Enterprise Resource Planning vs Customer Relationship Management: Which is Better for Your Business?

Businesses are constantly looking for new ways to streamline their core processes. Thanks to the advent of technology, a host of software are available to achieve these goals. When organizations are looking for a solution, very often enterprise resource planning (ERP) and customer relationship management (CRM) software are the top software contenders. 

One of the main points both the tech tools have in common is the microscopic focus on automation, revenue generation, and increasing productivity. However, it is important to understand that the methodology used by these programs to attain goals is very different. This is why you should understand the difference between a CRM and an ERP, and determine which is right for your business. 

In this article, we will take a look at what ERP and CRM software are, their common features, and what is the difference between them. 

SEE ALSO: 8 Best ERP Practices for Successful Implementation

What is an ERP?

An ERP software is loaded with all the functionalities for different business processes including HR, inventory management, finance, and distribution. The ultimate goal is to organize the core business processes and create a centralized data hub. 

Almost all ERP solutions are customizable and allow users to customize functionalities according to their niche business needs. Although large businesses are the primary end-users of ERP software, even small businesses are investing in ERP tools.

An ERP solution is loaded with features that are linked with back and front-office information. Besides, businesses can also enhance their internal communication and streamline data exchange. 

What is CRM?

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CRM is short for customer relationship management. CRM tools are predominantly designed to make happy customers with personalized sales communication. 

Besides, unlike an ERP that serves as a front and back-office tool, CRM software is a front-office solution that is used by the sales and marketing department. The goal is to generate more revenue and retain customers by consistently improving customer service. 

CRM systems are available as a standalone product or a component of an ERP solution. 

Major difference between an ERP and CRM

When you are choosing between an ERP and a CRM, it is essential to understand the differences between a CRM and an ERP. 

As mentioned before, an ERP is loaded with all the functionalities for different businesses. If you are looking for a tool that can facilitate finance, warehouse management, and other processes, ERP software is the right choice.

On the other hand, a CRM caters to your unique and niche requirements. Although many ERP tools come with basic CRM functionalities, a standalone CRM tool comes with a range of features. At the end of the day, if you are looking for a tool that caters to different business needs, you should opt for an ERP. 

However, if generating additional revenue by providing a seamless customer experience is your goal, CRM software should be your first choice. 

Functions of ERP

Planning Progress Discussion Strategy Brainstorming Concept

The range of functionality largely depends on the ERP vendor you choose. However, most ERP solutions come with some common features. 

Here are a few features that you should consider when you are looking for a solution. 

Some ERP tools also come with project management features that allow users to view the status of different projects while allocating resources. 

Financial management

Financial management and accounting systems are at the heart of systems. Without a well-structured financial system, a business is bound to crumble. Financial tools ensure that projects are being carried out within the stipulated budget. 

Some of the most important features of financial software are accounts receivable, accounts payable, fixed assets management, and general ledger. 

Human capital management

If companies fail to manage their workforce effectively, it will cost them in the long run. This is why companies either deploy a standalone human resource management software or opt for an ERP with an HR module. 

Customer relationship management

We will take a closer look at what CRM software is in the next part of the blog. However, some ERP vendors also offer the CRM functionality in their software. Although the features are very basic and not as extensive as seen in a standalone CRM, basic features are included. 

Supply chain management

Supply chain management tools also come with a wide range of features. Inventory management is one of the most important functions of supply chain management. As technologies continue to evolve, new avenues are likely to open up in this field wherein automation will also have a major impact. 

Functions of CRM

 

Database management

This is one of the most useful tools that enables users from different companies to access the same data from a centralized database. Some CRM solutions come with a data cleaning function to minimize duplicate data that could generate incorrect information. 

Client interaction tracking

The client interaction tracking feature enables users to go through historical data and leverage it to improve their existing sales processes. Besides, sales representatives can also use this information to bifurcate their customers based on their interests, purchasing behavior, and purchase intention. 

Lead management

The lead management feature allows you to capture leads from various sources such as referrals, landing pages, and email. Lead management offers a clear view of the status of all your leads in the pipeline. Besides, you can assign leads to different employees with this functionality. 

Integrated ERP vs standalone CRM

In the battle between ERP vs CRM, it is hard to pick a clear winner.

While deciding between the two, you need to identify your sales and lead management requirements. 

An ERP tool is handy in this regard as it organizes a wide range of processes with certain capabilities. A standalone CRM tool primarily contains a group of features that focus on improving customer experiences and relationships. 

This is why, if you are only looking to strengthen your relationship with your customers, CRM software should be your top choice. If you are looking to implement a tool for better workflows apart from CRM, you should look at an ERP. Besides, an ERP also comes with connected business processes and a centralized data source.

SEE ALSO: 4 Key Reasons Why Hospitality Companies Should Use a CRM

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Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency.  At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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