ERP or CRM – Which One Should be Chosen


Those businesses looking to automate the business process, especially the core activities usually look for two major solutions. It’s either ERP (Enterprise Resource Planning) or CRM (Customer Relationship Management). An ERP can help a business to run successfully by connecting their operational and financial systems to a central database. In contrast, a CRM can help to manage how the clients or prospects interact with a business.

Both the systems act as important data repositories. Also, both include multiple departments, and while these are built on a common platform, the application is often acquired separately. However, these can be integrated whenever there is such a need. Therefore, it is essential to understand the key characteristics of ERP and CRM (including Open Source CRM), the basic difference between the two, and whether an ERP or a CRM would suit best.


Basics of CRM

A CRM can be regarded as software that can manage all how a customer or a prospect interacts with a particular business. In the beginning, the features of CRM were developed specifically for sales. It was referred to as SFA (Sales Force Automation). Soon, other systems were developed for managing the various customer service interactions along with marketing. It was especially true in the case of call centers that were later on referred to as contact centers. It happened when the telephone became a channel for client support.

Through developments and acquisitions, the system developers started combining all these aspects under one roof. It was termed as custom relationship management or CRM. In some of the CRM systems that exist today, sales performance management and sales incentive compensation are included in the system. However, since there are certain complexities, these are often sold separately.

PerfectView What is CRM


Benefits Of CRM

The main benefit of a CRM software is to extend businesses with a central repository of all customer data and keeping track of all the interactions. With the help of these analytics and information, businesses can make informed decisions. Based on these, it is possible to pursue prospects for additional revenue and monitor how the sales team performs. It is also possible to find out how efficient the customer service is and to what extent things are appropriate and so on.

With the help of a centralized CRM system, it is possible to find out whether the customers have exclusive service tickets or not. Accordingly, there can be a response. Alternatively, it can be verified whether a prospect is highly valued or not or whether it is potentially high valued. Accordingly, the system can re-route to the concerned department.


Basics Of ERP

Enterprise Resource Planning (ERP) has evolved from MRP (Material Requirement Planning). It was a means, especially for manufacturers to understand the various resources that are essential for successfully operating a particular business. ERP functions as a shared database for all the departments of an organization. At the basic level, it indicates that it is inclusive of the accounts system, inventory management, supply management, and management of data and information. ERP also touches on production, distribution, procurement, and fulfillment. Modern ERP systems also include human resource management, e-commerce, and CRM.

Benefits Of ERP

An ERP’s benefits include a single but common database for the management of all operational and financial data. It greatly impacts reporting that includes both ad hoc reports and the usual monthly reports based on a business’s requirements. A single source of operational and financial data implies that everyone associated with the business can drill down to a number of reports for uncovering various insights without the need for any specific finance or IT set-up.

Therefore, it becomes convenient for businesses to make quick decisions that are based on data and facts. In the long run, it impacts almost everything associated with business like profitability, growth opportunities, and so on. Another prominent benefit associated with ERP is quick financial close. The finance department usually accounts for the business’s income and expenses at the end of the month or quarter. Doing this work through spreadsheets or basic accounting systems involves extensive manual work, data entry, and coordination with various departments. A centralized ERP system can greatly help to automate these tasks.

ERP systems also allow more financial control in an organization. Since the system is centralized and the permissions are role-based, only those with defined job functions will have access to sensitive information. It dramatically helps to improve audit trials and reduce financial risks.

What Is The Difference?

Although an entire organization relies on both ERP and CRM, the fundamental difference between the two is ERP is primarily related to financial data. At the same time, CRM is customer data for use by the customer and sales department. ERP is commonly regarded as back office while CRM happens to be the front office.

Any growing company, irrespective of the size, will need both ERP and CRM or maybe a common platform having both. Depending on whether a business is more inclined towards back-end services or front end services, the decision to have ERP or CRM can be evaluated.


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