ERP vs CRM: What’s the difference between them?

Efficient approaches to data and resource management are among the top priorities for any business that wants to succeed. And today, it is impossible to imagine these processes without using powerful software solutions created to help companies deal with huge volumes of valuable data. Enterprise application development is not a new trend. First, enterprise software systems were introduced to a wide audience in the 90s, and since then, they have changed (and improved) a lot. Despite the variety of solutions available today, ERP vs CRM remains a key dilemma for many companies as these two platforms have demonstrated the highest efficiency in supporting businesses in their growth.

CRM software development and ERP system development today are among the most popular requests we receive from enterprises looking for efficient management platforms. While ERPs help connect operational and financial systems and track back-office workflows, CRMs are intended to operate customer life cycles, including marketing, support, and sales.

How to make the correct CRM vs ERP choice? And do you have to choose? Can these systems replace each other? Or is it better to use both simultaneously? Will it make any sense? 

This article will help you to find answers to these and dozens of other related questions.But, as usual, let’s start with the most basic information about these two systems to analyze the ERP system vs CRM rivalry.

CRM system: What is it?

CRM is an abbreviation for customer relationship management. This system helps to unite and coordinate the efforts of marketing, sales, and client support teams to streamline their interaction and increase the general efficiency of business processes. The final goal of using CRM solutions by enterprises is to personalize the customer experience and increase client satisfaction.

In other words, CRM systems keep together, store and process various types of customer data that can be received from different internal and third-party sources, including but not limited to content management platforms, email, data analytics apps, call centers, social media, email, ERP (and here is already the first point that can prove that we should consider ERP vs CRM system not only in confrontation but also in tandem).

As all customer data can be accumulated on one platform, the company’s teams that deal directly with clients can also have a comprehensive picture of the entire history of the company’s interactions with customers. Such systems offer access to a full list of clients with detailed information about their inquiries, their contact details, and the outcomes of each act of communication with them. 

Thanks to this information, companies can be sure that they understand all the interests, needs, and specific demands of their customers and that they do not miss even a single lead.

CRM solutions usually have the following features and functionality:

• Contact management
• Lead management 
• Customer interaction monitoring tools
• Marketing and ad campaign tracking
• Sales automation.

Benefit from using CRM platforms

Let’s have a look at how different companies’ teams and specialists can benefit from using CRM platforms:

1. Marketing. These specialists use data accumulated in CRM systems for identifying leads and uniting them into different groups to see which of them have the highest chances to be monetized and which of them should be nurtured. CRM solutions allow marketers to accurately track each lead's entire cycle, including all steps and stages of interaction. With the overview of each client, marketing teams can make more informed and efficient decisions regarding approaches to communication with clients, channels for communication, and the creation of various ad campaigns.
2. Support. Customer support teams work with clients directly and can get insights that would stay unavailable without their interaction with people via different communication channels. When support specialists have an entire picture of customers’ profiles, they can find the most appropriate solutions based on specific customers’ needs and ongoing conditions. Though some tasks of support teams today can be fulfilled by chatbots, these solutions can still accumulate the necessary information and also can build interaction with a client following the data available on a CRM platform.
3. Sales. A CRM provides sales specialists with a tool for sales automation. Moreover, with all the data available to them on a CRM platform, sales teams can make more precise and realistic forecasts regarding further sales dynamics and customer behavior. With a better understanding of the needs and requirements of clients, companies are likely to boost their sales and increase profits faster.
4. eCommerce. Though we can’t say that 100% of businesses have already moved online, a lot of them have their digital platforms. Thanks to the CRM solutions eCommerce team can find the most relevant solutions regarding delivery methods, pricing, special offers, etc.

