November 15, 2024
by Harshita Tewari / November 15, 2024
Customers are the fuel of any business. They drive the revenue that organizations need to grow and succeed. Resources, on the other hand, are the machinery required for smooth business operations. Employees, equipment, partners, and working capital all come under resources.
Companies often use business management software, such as enterprise resource planning (ERP) systems or customer relationship management (CRM), to achieve goals, increase profit, and manage customers and assets.
Both CRM and ERP systems improve productivity by automating core business processes. However, some key differences between the two software are important to know if you have to decide between them. A growing organization must figure out which software best suits its needs.
ERP functions as a central data hub for all the back-of-house operations that make up the organization. On the other hand, CRM software focuses on customer-facing elements like marketing or sales.
CRM software is one of the most widely used solutions. It provides incomparable value to organizations looking to connect with their customers strategically and systematically.
ERP software is no less valuable but far more niche. It is also an essential tool because it manages the various workflows and operations that come with modern production and professional service organizations.
Here's a quick video on the difference between ERP and CRM before we dive into the details.
Source: NetSuite
Let's get into the specifics so you can choose the right solution to scale your business into bigger and better markets.
Enterprise resource planning (ERP) is a software system that functions as a central data hub. It coordinates myriad workflows, best practices, and financial infrastructures that comprise the different departments of the modern corporation.
ERP software is typically composed of multiple modules that handle different areas of business operations. An ERP system may have a module for managing financial transactions, another for inventory management, and a third for managing human resources.
Each module works with the others in the system to provide a comprehensive view of the organization's operations. It results in efficient data sharing and communication across departments.
ERP systems are either deployed on-premises or in the cloud. The former means installing and maintaining software on the organization's servers. Hosting in the cloud means accessing the application through the internet, which a third-party provider maintains. Some examples of ERP software include SAP, Oracle, and Microsoft Dynamics.
One of the best ways to conceptualize an ERP system is to think of it like the human body. The accounting and financial data are the 'backbone' that supports the corporate body. The lifeblood is its internal data, used to vitalize other departments and workflows throughout the organization.
The features available to users vary depending on the industry's specific demands. Nevertheless, two general categories for ERP applications are the back office and operation functions.
Back office includes departments such as sales, marketing, and accounting. Most ERP systems also involve a degree of functionality for human resources, purchasing, and analytics. Each of these departments holds unique and crucial insights for developing overall strategy.
For example, data from sales representatives can give insight into the wants and needs of current clients and prospects. The interconnectivity through ERP makes this knowledge readily available to the entire company, which drives the optimization of future product plans or marketing campaigns.
Integrating operations modules is crucial for building the central data hub. Tools of varying complexity exist for project management, production, warehouse management, and supply chain management.
Integrating these departments with the functionality of back offices and the financial lifeblood of a company is quite beneficial. It refines the calibration of consumer demand, market trends, and other changes as they arise.
More recently, the various modules in ERP software's operations and back office parts have become customizable. Some, offered by industry titans such as Oracle, come in complete packages known as best-of-breed ERPs, which include a bit of everything, including a higher price tag.
Other ERP vendors, particularly smaller developers, offer tools with specific parts to match with other systems or entirely other software.
ERP systems are used by organizations of all sizes in various industries, including manufacturing, retail, healthcare, and finance. Every company needs to tailor the software to fit its organizational needs, but a few benefits of ERP are relevant across the board.
* These are 5 leading enterprise resource planning systems from G2's Fall 2024 Grid® Report.
A customer relationship management system (CRM) improves and automates how organizations interact with existing customers, potential leads, and new prospects. CRM tools are designed for companies of all sizes to boost the relationships at the core of good business.
CRMs save time and resources while adding to the efficiency of marketing and sales efforts.
Even the most basic CRM tools have multiple datasets to draw conclusions about customers by analyzing their interaction history. Customer data collected via CRM systems includes contact information, purchase history, and communication records. Various channels, like customer service interaction records, online forms, and sales interactions, collect the desired customer information.
Once customer data is collected, businesses analyze it to gain insights into customer behavior and preferences. The new information helps tailor marketing efforts, improve customer service, and identify sales opportunities.
CRM systems also enable customer interaction management across different channels. Businesses use this feature to keep track of customer communications and ensure that teams respond promptly to customer inquiries and requests.
Further, various marketing and sales processes, such as lead generation, lead nurturing, and sales forecasting, are automated to increase productivity and profits.
