and each is important to your business.
Both types of software streamline and automate your core business processes: A CRM is focused on the sales side of the organization, while an ERP system is integrated and implemented across multiple departments. Each serves its own unique purpose, and each will help you improve efficiencies, lower costs, and increase profitability.
The difference between ERP and CRM is complicated by the fact that these applications may be packaged into the same solution. However, the distinction between the two becomes clearer when you consider the purpose of each tool, rather than how they’re often presented to the user.
Linescripts can help you streamline your integration of ERP with your existing business solutions. Contact us today to learn more about how we can help you with your ERP implementation.