As you can see from the functionality and new opportunities provided by this type of enterprise software, the benefits for companies are obvious. And actually, it is not surprising that the CRM market (as well as the company's investments in developing and customizing these systems) is growing. According to recently published studies, the volume of the global CRM market was at a level of more than $57 billion in 2021. As for 2022, experts believe that this figure will reach almost $64 billion, while the forecasts for 2029 reveal that the market size will hit the mark of $145 billion, which means that a CAGR for the period from 2022 to 2029 will be over 12%.

Among the most popular CRMs used by companies worldwide today, we can mention Zoho CRM, HubSpot, Pipedrive, monday.com, Salesforce, and others. But it’s also worth mentioning that many businesses prefer to develop and launch custom CRM solutions. These decisions are explained by many factors, such as the possibility of creating a platform that will be fully tailored to their specific business needs and great control over software management and development (without any dependence on a vendor).

When do companies usually decide to start using a CRM? Below you can find just a few situations that may seem familiar to you.

• When companies see that they are losing control over their business processes related to interaction with clients;
• When their client bases are growing very fast, and it is impossible to track them manually;
• When companies and their clients are not satisfied with the quality of customer service provided by companies;
• When there are a lot of communication channels, but there is no such place that accumulates all the necessary data.

A CRM system can seem to be a good idea for supporting and boosting business growth but let’s not forget about ERP vs CRM competition. It’s high time to proceed to a closer analysis of the capacities of a traditional ERP platform.

ERP: What does it offer to businesses?

It becomes quite simple thanks to ERP’s capacity to unite separate processes that may seem to have practically nothing in common into a single ecosystem. As a result, such systems boast the highest popularity among huge enterprises with many departments, teams, and workflows. Thanks to ERPs, such businesses have a reliable tool for controlling various processes and ensuring result-oriented cooperation between different divisions, including HR, accounting, sales, and others.

The global ERP market is growing, and the coronavirus pandemic was one of the boosters of this growth. 2020 and 2021 were the years when the market growth rate significantly increased. This tendency can be explained by the necessity of enterprises to find an efficient tool for organizing their business processes and coordinating the work of different teams, even in a remote format. In 2021, the world’s ERP market size was nearly $45 billion, which is expected to increase to $49 billion in 2022. As for further projections, a mark of $90 billion is expected to be reached in 2029, which indicates a CAGR of more than 9% for the 2022-2029 period.

Modem ERP systems can include different modules focused on various business functions. When creating your custom ERP system, you can always decide on the exact combination of modules you want in your system. Below you can see the list of the most popular choices made by companies working in different spheres.

• Accounting and finance. This module helps companies (and accountants) file taxes and process payments and other transfers automatically. Because all financial operations are accumulated in one place, the risks of mistakes are significantly lower.
• HR. This module is used for storing all the employee data, job profiles, qualifications, and schedules. 
• Sales. ERP systems can also be used for tracking sales data, analyzing requests, creating and sending invoices, verifying transactions, and preparing offers.
• Supply chain. As this module accumulates all data related to all the steps of supply chain processes, it is easier to automate and optimize respective processes.
• Distribution and inventory. Thanks to this module, enterprises can not only plan and analyze production volumes and monitor processes but also manage product inventory and more quickly react to any related issues.
• Marketing. This module helps marketing teams track the efficiency of marketing campaigns, analyze clients’ demands, and get other valuable insights for developing high-quality strategies.
• Customer relations. As you can guess, this module accumulates all data related to customers and the company’s interactions with them, including receiving requests and history of purchases, if any. While some companies use stand-alone CRM platforms, others prefer to rely on the functionality of such systems in the framework of another solid solution (and that’s already the second point when we can highlight the unity of these two types of software instead of the CRM vs ERP rivalry).

There can also be some other modules like eCommerce or purchases that you can add to your system if you see such a need.

Given that the functionality of ERP systems can differ, the targeted groups of specialists who will use them can also vary. When a business launches an ERP, management expects all employees to use it. 