A spreadsheet works for managing a few customers' data if you maintain it regularly. However, it’s a time-consuming manual task, and chances are high that you’re missing out on a gold mine of customer data that'll boost your sales.
But then there’s CRM, a platform that elevates your relationship with the customer and simplifies everyday tasks. One of its key features is its ability to automate numerous tasks and processes, such as email marketing campaigns, appointment scheduling, and customer service inquiries.
The below-mentioned points list some more CRM features.
CRM tools have a wide range of functions to help your organization reach its objectives. The applications that supercharge your business include current customer data, lead qualification, and sales enablement.
Using all of these elements paints a detailed portrait of your customers, present and future. It fosters a deeper understanding of your buyers as people: their habits, preferences, wants, and needs. The more information and data you have about your customers, the better you’ll be able to create a positive buying experience.
Collecting current customer information, the most basic CRM application increases client and account retention by giving you the most accurate, actionable insights to predict your future performance.
The information collected using this element includes:
CRM systems offer powerful options for managing the sales pipeline and nurturing relationships with potential clients, in addition to data on current clients.
CRM software only automates some processes in the buyer's journey – the human touch is still an essential element, after all. Still, it does support each of the following aspects of the pipeline to some degree:
Business development representatives (BDRs) use CRMs to translate their early interactions with prospects into a complete 360°profile. It provides sales reps with immediate insight into the client's history and personality.
The third and final application of CRM systems is sales enablement, which supports the sales team by:
A CRM in the business space does everything from serving your customers right to increasing your team's productivity. Whether you’re a small business or a large corporation, you’ll find multiple benefits to implementing a customer relationship management system to run your daily operations.
Both software offers incredibly powerful, data-driven insights, but you have to consider the merits of each solution for your organization and needs.
The core difference between these two software solutions is the type of data used to generate business insights. ERP software uses internal data to streamline your company's workflow, optimize business operations, and integrate otherwise siloed departments into a single source of truth.
On the other hand, CRM software turns external input regarding current clients and prospective customers into insights that directly guide sales actions. From broad strategy to granular decisions, the knowledge afforded by CRM is inherently client-centric.
ERP systems employ external data in the same way as CRM systems, but it's only a small part of their overall structure.
Since we've already discussed the specifics of each software, it’s now time to ask yourself which would better serve your business. CRM is the way to go if you need to increase your sales volume. ERP software is worth your time if you need to create and perfect best practices for business operations.
Tip: Beyond the information listed here, consider the insights of people using the software already. A platform like G2 uses verified reviews of actual users to build profiles of the best software on the market so you’ll always make the best decision for your business.
When purchasing a major software like a CRM tool, you need to make sure it fits the needs of your business. You might need a CRM if:
If you answered yes to a lot of these questions, you need to buy a CRM system to scale your sales capabilities and maximize your marketing. Incorporating CRM will let you transform your organization's customer experience and ultimately drive more promising prospects down your pipeline.
If those questions don’t seem quite relatable to you or they do, but there's more you need to account for, a CRM isn’t your route. It might be worth taking an ERP for a test drive if:
With ERP, accounting is the name of the game. Suppose you have an issue related to your finances or need end-to-end operations to achieve more optimal performance. In that case, ERP is the best tool for the job.
At the end of the day, it's perfectly acceptable – typical, in fact – to purchase both software solutions and combine them into one powerful system. While it won't necessarily solve all your business issues, merging a CRM and ERP system provides numerous benefits. Custom ERP implementations, like Salesforce ERP, integrate your business departments and their roles as one functional unit to give you clarity into actionable items.
Luckily, integrating ERP and CRM solutions is easier than ever, thanks to developments in cloud computing and remote software deployment.
Ask yourself these questions if you are considering buying both platforms simultaneously.
Keeping your business up to date in the digital age requires the best software. CRM and ERP tools drive growth and increase a business's overall profitability.
Your thorough understanding of each will go a long way toward solving whatever problem your organization takes on.
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This article was originally published in 2023. It has been updated with new information. robust
Harshita is a Content Marketing Specialist at G2. She holds a Master’s degree in Biotechnology and has worked in the sales and marketing sector for food tech and travel startups. Currently, she specializes in writing content for the ERP persona, covering topics like energy management, IP management, process ERP, and vendor management. In her free time, she can be found snuggled up with her pets, writing poetry, or in the middle of a Netflix binge.
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