ERP and CRM: What’s the Difference?

By Lexi Wood • Updated on March 19th, 2020

If you run a business, you’ve probably considered using software to streamline operations. Two terms you’ve likely encountered during your search are enterprise resource planning (ERP) and customer relationship management (CRM), as these are two of the most popular software suites available to customer-facing businesses. Yet what do they do? How are they different? And does your business need both to succeed?

Take a look at how ERP and CRM are different (and areas where they overlap) to see how these two software types benefit your business. Here are the basics:

What is ERP?

ERP, known as enterprise resource planning, usually refers to any software suite made up of business management tools like accounting, budgeting, and forecasting. There are also human resource tools for scheduling, attendance tracking, and employee onboarding. Finally, there are applications for inventory and supply chain management.

The many features of ERP make it an incredibly popular option for optimizing business processes across every department in real-time. And its versatility makes it useful for every industry.

Oracle ERP Cloud Navigator
Oracle ERP Cloud has many modules for managing your business.

What is CRM?

CRM stands for “customer relationship management” for both B2B and B2C operations. As a software suite, it includes all sorts of features to streamline communication between your customers and your company. In particular, this software includes:

  • Contact management
  • Email integration and templates
  • Call center integration and call scripts
  • Follow-up scheduling
  • Lead tracking and customer order history
  • Social media channel management

As a customer relationship software, CRM is used by any business which deals directly with customers or clients. This might mean sending newsletters to customers who visit a physical storefront or delivering invoices to suppliers who buy your goods earlier on the supply chain. Whatever customer interactions your business relies on, CRM can handle.

Zoho CRM
CRM like Zoho provides detailed customer information and analytics.

The Main ERP and CRM Differences

Now that you know the basics, here are the important ways ERP and CRM differ:

By Function

Of course, ERP and CRM have different, though similar, functions. ERP software tends to focus on inter-departmental processes like accounting and supply chain management. CRM focuses on compiling contact information for potential customers.

While ERP automates business management throughout the production lifecycle, CRM looks at customer information to improve their experiences, increase sales opportunities, and provide sales reps with better support.

By Scale

ERP suites tend to be more encompassing than CRM software as they have to cover more parts of your business operations. As mentioned before, ERP is meant to handle every aspect of your business from the start of the supply chain until the end. Essentially, you notify the entire company about changes to your business process through one platform.

For example, imagine a shortage of raw materials means you have to slow down production. You can use an ERP to inform every step of the supply chain at once so every department can begin to prepare.

CRM is only focused on improving and maintaining customer, lead, and opportunity interactions. The amount of customers you have determines how big your software is. There are CRM systems which focus on one form of communication while others include multiple options. Use email templates and call scripts to keep all outgoing communication consistent in your marketing campaigns.

By Department

The core functionalities of ERP can be used by an entire company through every step of the product or service supply chain. Manage production from the raw materials all the way until a finished product arrives on store shelves. ERP has tools for financial workers, manufacturers, distributors, human resource representatives, sales, marketing, and, in some cases, legal departments. An ERP system minimizes miscommunications by standardizing data across all departments.

By comparison, CRM is primarily for sales and marketing departments to stay in control of customer communication. While some other departments may benefit from CRM, it depends on how much interaction there is. For example, you may use a CRM to issue tickets for customer support problems. The IT department isn’t normally in contact with customers but through a CRM system they can maintain the personalized communication established by sales across multiple channels.

By Industry

General ERP applications can be used by any industry since it offers universal business features like accounting, scheduling, and more. However, there are types of ERP software made for certain industries:

In contrast, CRM software is more useful for companies which deal with a high volume of B2B and B2C customers on a regular basis. Amongst B2C companies, the retail and hospitality industry in particular both rely on clear customer communication to avoid overstock and overbooking mistakes.

ERP or CRM: What Does My Business Need?

Now that you know the key differences between ERP and CRM, do you know which one your company needs? Both help clear up communication and cut down on errors. Which one you use comes down to whether you need a general business software or a specific solution for a single purpose.

If you want your company to have all the benefits of ERP and CRM without paying twice as much there’s good news! There are many ERP suites which include CRM modules. It may make more sense for your business to get an ERP suite with CRM than to purchase two separate programs. For example, a distributor who works exclusively with one supplier would only have one point of contact and likely wouldn’t need an entire software suite for managing that relationship.

However, if your business is heavily customer-facing, you may want to have a standalone CRM software separate from your ERP system in order to meet those needs. Or if your marketing or sales department is very large, you may benefit from an integrated CRM system just for them.

Not sure if you need both? Talk with our Software Connect experts by emailing [email protected] to learn more about custom solutions.

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