And as you may have already guessed, today’s software development market offers a wide range of ready-made ERP solutions (most of them provide some levels of customization for their users). The most popular systems of this kind are the following ones: Oracle NetSuite, SAP ERP,  Microsoft Dynamics 365, Acumatica, Epicor Kinetic, and others.

Benefits of ERP system

The main reasons for companies to use ERP solutions are related to the benefits that they can enjoy thanks to implementing this software product, such as:

• Better productivity of each specialist separately and the entire enterprise as the whole;
• Minimized risk of errors caused by a human factor;
• Enhanced cooperation between departments;
• Informed decisions;
• Improved, faster and automated reporting;
• Compliance;
• Higher quality of customer support service;
• Increased profit.

About ERP vs CRM: Let’s compare them

As you see, to those who have never studied the confrontation of CRM vs ERP earlier, it may seem that these two platforms are practically the same. Nevertheless, if we look closer, we will see the differences. Yes, both are intended to facilitate many processes for companies, increase the quality of provided services, and, finally, get higher profits. Both systems help users to make more informed decisions. Nevertheless, they offer different opportunities to achieve the same aims and focus on various tasks.

We’ve defined some parameters that will help us to compare an ERP system vs CRM.

First of all, it’s essential to understand that while ERPs can include a CRM system as a module, a CRM, in its turn, greatly relies on the data accumulated in an ERP even when a customer relationship management system is used as a separate app.

Secondly, the group of ERP’s end users is significantly more comprehensive than those employees who can use a CRM solution in their work.

Thirdly, while CRMs are intended to improve client experience and increase sales volumes, ERPs are targeted more at automating and optimizing business processes expected to enhance the ongoing business state.

Which solution do you need?

When looking at the benefits and features of both systems, you may decide that you need them both. And probably, you are right. The majority of businesses will find it helpful to have the possibility to use the functionality of both platforms. However, there can be situations when there is no need to invest in developing these two platforms. For example, if your client base is relatively small, but you have a lot of complicated financial transactions, an ERP system can be a perfect choice. At the same time, when you do not manufacture your products, your logistics processes are pretty simple. Still, while you are focused on expanding your customer base, implementing a CRM platform will suit you.

But let’s return to the case when both systems are required. Will they function as stand-alone gully solutions? Here is when it will be pretty sensible to talk about CRM/ERP integration.

Integration of ERP and CRM systems

When your business can boast an impressive customer base and at the same time have some complex financial, logistics, and manufacturing processes, you can choose an option that presupposes the integration of ERM and CRM systems. Thanks to this step, both systems will be connected and synchronized to have a unified database and seamless data flow between both solutions.

What other benefits can you get by integrating ERP and CRM?

• More productive work with data accumulated by both systems;
• Higher efficiency of process automation;
• Easier working processes for employees;
• Better data flow transparency.

It is crucial to find the right approach to ERP integration, given the state and the peculiarities of your software infrastructure. That’s why it is better to rely on professionals for these questions. At Geomotiv, we have rich expertise in working with different types of enterprise systems and have a good understanding of how to organize all the processes related to interactions with them so that companies will have easy access to all required data.

Instead of the closing word

Regardless of all the benefits that each type of enterprise software can offer you, there is no need to implement all the existing tools in your business processes without analyzing your ongoing business needs.

When it is necessary to make a CRM vs ERP choice, you should precisely analyze the specificity of your business processes, their complexity, as well as the size of your client base. Moreover, it is important to identify the current focus of your business: whether you are working on the expansion of your client base or you concentrate on logistics and manufacturing tasks. 

A CRM is a good solution for enhancing your client experience while an ERP will allow you to improve and optimize your core business processes. At the same time, please, do not forget that when you need to have the capacities of these two systems, it will be sensible to integrate them. The integration will let you enjoy the benefits of having a reliable pool of company-wide data.

If you still have any questions about these two types of enterprise software or you have already decided to launch one of them (or two), we are always at your disposal. Just contact us via an online form, and we will discuss how we can help you.