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ERP vs. CRM: Differences, benefits, and software integration
ERP and CRM systems track data and streamline core processes, working together to take your business to the next level.
By Donny Kelwig, Contributing Writer
Last updated January 11, 2023
Enterprise resource planning (ERP) and customer relationship management (CRM) software automate business processes and boost your return on investment (ROI). ERPs manage day-to-day operations that affect your entire business, streamlining or automating core processes. CRMs collect data on the customer-facing side, assisting with sales and customer support services.
The ERP software market is expected to reach $78.41 billion by 2026, while the global CRM market could reach $96.5 billion by 2028. In today’s market, tech solutions aren’t luxuries: They’re necessary tools to stay competitive. By learning the basics of ERP and CRM systems and how they can integrate, you will exponentially improve productivity.
What’s the difference between an ERP and a CRM?
Both CRMs and ERPs aim to improve a company’s performance—ERP systems focus on the organization as a whole, and CRM software focuses on the consumer-facing side of your business.
- ERPs let organizations manage their core operations. Managers can automate and oversee daily activities involving accounting, project management, supply chain procedures, risk management, and compliance.
- CRMs improve relationships between a company and its clients. CRMs streamline sales and customer service processes to improve the customer experience and increase profits.
Key ERP and CRM software similarities
All ERP and CRM systems streamline operations and create better communication, efficiency, and accuracy throughout your company. They do this by storing and analyzing data in one system. They’re both:
- More secure than processes that spread data across various communication platforms
- Easy to use, as they’re packaged within an accessible software as a service (SaaS) model
- Time-saving tools when it comes to data collection and reporting
- Accurate in generating reports on everything from finances to sales metrics
ERP and CRM features
ERPs and CRMs offer an extensive list of use cases. For a breakdown of each software’s main features, check out the table below:
Accounting and financial management
Complete customer view
Supply chain management
Sales productivity tools
Bulk outreach tools
Customizable smart lists, templates, and sequences
ERP software helps with finances (such as accounting and payroll), order processing, tracking manufacturing and supply chains, inventory management, and more. Some ERPs even have customer management and support capabilities. Rather than using multiple systems, companies can use one ERP’s enhanced reporting capabilities to see a snapshot of the entire business.
CRM systems help with front-end processes. CRM software benefits include creating customer profiles, automating marketing campaigns, building out self-service resources (like chatbots and help centers), and tracking sales. CRMs also make it easy to sync customer-facing teams, including sales, marketing, and support.
What is an ERP?
An ERP collects information from various departments and stores it in a centralized database. The tool can capture data on:
- Supply chains
- Human resources
As a result, teams can share data and collaborate more easily, leading to an improvement in internal operations. That level of visibility spotlights inefficient processes as well as opportunities for synchronization, such as automating repetitive tasks. Overall, this increased efficiency saves businesses time and money.
Benefits of using an ERP
ERP systems greatly benefit sales and support teams because they provide a big-picture view. Sales reps can see outstanding payments or credit status when determining whether to upsell a customer. They can also get alerts about supply chain or order processing issues. Using ERP tools, they can proactively inform the customer about potential delays and provide other options.
Other benefits of ERP systems include:
- Better business reporting
- Improved customer service
- Decreased inventory costs
- Increased cash flow
- Safer data security
- Process improvements
- Smoother supply chain management
Limitations of an ERP
Despite their benefits, ERPs come with a few limitations, including:
- Slow installations and integration
- A lack of customization
- Being far more expensive than CRMs
- Requiring extensive training to use
- The absence of time tracking features for employees
What is a CRM?
CRM systems gather information about customer interactions with a company and compile that data in a centralized database.
CRM software manages customer data for sales and customer service purposes. It is a key part of a CRM strategy, which companies deploy to better manage their relationships with prospects and customers. Businesses will use a variety of applications as part of their CRM strategy.
Benefits of using a CRM
With access to a wealth of customer data—including contact information, purchase history, and previous interactions—marketers can create targeted campaigns that attract and retain customers. They can also automate messages and segment their audience lists so messages reach the right people at the right time, without repetitive work on the back-end. Reporting features also give you a unique CRM analysis of sales goals, so it’s easy to see what products to promote.
Other benefits of CRM systems include:
- More in-depth client profiles and buyer personas
- Clearer segmentation
- Decreased customer churn
- Better sales preparation for an improved customer experience
- Faster communication with clients and teammates
- Increased data protection
- More time with clients (due to paperwork automation by CRM)
Limitations of a CRM
Some limitations of CRMs include:
- ROI depending on the right setup
- Implementation taking time, money, and training
ERP vs. CRM: Which one is right for your business?
