When it comes to technologies that can help your business be more productive, CRM and ERP software are top of the list.
People often mention them in the same conversations regarding business efficiency and employee engagement. That’s no wonder when you realise how much this can positively impact a company. According to Startups.co.uk, companies have an average return of £6.85 for every £1 invested in a CRM.
Though the two pieces of software do have areas of crossover, they are diverse solutions and may suit some businesses’ requirements more than others. This article will give you a refresher on what ERP and CRM are and run through some of the key points of difference between them.
What is ERP?
ERP stands for Enterprise Resource Planning. ERP software helps businesses manage multiple activities – like accounting, compliance, and supply chain operations – on one centralised platform. This helps businesses expand their operations while also running more efficiently, as all these activities are organised.
What is CRM?
CRM stands for Customer Relationship Management. As the name suggests, it’s a strategy and set of tools used by businesses to manage and analyse interactions and data throughout the customer lifecycle. The goal of having a CRM is to improve business relationships with customers, assist in customer retention, streamline processes, and drive sales growth.
Differences Between CRM and ERP
Functionalities
One of the biggest ways that CRM and ERP software differ is through their functionalities.
ERP software is better suited for back-office processes, like finance, inventory, supply chain, and production. The insights it provides mean you can start analysing important company metrics like cash flow, profit levels, and item amounts straight away. What’s more, internal and external business operations are both accounted for, so you’ll know that any decisions you take include all the data at your disposal.
CRM is for front-office functions, like customer interactions, sales, and marketing. As such, it has extra capabilities to help with that. This includes contact management, sales management, marketing automation, customer service, and support.
Lead tracking is one example of how a CRM can help with sales management. In most CRM software, you can categorise leads depending on where they’ve come from (their “source”). You can also mark leads based on what stage they’re in – whether that’s “won”, or “in progress”. Taken together, these two functions let you see ratios of won deals and associated sources – meaning you have evidence to justify adjusting your approach on different platforms, should you need to.
Integration Capabilities
Whilst both solutions are built to integrate, they do diverge in the software they integrate best with.
With their focus on customer interactions, CRMs naturally fit with other applications that also help to streamline sales and customer service. Many CRM systems offer built-in integrations with popular third-party applications. These are pre-configured connectors that make integration straightforward. Examples include Mailchimp, Office 365, company websites, and finance/ERP systems.
On the other hand, ERP software integrates well with internal business functions, like accounting, manufacturing, and distribution. By incorporating functions like inventory and returns management, the order process can be fully automated, from reception to delivery.
Similarities Between ERP and CRM
Despite these differences, there are a lot of areas where ERP and CRM software are broadly the same.
Most notably, both systems provide a centralised database where information can be stored, accessed, and managed. This ensures that different departments have access to the same up-to-date information, improving coordination and decision-making.
Both CRM and ERP systems are designed to integrate with various other business processes. They help streamline operations and improve efficiency by centralising data and automating workflows.
Additionally, there’s also an overlap between many of the generic functions of the software, even if their use cases differ. For example, CRMs automate marketing campaigns and customer interactions, while ERPs automate inventory management and financial reporting.
Benefits of a CRM for SMEs
Better customer service
As CRM is a centralised platform for all customer data, implementing one is an easy win for your customer service. Instead of spreading data across multiple platforms or it only being available to certain teams, you can make it available to everyone who needs to see it. This means your team has a comprehensive view of the customer and can provide an experience that’s far more tailored. For example, if a customer has logged a lot of support tickets, their account manager can assess if they’d benefit from further training.
Boost productivity
Aside from being a central hub for all your customer information, CRM can also boost productivity through other functionalities. Its other functions – like data segmentation – let you automate certain parts of the customer process, like sending out a particular offer to newly acquired customers versus long-standing customers. This allows you to send specific and personalised messages to each audience, making them feel valued and in turn creating a positive customer experience. By automating this process, you free up time for marketing and sales and improve the sales lead conversion.
Benefits of ERP for SMEs
Improved resource management
The clue’s in the name here. With an ERP system, you can always be sure that the right amount of resources are going to the projects that really need it. This is why you see ERP systems used by so many companies dealing with fast-moving consumer goods (FMCG). The ERP system can, for example, cross-reference other data to determine which products are selling best, and order more stock of those items accordingly.
Scalability
Scalability is a word that’s used a lot in business circles, and that’s no exception when it comes to ERP. In this context, it’s about how well an ERP system can adapt to changing workloads and business growth. The latter is something developers have in mind when they’re building modern ERP systems. You can add data and users when your business needs them, giving your business more flexibility and capacity.
How To Decide if You Need an ERP or a CRM
Now you know about what a CRM and ERP can do, how do you choose between them?
The first thing to say is: often, you don’t have to. Many companies find that it’s easier to have both an ERP system and a CRM system, acting together as a single source of truth for customers and employees alike. As mentioned, a lot of the generic functions can complement each other. By combining the power of both systems, you see your business from the front office and back office, meaning you have a complete view of how all departments run in tandem.
However, if you’re just starting out on your business software journey, it’s best to begin with what your company needs. If your financials are the main concern, it makes sense to prioritise an ERP. On the other hand, if your business model is heavy on frequent, highly personalised customer engagement, a CRM is your best choice.
ERP and CRM systems are far from being interchangeable. One system will do things that the other can’t (or at least, not in as much detail). Neither one of them is better or worse. You may well end up needing both in your business’s long-term future.
Looking for a trusted CRM or ERP solution? We offer Sage CRM, Sage 200, and Sage Intacct – systems that work as well separately as they do together.
To find out more about them, use our enquiry form or call PKF Smith Cooper Systems on 01332 959008.
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