Streamlining business processes is an urgent and important task facing a wide variety of companies. Large industrial enterprises, banking institutions, government agencies - all these (and others) organizations should take care of their business efficiency. Among different ways to do this, there is a fairly simple option to achieve the goal, namely - by using the so-called CRM and ERP tools.
However, several questions arise here: what is the difference between the CRM and ERP solutions? How to understand which one you really need?
We’re ready to clarify these issues in our article. You'll learn how to increase the profitability of a business with CRM and ERP technologies and find out which system is just right for your specific needs. Or, maybe, you should think of their integration?
What is CRM?
CRM is a customer relationship management system intended for maintaining the client base and organizing and automating sales and marketing departments. Also, it's quite good as a powerful lead-generation tool. No wonder, salespeople and marketers are especially fond of this system and find it extremely useful.
Some might think that CRM and ERP platforms are similar, but this is far from the truth. In fact, the CRM software has the following features which distinguish it:
- Processing the base of existing customers;
- Providing a convenient interface for managing different tasks;
- Processing of various flows of leads (new calls from potential customers);
- Automation of repeatable processes (referring to operations with the client base - like Sending an SMS or a letter, a reminder of a call or meeting);
- The possibility to follow up how the transaction progresses through the sales funnel and determine how effective each manager is;
- Notifications & Alerts System (so you won’t miss anything in your daily activities);
- Files Storage (it’s always convenient to have the necessary documents in one place);
- Email Marketing Tool;
- Intracorporate chat tool for your company members' interaction with each other in a simple way;
- Management of various tasks;
- Social networks solution;
- Statistical analysis of the processed data.
Among the ultimate goals of the program, we would like to highlight the following…
In short, while building profitable customer relationships, be sure to use CRM-systems, because they’re aimed at initiating a productive dialogue with the client and making him buy more, buy often and faster.
Want to know more about CRM software? Read our article where we delve into this question!
However, no matter how useful a CRM platform is, it covers only a part of the company's needs and functions. And how about manufacture, procurement, logistics, accounts department, and much more? Well, that's when an ERP system is here to rescue!
What is ERP?
Now we should explain to you the ERP system definition.
ERP means Enterprise Resource Planning, that is, it's about something much broader than just the opportunity of stimulating sales through marketing techniques and managing the clients' database.
So, let’s clarify: what is an enterprise resource planning system? What tasks does it have?
Fully justifying the ERP meaning, the platform maintains an extensive and diverse enterprise database. Thanks to this ERP database, all main corporate divisions can become more effective: accounts, logistics, and personnel departments, as well as a lot of others.
Thereby, you must implement an ERP system if you want to ensure a common informational environment for your employees and speed up (through automation) numerous business processes.
Recommended features for your new ERP system:
- the possibility to collect data about all corporate processes in a single interface: sales, project management, communication between employees, etc.
- easy information exchange between departments;
- convenient analytics. Using CRM, you can get data only on the sales funnel. ERP financial systems also involve working with BI tools for processing huge amounts of data (BI stands for Business Intelligence);
- employee control. Management sees what is currently happening in a particular department and in the company as a whole;
- planning the necessary volume and quality of raw materials for production;
- drawing up a recruitment plan for the near future;
- the ability to easily implement projects to modernize and upgrade equipment and implement other measures for the productive functioning of the company.
As you see, ERP focuses on the business and keeps company resources under control. It's targeted at turning individual parts of the company into a single mechanism.
To make the ERP software definition clearer, let's analyze a specific example. Among the top ERP systems, we can highlight Deltek Vision - an enterprise-focused project operating on the on-premises or cloud basis (depending on the needs of the client).
Deltek Vision offers its customers the following features:
- Accounting System
- Billing/Invoicing Tool
- Budget Planning
- BI (Business Intelligence) - to efficiently analyze your data
- Clients Management System
- Statistics of income and expenses
- Financial Accounting
- Time Management System
- Enterprise scaling planning
- Project Management Tool
- Payroll accounting
- Resource Management System
How ERP and CRM software intersect with each other
Now let's discuss differences and similarities of ERP & CRM software. Our final choice of a certain system depends on this very aspect.
We’ve already described the capabilities of each platform, and now we’ll try to identify common ERP and CRM feature sets.
While the CRM system is intended to work with the client, and the second one is focused on production processes, they have a common issue-wide purpose, even the mission in its own way, namely - they should increase the company efficiency! But what does efficiency mean? In most cases, it's about sales (and no matter what we’re selling, goods or services).
