Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) software systems can help your company streamline processes, increase productivity, and grow revenue.
Yet how do you choose between them when wanting to grow your company? Or should you incorporate both?
Here's the truth: They're not interchangeable. Choosing between the two without considering a few factors could mean lost opportunities and wasted resources.
Read on to learn the differences between ERP vs. CRM, to see which best works for your company.
Enterprise Resource Planning (ERP) is a comprehensive business software solution that integrates and streamlines different back-office processes. Its main purpose is to help companies effectively manage finances and resources, thereby controlling costs while achieving production goals.
ERP functionalities include:
ERP systems also address supply chain management, project management, risk management, and human resources processes.
In short, ERP is much like a centralized hub, connecting and optimizing various financial- and resource-allocation functions to ensure operational excellence.
When a healthcare organization puts up an ERP, it can improve its patient care by ensuring medical staff have access to real-time data on patient records, appointments, and resource availability.
Specifically, the ERP system can seamlessly integrate with Electronic Health Records (EHR), providing a comprehensive view of a patient's medical history. This integration further facilitates financial management, procurement, and patient care processes. It can also track associated costs of each procedure performed on a patient, manage procurement for necessary medical supplies, and update the billing system.
This approach not only streamlines administrative tasks but also enhances patient care by providing healthcare professionals with timely and accurate information.
Customer Relationship Management (CRM) is designed to enhance customer interactions and streamline the sales cycle. It operates as a sophisticated framework, seamlessly integrating with various customer experience (CX) applications such as marketing, advertising, e-commerce, and customer service solutions.
Key CRM uses include:
CRM systems help organizations adopt customer-centric practices, enabling better communication and responsiveness to customers' needs.
For instance, a growing e-commerce business might use a CRM system to help target specific customer segments based on their buying history, ensuring personalized promotions. Meanwhile, the customer service team can quickly resolve issues by accessing comprehensive customer profiles. A well-implemented CRM system fosters customer loyalty and helps grow your business.
The big difference between ERP and CRM systems is their business focus. ERP software is predominantly used for managing financial data and back-office operations, encompassing accounting, procurement, HR, and compliance functions.
On the other hand, CRM software is specifically designed to improve sales and customer service aspects of the business. It concentrates on front-office operations, including marketing, sales, and service.
Imagine ERP as the backstage manager and CRM as the frontman on stage.
Sometimes, ERP systems have a bit of CRM in them, but CRM systems don't handle the financial side. Take Salesforce, for example: It's not an ERP system because it doesn't handle transactions. While it has Commerce Cloud for creating and managing storefronts and e-commerce apps, it relies on connections with ERP systems to obtain order history or invoices.
There are two questions you need to ask yourself:
First, what are your company goals?
Opt for an ERP system if you aim to boost production, financial management, and inventory control for internal operational efficiency.
If your priorities are increasing sales, attracting and engaging leads, and cultivating customer relationships for repeat business, a CRM system is a more suitable option.
Overall, your decision should align with your business's specific objectives. If it's about refining internal processes, opt for ERP; if it's geared toward increasing sales and customer satisfaction, opt for CRM.
ERP is a better choice if your company operates with a compact yet high-value customer base and deals with tricky financial operations. This is because ERP systems are great at handling nitty-gritty financials and making tasks like accounting, procurement, and HR a breeze.
ERPs are also best suited for:
On the flip side, honing in on a CRM system can be more beneficial if your business has simple financial operations but a huge customer base that needs lots of attention. CRM systems amp up your connections with customers, can handle sales, and deliver top-notch customer service.
Tailored for front-office functions, CRM systems make the perfect fit for businesses that focus on customer interactions.
CRMs are well-suited for businesses such as:
Now, what if it's not always a simple either-or decision?
You might think some companies can benefit from both, such as those involved with the following:
For most growing companies, whether small or large, there comes a point where you need both or even a single platform that does both things seamlessly. As businesses get more complicated and extensive, having both ERP and CRM systems becomes not just an option but something necessary for smooth operations.
This involves an integration between CRM and ERP systems to share information seamlessly, preventing the need for separate data sets.
For instance, when someone books a virtual medical consultation on an online platform (CRM), the finance team records the transaction and revenue (ERP). These systems should work together to avoid discrepancies in financial records and potential disruptions in providing accurate healthcare services.
But this integration isn't just about avoiding errors. It's also about understanding customer habits better. By analyzing data from both CRM and ERP, companies can improve budgeting, offer faster and more personalized customer experiences, and predict future needs.
Here's the big win: Integrating ERP and CRM systems can boost profits. You get a clear picture of pricing structures and can manage significant numbers like customer acquisition costs and customer lifetime value. In short, this integrated approach makes the business run smoother, with fewer errors and more profit.
Deciding when to get a CRM or ERP system depends on what's happening in your business. If your company is continuously growing, dealing with complex operations, or expanding globally, it's time to consider an ERP system.
But, you should prioritize a CRM system first when you're currently working with a big customer base, struggling with sales or customer service, or if your marketing efforts need to better connect with your audience.
Regularly checking how your business is doing will help determine when these systems will be most helpful. You can also consult with Provisions Group to help you decide which system is best for you.