CRM vs ERP: Discover the differences and benefits of both solutions to learn which better fits your business.
If you’re looking to automate your business processes, you’re likely looking into Customer Relationship Management (CRM) software, Enterprise Resource Planning (ERP) software – or both. Both CRM and ERP offer powerful tools to boost the overall efficiency, productivity, and bottom line of a business. They also have many features that overlap and, in many cases, can be seamlessly integrated.
The market for both these solutions – especially the cloud-based options – is rapidly expanding. According to Gartner, the $20.6 billion CRM sales software market is looking at an annual growth rate of 12.9% through 2027. Meanwhile, the cloud ERP is poised to become the next biggest growth driver in the SaaS market and could reach $73 billion by 2026 with an annual growth rate of 15%, based on IDC data.
Both ERP and CRM software are necessary tools to keep your competitive edge in today’s business landscape. Understanding the differences and similarities between these solutions will help you decide how to select the one that is right for your business.
CRM vs ERP: What is the Difference?
ERP and CRM software both increase the profitability of a business by using different approaches. An ERP reduces admin, management, and operational costs by streamlining business processes, while a CRM can help produce greater sales volumes. An ERP focuses on back-office activities and is oriented toward the entire business enterprise, while a CRM focuses on front-office activities and is oriented toward customer relationships.
Broadly speaking, a CRM will help you with front-office activities, while an ERP focuses on back-office functions.
CRM Features | ERP Features |
|---|---|
Managing your business contacts and leads | Streamline core business processes |
Tracking a customer’s interactions | Managing accounting and financials |
Streamlining marketing efforts | Managing human resources and payroll |
Automating customer service | Distribution process management |
Managing and prioritizing leads | Supply chain management |
Streamlining sales and managing pipeline | Inventory management |
Insights for cross-selling and up-selling | Advanced business intelligence |
To summarize, ERP solutions help businesses manage their core operations while CRM solutions optimize the relationships between businesses and their customers.
CRM vs ERP: Key Similarities
Both CRM and ERP software streamline business processes by storing and analyzing business data in one unified system. They both:
Aim to increase the profitability of a business
Promote accuracy, efficiency, and improved communication
Available as on-premises software or cloud software
CRM and ERP software often have overlapping features, for instance, both can manage contacts, quotes, companies, orders, forecasts, invoices, and more. ERP software typically comes with basic CRM components but may lack the specialized features a standalone CRM can offer. Both can typically be integrated for better results.
What is a CRM?
CRM or Customer Relationship Management software manages the relationships and interactions your business has with customers and potential customers. Essentially, a CRM is a hub for collecting, storing, and analyzing your customer data.
Not only does it provide a standardized database for your customer information, but it also tracks information across every touchpoint in your customer’s journey (for instance, if they engaged with a campaign, or contacted customer support). In this way, a CRM can help you better meet the needs of your customers and build better relationships, which creates loyal customers, which in turn translates into long-term profitability due to repeat business, either by more frequent orders or higher value of orders.
Benefits of a CRM Solution
CRM software is especially useful to marketing, sales, and customer service teams, and here are some ways a well-implemented CRM system could help your business:
Improve customer service
Automate routine tasks like data entry
Easily manage all communications with prospects
Identify new leads and segment your customers
Streamline sales process and automate sales forecasting
Improve analytical data and reporting
Who Should Use a CRM Solution?
Small businesses that are looking to grow and seek a competitive edge in the marketplace as well as mid-sized to large businesses who want to scale more efficiently will benefit from using a dedicated CRM solution. Most CRMs are vastly versatile and can offer you flexible solutions to meet your business needs, regardless of the size of your business.
For instance, a CRM solution such as Microsoft Dynamics 365 goes a step further and allows you to get a customizable CRM application to meet the needs for your specific line of business. For instance, if your focus is on boosting sales, their Dynamics 365 Sales CRM is geared to do just that.
What is ERP?
ERP or Enterprise Resource Planning software automates and integrates your day-to-day core business processes such as accounting, project management, supply chain operations, and more. By bringing them together, it enables the flow of data between them.
Instead of using multiple stand-alone software systems to manage all your business functions, an ERP solution allows you to bring all these processes together under one system. ERP solutions are designed around a single, defined structure that has a common database.
This is then interconnected with business processes which are driven by workflows across different business functions (operations, sales, finance, etc.) In this way, your entire business is consolidated into one fluid system. This allows businesses to boost their productivity, increase collaboration, and make better data-driven decisions.
Benefits of an ERP Solution
ERP solutions benefit a multitude of departments across a business, from accounting to sales and support teams, and more. They provide a comprehensive overview of the business and offer a unified single source of truth so decision-makers can make data-driven decisions agilely.
Here are some other business benefits of a well-implemented ERP solution:
Streamline business processes and operations
Improve financial consolidation
Maximize inventory efficiency and reduce admin costs
Optimize your supply chain and reduce planning cycles
Respond to market conditions faster thanks to data analytics
Lower management and operational costs
Who Should Use an ERP Solution?
The short answer is any business will benefit from an ERP solution. ERP software is used widely across industries such as manufacturing and distribution, retailers, professional services, construction, non-profits, healthcare, hospitality, and more. And now, thanks to the cost-efficiency of cloud ERPs, even small to midsized businesses can easily improve their business with an ERP solution.
For instance, Microsoft Dynamics Business Central is a cost-effective cloud ERP solution that is designed specifically for small to medium-sized businesses. It empowers them to run their entire business with a single ERP solution that will help them streamline processes, make smarter decisions, and accelerate growth.
CRM or ERP – Which One Is Right for My Business?
When deciding between a CRM and ERP solution, you should keep the following factors in mind: business needs, investment, and scale.
When to use an ERP
An ERP solution is right for you if you’re looking for a way to consolidate all your business data and operations and streamline processes across departments. Consider using one if:
You need to improve back-end processes
You are dealing with multiple, disparate systems to run your business
Your business data is siloed across departments, and you lack financial visibility
When to use a CRM
A CRM solution is right for you if you need a robust system for managing your customer data and improving your customer experience. Consider using one if:
You struggle to keep up with lead flow
Your customer service or sales is falling short
It is difficult to track customer touchpoints and profiles
When to use both ERP and CRM
Eventually, most businesses that are poised for growth find value in both an ERP and CRM solution. Whether a business chooses to implement a CRM or ERP solution first depends on its business model. Companies with more complex financials may choose to go with an ERP first, while companies with large customer bases and frequent contact might select a CRM as their first solution.
Integrate Your ERP and CRM for Optimal Results
If you find that your business requires both an ERP and CRM and the good news here is that most ERP solutions are designed to integrate with a CRM and vice versa. Integration is essential because the two systems need to be able to share their data to avoid issues with siloed information, data duplication, or the need for manual updates.
Depending on the solution you choose, ERP and CRM vendors typically have pre-built integrations that make the integration process simpler. For example, a cloud-based ERP solution like Microsoft Dynamics Business Central seamlessly integrates with Dynamics 365 Sales if required.
Got Questions? Kwixand Solutions Can Help
If you are still unsure about whether an ERP or CRM is right for your business, the team at Kwixand Solutions is here to help. As software implementation partners, we help businesses across the US and Canada achieve their digital transformation goals. Book a free consultation with us to get started.
