ERP Vs. CRM – What’s The Difference?
We are gradually moving towards a digital transformation where businesses and Organizations seek to computerize their main business processes. We will share the difference between ERP and CRM.
However, they can only achieve that with the two available business software: Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM).
CRM is software that automates the activities of your sale. It is often called “sales force automation”. In general, CRM software helps Organizations manage their sales activities.
On the other hand, Enterprise Resource Planning (ERP) is a business tool used for the organized collection, storage, and use of information to benefit a business enterprise.
Either CRM or ERP are powerful business tools capable of boosting your profitability. Although both CRM and ERP are hosted on the same platform, they are often bought separately and integrated where necessary.
In this article, we will help you identify peculiar differences between two prevalent types of business software – CRM and ERP – and which is suitable for your business or whether your enterprise needs both.
What Is CRM
Customer Relationship Management is the processes, rules, and concepts a business or Organization adopts when communicating to its customers.
CRM, which stands for Customer Relationship Management, is designed to boost customer relationships among old and new customers by creating an enabling environment where they can interact with their prospective customers, specifically by utilizing data analysis to study large quantities of information.
It is a business tool used to compile various information from several sources such as telephone, email, marketing materials, Organization websites, social media, etc.
Customer relationship management (CRM) also helps businesses and Organizations know more about their potential customers or targeted audiences and how best to fend for their needs and retain them as regular customers. Hence, CRM is an essential business software for an Organization or business that wants to increase sales.
Figure 2. The CRM system helps Organizations to know more about their customers and prospective customers and how best to fend for their needs and retain them as permanent customers.
What Is ERP
ERP, which stands for Enterprise Resource Planning, originated from the manufacturing space. It was a tool mainly used by manufacturers to track their inventory, shops, warehouses, etc.
Over time, the ERP has expanded to a broader technology that is used in the manufacturing space and in any other type of business Organization, such as profit and non-profit business enterprises and governmental Organizations.
ERP is a business tool that is essentially used for managing information. It centralizes all the data of your business Organization, making an Organization capable of streamlining the flow of information which connects your business process end-to-end.
The ERP business software gives your company a single view of your customers, bringing about better customer service because the necessary information your company needs is available.
In general, what ERP does to business Organizations is to give them a single system to tie together their functions and capabilities across their entire business.
Figure 3. The ERP software gives business enterprises a single system to tie together their functions and capabilities across their entire business.
What Are The Differences Between ERP And CRM?
There are some differences between the Enterprise Resource Planning (ERP) and Customer relationship management (CRM) software despite their similarities. This section discusses some of the specific differences between the ERP and CRM software you should be aware of.
In terms of Cost
CRM is cheap and should be adopted by small or medium-sized business enterprises. Here are some of the differences between ERP and CRM softwares.
There are about 728 CRMs software solutions in the market with different prices for it. For example, nutshell pro costs about $42 per user, per month when charged annually. And $49 per user, per month when charged per month.
Copper professionals cost $49 per user, per month when charged annually. And $69 per user, per month when charged per month.
On the other hand, ERP costs more and is mostly adopted by larger Organizations. For example, the average cost for a medium scale ERP project will cost between $140,000 and $760,000.
In terms of scale
CRM softwares favors small or medium scale enterprises since it is cheaper.
On the other hand ERP favors large scale business enterprises.
In terms of sales
CRM focuses on increasing raw sales numbers and customer relations.
ERP focuses on reducing the cost of each sale, growth of the Organization and how efficient they are in doing what they do.
In terms of benefits
CRM is not beneficial to every division and department of a business enterprise but only to that in which it is limited to.
On the other hand, ERP is beneficial to every department and division of an Organization or business enterprise.
In terms of web
CRM is considered a web based solution
On the other hand, ERP is considered a web based application.
In terms of function
CRM is a single system for turning prospective customers into permanent customers
While, ERP is a centralized system that streamlines every of the process
Advantage Of CRM
Below are some of the advantages of CRM softwares to a business enterprise.
- ERP is essential in Improving sales
- ERP also increases customer relationship and helps Organization and business enterprise connect with prospective buyers
- Ensure quality services
- It also helps in building effective marketing campaigns and pursuing new leads
- ERP analyzes purchase patterns and automates repetitive task
Advantages Of Enterprise Resource Planning (ERP)
Some of the advantages of ERP to business enterprise includes:
- Helping your team track real-time business process information within and across the department in the business Organization.
- Alerting team members within or across a department of an Organization about an emergency issue that may affect them.
- Planning the business enterprise-level strategy based on enterprise-wide knowledge.
- Processing orders, updating accounts, and triggering automatic alerts that will help build those orders.
- Managing manufacturing supply chains for your business enterprise while creating records and alerts on every single step of the process
- Helping Organizations track their recruitment and hiring initiatives.
- Helping Organizations or business enterprises manage payroll benefits and the personal data of their employees.
Which Do I Need For My Business, ERP Or CRM?
One of the main questions business enterprises are faced with is which of these business tools should their Organization adopt, the ERP or CRM or both of the software? If we must ensure we make the right choice, we must consider these three main factors. They are,
ERP and CRM both serve different needs despite their similarities. As a business owner or the CEO of an Organization, the business software to adopt will depend on the Organization’s needs, investment, and scale.
CRM software focuses on boosting raw sales numbers, while ERP seeks to reduce the cost of each sale. CRM software tends to be cheaper than the corresponding ERP software.
Furthermore, the CRM software should be adopted mainly by smaller Organizations or businesses who want to engage in a smaller investment, while the ERP is mostly for larger Organizations or business enterprises that want to boost sales or engage in a larger investment.
More so, CRM and ERP are on a different scale. CRM is used for small or medium-scale businesses, while ERP is used for larger-scale companies.
In summary, CRM provides excellent benefits to small-scale and medium-sized enterprises, giving them room for growth. ERP, on the other hand, provides more significant benefits to larger and more complex businesses and a cost-cutting efficiencies-driven company with a potential increase in sales.
However, some Organizations integrate both ERP and CRM software for their business. Even if your business is not ready to take full advantage of it, you can always start with a CRM and integrate with a compatible ERP software when you are ready.