The high-level distinction between ERPs and CRMs is clear: ERPs focus on back-end processes, and CRMs focus on front-end processes and customer management. While they have many similarities, the systems work best in their intended departments.
If you want to use your online CRM to look at finances and budgeting regarding inventory, it won’t work as well as an ERP. You’ll get further than you would with no sales software, but an ERP will perform better. Similarly, you won’t get the best client profiles and buyer persona breakdowns out of an ERP.
If you’d like to cover all your bases, integrating the two is always a great option to explore. If you’re only looking to integrate one or the other, making that decision depends on your business model, scale, and unique operations.
When to use an ERP
Looking for a one-stop solution for balancing employees, customers, and inventory? The full-service functionality of an ERP system may be just what you need.
Consider using an ERP system if:
- You want to improve back-end processes. ERP software (and ERP integration) can help you streamline hiring, accounting, supply chain management, and more to make your operations more efficient.
- Your business is growing rapidly in all areas. A robust ERP solution can help you overcome growing pains and keep everyone on track by synthesizing key data and aligning departments.
- You’re using numerous tools or tech services. Using multiple solutions can get confusing and costly. An ERP system lets you consolidate the information you need in one database.
According to Terillium, an ERP consulting company, industries that benefit from ERP systems are manufacturing, professional services, distribution, construction, and healthcare. Whether large or small, these types of businesses all have complex operations and processes. An ERP is essential for keeping all departments aligned.
When to use a CRM
When a company is just starting out, a simple spreadsheet may be enough to keep customer information organized. But as the business grows, it will need a more robust system for managing customer data and keeping it accessible to employees. That’s where a CRM system comes in.
Consider using a CRM tool if:
- Your customer relationships are complex. Although some ERPs have limited customer management capabilities, they’re often not as robust as CRM software features. A dedicated CRM system will help you handle a large customer base and focus on valuable long-term accounts.
- Sticky notes and spreadsheets will only get you so far. When it comes to organizing customer data, a CRM is often a great place to start, especially for businesses that don’t need additional back-end features. This is because a CRM generally costs less and is easier to onboard than an ERP.
- You aren’t looking to launch any new products in the foreseeable future. ERPs are fantastic on the production side, but if you’re looking to push existing products, CRMs are far more useful for marketing tactics and customer experiences.
Any business that deals with customers can benefit from a CRM system. Here at Zendesk, we see a variety of industries embracing different types of CRM tools. Hotels, retailers, banks, and real estate companies are some of the most common CRM users. Still, many other industries also use this tool.
Questions to ask yourself
Before investing in one type of software or the other, ask yourself:
- What’s my core business model? If your ROI depends on attracting and retaining customers, a CRM can help you right out of the gate. An ERP makes more sense if you focus on managing resources or assets.
- Do I need help growing my business or managing that growth? CRMs will attract new customers, but ERPs will streamline operations as you assist them.
- How much do I want my company to grow? The larger a business becomes, the more an ERP will help manage various processes.
- How soon do I need to implement the software? CRMs are easier to install than ERPs and offer immediate benefits.
- What’s my company’s biggest weakness? Software can do more than capitalize on a business’ strengths; it can also compensate for weaknesses. Use one system or the other to improve front- or back-end processes.
Do I need an ERP, a CRM, or both?
Given enough time and growth, most organizations will need an ERP and a CRM. The order in which a company integrates this software depends on its model. Companies with a large customer base and straightforward financial management should start with a CRM. Businesses with a small customer base and complex financials should begin with an ERP.
ERP and CRM FAQs
How much do ERPs and CRMs cost?
ERPs designed for mid-sized businesses cost between $150,000 and $750,000. ERP costs increase with more users and features. CRMs cost between $12 and $300 per user, per month.
Is CRM a part of ERP?
Customer relationship management makes up one of ERP’s five core pillars. Some ERP systems include basic CRM tools. However, you need a full CRM software package for complete functionality.
Is SAP a CRM or an ERP?
SAP—Systems Applications and Products in Data Processing—sells both CRM and ERP products. Businesses can use one SAP system or integrate their ERP and CRM software.
Integrate your ERP and CRM for the best results
ERPs and CRMs have traditionally remained separate, even when companies rely on both. But at Zendesk, we recommend CRM and ERP integration to give everyone the best of both worlds. All departments will get a real-time view of crucial data surrounding customers, financials, inventory, pricing, and more.
Say someone from the accounting team (who uses the ERP) or someone from the customer service department (who relies on the CRM) updates a customer account. If the two systems are integrated, there’s no need for manual updates because both tools are pulling from the same database.
Request a demo of our CRM and ERP tools today, and experience how integration can drastically improve your organization’s efficiency, profitability, and customer satisfaction.
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