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If you work in a company, whether in sales, management, or IT department, you have probably heard the terms enterprise resource planning (ERP) and customer relationship management (CRM). After all, both are ways to collect, store, manage and interpret data—and companies use them for similar purposes.
But there are significant differences between these two systems—differences that can determine how well a company does its operations. Below are fundamental differences between them.
ERP Versus CRM
ERP is a technology that helps businesses manage their daily operations such as accounting, project management, supply chain operations, procurement, etc. On the other hand, CRM manages the interaction between customers and other organization members.
In other words, ERP is all about looking at your company from an internal standpoint. It answers the question—how do we make sure everything we need is being done effectively? CRM is more focused on how you interact with external forces like customers, suppliers, and partners.
2. Specific Goals
An ERP is excellent for managing inventory transactions and tracking company finances, including sales and purchases. Its goal is to enhance business processes and systems. It can also track employee time and attendance. A CRM, on the other hand, is designed to help you create a better customer experience. It helps keep track of customer details such as their name, address, phone number, and email address in one place so you can make tailored campaigns.
3. Target Audience
ERP software is more complex and resource-intensive than CRM. So, it would be more fitting to be used by companies that need to organize and process a large amount of information, like those in the manufacturing or transportation industry. For instance, if you’re an accountant at a major corporation, your company might use an ERP system to manage its supply chain or inventory management.
On the other hand, CRM software only keeps track of customer relationships. The most common CRM companies are retail stores and restaurants—any enterprise where customers interact directly with employees regularly.
4. Business Size
ERP and CRM are data management tools, but the systems are designed for different business sizes. ERP is more complex and requires more resources to implement, so it’s most suitable for large organizations with many employees. However, if you have a small business with only one or two people on staff, CRM might be easier to use since it’s simpler than ERP.
If you don’t know which system will work best for your business, consider whether or not that type of software will fit into your workflow and help streamline processes. You may need to combine both for a more effective solution for your business.
CRM systems are more accessible because they’re designed to be user-friendly. They’re usually easy to set up and use, with essential functions that almost anyone in your company can access. On the other hand, enterprise resource planning (ERP) systems likely require more training and are much more complex.
In addition to being difficult for non-tech-savvy employees to use efficiently, ERP systems also come at a steep price tag. They often cost tens of thousands of dollars per year and sometimes require custom programming based on your business’s unique needs.
6. Software Type
ERP systems provide a comprehensive suite of business applications, from finance and accounting to sales and operations. The software typically requires a dedicated IT department to install and manage it, an expensive proposition for smaller companies.
CRM is intended for SMBs that don’t require an all-in-one solution. Instead, they need specialized systems that handle specific tasks such as sales or customer service on a smaller scale than ERPs do. Besides, they’re built around targeted processes and streamlined features.
CRM is more customizable than ERP. It is because it’s usually built around data collected directly from your customers (like how many times they’ve purchased from you). Hence, it enables you to customize according to your target audience.
In contrast, ERP tends toward standardized business processes that don’t lend themselves well to customization by user groups within a company. However, this isn’t absolute, as some aspects of those processes can still be customized.
Being used for internal management, ERP focuses on the organization’s processes. It ensures systems integration and data sharing across departments and teams. It leverages real-time data access to implement optimized decision-making.
Being used for external management, CRM focuses on the customer’s experience. It’s usually centered around customer data sharing across multiple organizations. Unlike ERP, it uses historical data access.
The differences between ERP and CRM may seem self-evident, but they’re often conflated in the business world as both technologies have evolved. And while some vendors are beginning to blur the lines between these systems, most still offer distinct solutions for specific problems. The key is to understand what each does and does not do so you can find a system that best suits your organization’s needs.