CRM and ERP: What are they and how are they different?

ERP and CRM are two business applications that can help us achieve the goal of increasing the overall profitability of a business.

• Although they are somewhat similar solutions, there are also differences, both in their purpose and in their objectives.
• In this post with updated content we tell you how the incorporation of a CRM and an ERP in your company can change your day to day

It is true that over time, business management software is becoming more diverse and functional, which can lead to overlapping of some of the specific tasks for which they were designed. However, it is important to keep in mind that both an ERP and a CRM are business management solutions with specific objectives and that they are effective when used in the tasks for which they were created.

Definition of ERP software and CRM software

But what does each software consist of?

ERP: When we talk about ERP, we are referring to a solution that integrates and manages various areas of a company (such as finance, human resources, inventories, etc.). And all of this to improve efficiency and optimize the internal processes of a business.

CRM: Meanwhile, a CRM is a tool that focuses on managing customer relationships. It allows you to collect, organize and analyze information to improve customer satisfaction (in addition to boosting sales and offering personalized attention).

Let’s draw a parallel to understand it better.

Can I edit a photo with a presentation program or a text editor?

• Yes, with certain limitations, but I can modify it.
• However, for a professional finish I will need to use a specific photo editing tool.

The same is true for these business applications. Can I manage my clients’ contacts with both? Partly yes, but to extract the full value I will need to use a CRM.

Therefore, it is ideal for companies to have each of these systems in order to better manage each of the processes. The approach used by these tools is different and this is how they manage to maximize the efficiency and profitability of businesses.

What is the purpose of a CRM and an ERP in a company?

What are each of them used for?

Broadly speaking, we can summarise an ERP as an expense manager to optimise all these costs. Meanwhile, CRM allows you to generate more sales and, therefore, increase revenue.

Regardless of the fact that the former will be developed before the latter, the latter is mainly used to perform front office activities , while the other is used to perform back office activities .

To better understand the differences between the two programs, here are some practical cases:

1. Retail Store: For example, a retailer can implement a CRM system to manage its customer relationships. Through this tool, it collects information about its customers’ shopping preferences, purchase histories, etc. So, when a customer visits the store or makes a purchase online, the sales team can access this data to offer personalized product recommendations and offers.
2. Manufacturing Company : Meanwhile, a manufacturing company can rely on ERP software to manage its internal processes. In this tool, it can integrate inventory management with production planning and logistics. For example, when it receives an order from a customer, the ERP automatically identifies the stock in the inventory and plans production accordingly. 

Below we will see the main differences in detail.

CRM vs ERP: Main differences

Both systems improve efficiency in business processes. But while ERP focuses on reducing costs by making business processes more efficient, CRM seeks to increase sales.

To fully understand what differentiates them, we can establish some large blocks.

• Objective of the program
  • The objective of each is completely different. While one controls business resources and offers economic management of them, CRM is focused on customers and everything around them, to improve and optimize the sales process.
  • This means that CRM is a solution that can be accessed and used by almost all departments in a company, while CRM is more designed for sales and marketing departments.
• Implementation
  • For the reasons explained above, the implementation of a business management system is usually a higher priority and an initial step than that of a CRM. It is therefore more complex and costly, both in terms of time and customization and implementation.
  • While all employees should be familiar with ERP, only a select few should be familiar with CRM. The learning gained with the former also makes it easier to adopt the latter.

• Company objective
  • The larger a company is, the more complex its management tends to be. For many SMEs, a complete accounting solution may be enough to manage day-to-day operations. But if there is a lot of stock, input and output of materials, as well as a manufacturing process, implementing an ERP may be ideal.
  • The same applies if we also have both physical sales and sales through different online channels. The more unified the information is, the more competitive we will be.
  • Meanwhile, CRM, with its easier implementation and learning period, can be a very good option for almost any type of company. In addition, we must not forget that its main objective is to create a greater sales volume, as well as to improve customer relations.
• Managed data
  • An ERP manages internal company data, such as financial records and inventory data, as well as purchasing and supplier data, as well as production planning.
  • In a CRM, on the other hand, the data managed is about customers, from purchase history, sales and marketing activities, or everything related to customer service.
• Impact on business
  • There are many benefits to using ERP software in a business, but the most notable is the improvement in internal management, decision-making and overall productivity.
  • With a CRM tool, a company can increase customer retention, boost sales, and improve the loyalty of current customers.

The importance of CRM and ERP in the daily management of companies

The integration of an ERP and a CRM has clear benefits for companies, as several studies have shown.

The change is almost instantaneous, as these types of tools allow companies to build and deliver with critical capability and based on data, not assumptions.

The day-to-day operations of companies see their business efficiency improved , making information between departments communicated and shared more fluidly. In addition, this also opens the door for all employees to have a better understanding of how the rest of the departments work and, by extension, the company as a whole.

Like almost all applications, an ERP and CRM also save time and reduce errors, since they allow you to automate many tasks and avoid duplications. This also facilitates instant access to data and information to make better operational decisions.

Both programs are tools that allow us to better manage our business, but each one has a different and defined purpose. The first is for a more global management of the company, focused on cost control, while the second is specific to the relationship with customers and, therefore, will help us increase revenue.

The correct combination of both will allow us to maximize the benefit.