So, increasing sales is the first shared goal these systems have. They use different approaches to the issue (CRM is acting by enhancing customer loyalty, and the ERP platform is doing so by improving the product itself), but the result is the same: consistently high sales.
In addition, production processes and work with clients are somehow related to marketing activities. And that’s why both programs include features which help automate these initiatives.
And now we have to figure out how to use the above information about types of software to select a specific platform.
CRM or ERP solutions: what to choose?
As we see after comparing CRM and ERP tools, the difference between them is significant. It's impossible to definitely say which one to choose. It all depends on the needs and size of the business.
When choosing a system, the following factors play a crucial role:
- The scale of the enterprise. Enterprise Resource Planning is a global ecosystem which brings together all of the company's possible processes. Such a complex ERP platform is useless if your business is rather small.
- The complexity of business processes. The ERP system best suits large-scale companies which purchases and processes raw materials, transports and produces goods. But if you have a simple online store working on a "buy-sell" scheme, it's better to choose a CRM software.
- Money issue. Unfortunately, ERP financial systems don't come cheap, since their price includes setting up software for specific business requests. A CRM system is much more inexpensive and accessible, and its work is easier to understand without extra help.
Another approach to finding out what you need, a CRM tool or web-based ERP, is to ask yourself: what tasks does your company face? There are 2 main options…
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The task of finding customers and increasing the loyalty of a potential buyer
You need CRM if you pay special attention to the sales department and want to increase its efficiency, automate and systematize the processes.
CRM will come in handy if you always think how to find new customers and turn them into loyal ones.
-
The task of controlling the production, trade turnover and managing of all business resources
If you need to organize the work of the entire company, not just the sales department, then choose the second option, since this is exactly what an ERP system definition promises you.
Such an IT solution is necessary if production processes are at the top of the agenda, and you're forced to ensure the smooth operation of different departments.
By the way, there is another option: instead of selecting between CRM & ERP software, take care of their integration.
Advantages of ERP & CRM software integration
Now you see what is the essence of a new ERP system and what tasks a CRM platform performs. But if you have to cover both? The answer is obvious: you should think about the joint integration of platforms.
There are a lot of advantages of ERP and CRM software integration, but we’ll describe only the most significant ones.
- 100% knowledge of your client. To know your client is to be able to satisfy his needs (at least some of them). And believe us, only a full suite of ERP software supplemented by CRM features will allow you to draw the perfect portrait of the average consumer of your products (or services). You'll know everything about him: habits, financial capabilities, requests, etc.
- The necessary information in real time. Not only you, as a business owner, but also your employees would benefit from the integration of both systems. Thanks to such approach, they’ll be able to work with clients (or perform another business task), receiving the required data without any delay, right here and now.
- The company as a whole. Constant access to CRM and ERP databases is the key to creating a harmonious business system which will work correctly and accurately. You'll take control of each detail: sales, production, interaction with clients, marketing. By acting such a way, you'll be able to get benefits - your increased profits.
The ways to integrate both types of software
You have two options for solving the problem, with its own pros and cons. Let's consider them.
1. Separate programs
Here you choose any of the top ERP systems offered by popular ERP vendors, and you do the same when selecting the proper CRM platform. Then all you have to do is to set up their joint integration.
The option is good when the main task is to create a quality product and manage all the nuances of a complex technological process. In such cases, business owners usually implement an ERP system. And if they also want to systematize transaction data and improve control over the sales department, the ERP tool should be integrated with a third-party CRM platform through an API.
Alas, the interaction of platforms from different vendors always leaves the risk that something will go wrong… and it means you won't do without an experienced system administrator.
2. All in one
Another option is when CRM is a pre-installed module in the web-based ERP program. The advantage is that there is no need to integrate third-party products and constantly customize them due to software updates. However, there is a significant disadvantage either: being secondary, CRM components of ERP systems lack functionality and flexibility.
Let’s gather up the threads: if you need the features of both IT tools, then don't forget to consider the optimal integration option beforehand, at the stage of choosing a system.
Summary
Thus, CRM and ERP solutions aren't competing platforms, they're just different sides of the same coin. The ERP system is the key to the production of high-quality and competitive products, and CRM is a tool to ensure the sale of these products and the formation of a stable market position of the company itself.
That is, both programs are involved in automating business processes, but CRM deals with the issue at the level of the relationship between the company and customers, and ERP is focused on the internal organization of the whole enterprise.
Any questions left? Feel free to ask them! Anyway, contact us if you need assistance: we'll help you implement an ERP system or CRM tool (or both), and we’ll offer you the best development solution.
