The ERP vs. CRM debate is an important distinction that could impact your business processes more than you think.
Companies have much to consider when weighing the difference between ERP and CRM.
Which one is best for you? Do you need both? What even are the differences?
These questions will get answered to ensure your confidence in choosing the best system for your business.
ERP vs. CRM: An Overview of Two Different Types of Software
What Is an ERP?
Enterprise Resource Planning (ERP) is a type of software that combines critical business processes into one system. Using one streamlined system allows companies to have a bird’s eye view when managing everyday activities.
Companies switch to ERP to improve their productivity and efficiency. Automating and unifying different business parts under one database improve these improvements. Using one system allows employees to access pertinent data from other departments.
ERP software may include some or all of the following functions:
- Finance and accounting
- Inventory and order management
- Payroll and HR
- Supply chain management
- Automation
ERP Benefits
How can ERP help your business? A few benefits of ERP include:
- Integrating separate business systems and processes all into one program
- Product greater efficiency by up to 95%
- Create reports and data analysis automatically without manual data entry
- Standardized monitoring of supply and inventory
What Is a CRM?
Customer Relationship Management (CRM) is a system that focuses on improving the customer experience, managing customer interaction, improving communication between marketing and sales, and incorporating customer data into one unified system.
The impact of CRM on a business means increased sales, happier customers, and more accurate marketing tactics.
CRM software may include some or all of the following functions:
- Marketing automation
- Sales management
- Customer service
- Lead management
CRM Benefits
How can CRM help your business? A few benefits of CRM include:
- Integrating customer service systems and processes all into one program
- Customer segmentation to optimize marketing to leads
- Create better methods of communication between the company and the customer
- Automate sales reports to quickly evaluate progress
| ERP Functions | CRM Functions |
| Finance and accounting | Marketing |
| Inventory and order management | Sales management |
| Payroll and HR | Customer relations |
| Supply chain management | Lead management |
| Automation |
ERP and CRM Examples
Below are well-known ERP companies:
- NetSuite (Oracle) ERP
- Microsoft Dynamics ERP
- SAP ERP
- Odoo
- Epicor
- Workday
- Syspro
- Sage
Below are well-known CRM companies:
- NetSuite (Oracle) CRM
- Salesforce
- HubSpot
- Microsoft Dynamics CRM
- SAP CRM
- Zoho
- Zendesk
The Key Differences Between ERP and CRM Software
1. CRM Can Be Part of ERP But Not the Other Way Around
Depending on what ERP your business uses, CRM software is often included in ERP. Most ERP systems integrate easily with stand-alone CRM programs if it is not already included.
For instance, NetSuite ERP offers the NetSuite CRM module to unify the NetSuite CRM and ERP systems.
However, the reverse is not true — ERP cannot be part of CRM software.
The reason is that CRM is solely related to sales and building customer relationships. The full scope of ERP software cannot be found in the smaller range that CRM systems provide.
Although ERP software can provide CRM services, the ERP system might not be as effective and may not offer as many features as a CRM specializing in customer relationships. The reason is that customer relations may just be one small element of what an ERP offers.
2. ERP Focuses on Finance, CRM Focuses on People
A business chooses to implement ERP to manage its assets and finances. The company wants an easier way to streamline accounting processes, manage cash flow, and generate data analytics for future projections.
ERP is designed mainly to support the back office or the behind-the-scenes departments that come with running a business. These departments may be finance, human resources, and accounting.
In contrast, CRM focuses on the customer and improving this relationship. A good CRM makes it easier to communicate with the customer, ensures customer loyalty, and automates storing customer data for analysis and reports to boost future marketing efforts.
CRM gets used by the front office or departments that interact with customers. These departments may include customer support, marketing, or sales.
3. ERP Systems Prioritize Efficiency, CRM Systems Prioritize Sales
The ERP model incorporates varying business departments under one system. Doing this allows businesses to automate processes and phase out manual (and slow) systems. This improves a company’s ROI by becoming a more efficient company.
Both CRM and ERP automate and improve efficiency, but this is not the priority of a CRM. A CRM may make a business more efficient, but its primary goal is to benefit the customer and increase profits and sales.
4. CRM Gets Used by a Few Departments. The Whole Business Can Use ERP
A big difference between ERP and CRM is that for large enterprises, CRM software commonly gets used by departments that are directly related to customers. These departments include the sales team, marketing, and customer services.
Conversely, ERP software streamlines large-scale business operations that most (if not all) departments benefit from. From HR to inventory management, employees in entirely different departments can access ERP tools in some way to make their daily tasks easier.
Ultimately, ERP helps connect disjointed systems under one roof to make communication and analytics more accessible for the whole business.
This is different from CRM, which is helpful mainly for sales — a significant part of a business but does not necessarily concern all departments.
One caveat:
For small businesses, all employees can use CRM because small businesses typically have less defined department roles. With fewer employees, there is more involvement among the whole team when looking at sales opportunities and communications with customers.
5. ERP Costs More Than CRM
Integrating ERP is an involved process that requires uprooting the entire current business system. Doing this is not cheap.
ERP software is also often customizable to the business. Although beneficial, this requires careful planning from multiple departments to ensure that the ERP is functional. This level of planning, rollout, and integration is expensive and can cost millions.
CRM software is not as expensive because of its more minor use case. Integrating CRM into your business does not require disrupting your entire business process.
ERP systems are usually targeted at large enterprises, while CRM systems target large and small businesses. This allows for a wide range of CRM costs — from free to a few thousand every month.
FAQs
Do You Need Both a CRM & ERP Software?
Although both ERP and CRM may benefit your business, it’s costly to jump into both.
For most small businesses, it’s beneficial to get only CRM software for sales and customer relations. Mismanaging data and having poor customer service will negatively impact profit and the customer experience.
The benefits of ERP may not be worth the cost until the company becomes more prominent.
Incorporating ERP and CRM for large businesses will create a healthy business environment. With more moving parts, communication breakdowns are apparent, and manual inputs become more time-consuming. Having both combines a robust sales engine within an efficient system.
Is CRM part of an ERP?
CRM can be part of ERP, but it can also stand independently. Whether CRM is part of ERP depends on the ERP software type because not all have CRM elements.
When CRM is part of ERP, it provides more advanced customer relations support and sales management to the business.
Do CRMs Integrate with ERPs?
CRM integration with ERP ensures that information between both CRM and ERP transmits efficiently and is standardized. This prevents your business from having two separate systems that don’t talk to each other.
Imagine if your customer support team gets repeat calls on the same technical issue. Without a proper CRM documenting these interactions, this information might never make its way for the development team to review.
Most CRMs integrate smoothly with ERP. Many companies opt for this route if they feel their current ERP system doesn’t offer enough CRM components. However, integration is an involved process that requires developers to use API, following tools provided by the ERP software, or using a third party to assist.
To avoid integration failure, voice all concerns with your technical team and ERP contact.
Can ERP Replace CRM?
An ERP cannot replace a CRM since they address two different functions: ERP improves efficiency in your business while a CRM works to get you more customers.
If you are thinking about adding ERP to your business, you can either integrate your current CRM or find an ERP that also offers CRM capabilities that match or exceed your current CRM model.
When It Comes to ERP vs. CRM, Both Can Have Major Benefits to Your Business
A CRM system specializes in customer relations and sales. ERP specializes in automating business processes.
Although they have differences, both approaches help your business improve its efficiency and profit.
You cannot go wrong with an ERP, CRM, or both.
Deciding which one to go with depends on the size of your business, your sales numbers, and ultimately what works best for you.