Enterprise resource planning (ERP) and customer relationship management (CRM) software can both fill vital roles for a wide range of businesses. They offer wide-ranging benefits when properly configured and implemented, providing support across a business.
Understanding the differences between ERP and CRM can help your company make a more informed decision about a software purchase. So can reviewing the similarities between these types of software. Recognizing how the line between ERP and CRM can start to blur in some instances is also helpful.
Let’s start with the basics, by defining ERP and CRM.
CRM vs. ERP: Definitions of Business Software
What is ERP?
On a basic level, ERP helps enterprises (businesses) make more effective plans related to their resources. This software has its roots in manufacturing, managing resources, and business processes.
However, modern ERP does much more than only support the management of those resources and production processes. Current ERP focuses more on the effective storage, retrieval, and analysis of information across an organization. This software offers benefits to manufacturers like machine shops and companies in a variety of other industries as well.
Epicor is a leading ERP provider. At CTND, we’ve been one of the company’s top US partners for 10 years. We want to share some of their definitions of ERP with you to help build your knowledge base.
Epicor points out that the foundational value offered by ERP systems is threefold. Specifically, it’s the ability to more easily streamline, automate, and scale operations. Reducing the time and human effort required to complete common workflows leads to a more efficient business. Real-time operational information makes it easier to spot potential issues and improve productivity.
A related and crucially important benefit of ERP software is its ability to provide a single source of truth. The right ERP ensures everyone derives insights from and makes business decisions based on the same information. There’s no more worrying about what kind of data is used by one department versus another.
Finally, ERP is broadly flexible. It supports more effective oversight and management in many business contexts. Providers often supply a wide range of general and function- or industry-specific add-ons and modules. That makes some ERP platforms deeply customizable.
Learn more about the benefits of ERP.
What is CRM?
CRM systems focus on gathering customer information, then analyzing it to create valuable insights. Ultimately, dependable and effective CRM supports the acquisition of new customers, retention of current ones, and stronger sales.
Salesforce, a leading CRM provider, explains modern CRM can effectively track customer interactions throughout a business relationship. That isn’t only limited to the sales process — customer service interactions, marketing, and other activities come into play as well.
Hubspot points out a few key problems that CRM is designed to address. Businesses that struggle to make customer information easily accessible and standardized can definitely benefit from CRM. It can also help build effective sales processes and workflows. That makes it easier for multiple people within an organization to work with a single client without creating friction.
Critically, CRM can remind sales staff and other stakeholders about outstanding needs, potential issues, and possible opportunities related to a client. It’s easier to provide effective and responsive service on the individual level with CRM. That’s something that just about every customer will appreciate, whether they consciously realize it or not.
Overall, CRM makes it easier to prioritize customers and their needs. In the big picture, that helps businesses effectively allocate resources.
How is ERP Different From CRM?
When it comes to ERP systems vs. CRM systems, it may seem hard to compare them at first. The scope of each software is a good way to quickly and clearly tell the difference between the two.
ERP has grown substantially since the first versions of that software were released. Now, it’s not specific to any single industry, business department, or workflow. Effective ERP offerings exist for governments, nonprofits, and all kinds of businesses outside of the world of manufacturing.
CRM, on the other hand, is still clearly tied to the sales process at its core. That’s not to say CRM software hasn’t grown and evolved over time. However, most of its functionality still centers on customer interactions and building more positive outcomes in customer relationships.
There’s something else to consider that can make it harder to distinguish between these two types of software. ERP’s continuing expansion into nearly all business processes means that it can include a wide variety of tools and features. That includes workflows and processes traditionally associated with CRM.
A purpose-built, dedicated CRM tool is generally more effective. However, ERP incorporating CRM concepts and tools can also capably address the same needs. It’s reasonable to say that, in the right conditions and recognizing the limitations, ERP can be used as a CRM.
The reverse isn’t true: There aren’t CRM platforms that also include broad ERP functionality.
Which is Better: ERP or CRM?
It’s difficult to find a winner in the ERP vs. CRM debate. We highlighted the areas where ERP functionality can cross over with CRM in the previous section. The key fact is that ERP can serve as a CRM in certain situations.
In a hypothetical situation where a manufacturing business can only choose one, it can make more sense to go with ERP. Its benefits — automating processes, improving efficiency, and managing resources — strongly align with a production environment. The ability to add a level of CRM functionality to ERP is another positive.
Other types of businesses may spring for CRM in the same situation. Consider a business focused on sales, one that doesn’t have a large (or any) manufacturing component. CRM provides more obvious benefits that align with the company’s key business activities than ERP.
ERP Designed for Machine Shops and Manufacturing
At CTND, we’re dedicated to developing and supplying purpose-built solutions specifically for manufacturers, machine shops, and companies in the A&D industry.