What Are The Differences Between CRM and ERP?

Posted on 27 October , 2016 by Bevan Hornsby

CRM vs ERPCRMs and ERPs are business software solutions that work in different ways to help companies improve their organization and productivity. However, the two platforms are often confused - so what’s the difference and which is the best option for your business?

                                                           

If you know how to use both systems correctly, both CRMs and ERPs can increase overall profitability, and although many people think they’re one of the same, they’re not. Both platforms benefit your business in different ways.  

 

In case you’re unsure which one of these business solutions would best suit your needs, we’ve compiled a list of the main differences to help you make the right decision.

 

 

What is a CRM and what is an ERP?

 

Here’s a small definition of each program:

 

CRM

Customer Relationship Management (CRM)

 

CRM is a tool that you can use to create databases with relevant information about your prospects and clients. The integrated data in the platform allows you to optimize processes within the sales and marketing departments, such as personally attending to each client and designing a specific sales strategy to help you sell more.  

 

ERP

Enterprise Resources Planning (ERP)

 

ERP is a centralized business management software that integrates the main functions and departments of a company so that they all work as one single system. ERPs consist of multiple modules that focus on specific areas of the business process such as accounting, product development, finance etc.

 

 

5 important differences between CRM and ERP

 

The following list compares the differences between the two systems and explains to what extent they are compatible with each other. The main points that distinguish CRM from an ERP are:

 

#1. END GOAL

 

While a CRM centralizes, simplifies and optimizes the sales process, an ERP manages various areas of the business processes to improve productivity.

 

In fact, a CRM usually focuses on the sales department (and in some cases marketing too), while an ERP operates on an interdepartmental level.

 

#2. EASE OF IMPLEMENTATION

 

Given that more than one department works from the ERP, implementing it can prove a little costlier and time consuming than implementing a CRM. It’s a single system that has to be used and learned by all employees who might have varying levels of IT knowledge and different methods of learning. 

 

#3. EASE OF DATA MIGRATION

 

Another aspect not so often talked about is ease of data migration from other software solutions previously installed in the company.

 

Since CRM is a more specific tool, transferring client data to a CRM is much easier than transferring all company information (payments, invoices, deliveries, delivery notes etc.) as is the case with an ERP.  

 

#4. COSTS

 

The investment that has to be made by a company when choosing between one software or another is another differentiating factor. It makes sense that if it takes longer to implement the software and there are many user licenses to add, the cost of an ERP will be considerably higher than that of a CRM.

 

#5. TYPE OF COMPANY

 

Following the logic of the points above, if an ERP costs more to implement in terms of time, resources and money, it’s obvious that medium and larger sized companies are the ones that will benefit more from this type of software, since many SMEs and micro-enterprises often lack the necessary resources.

 

The departmental structure of smaller businesses who have less employees is obviously a lot simpler, meaning they probably don’t need to implement an ERP, since these are designed to centralize activity of larger companies.

 

The use of a CRM is more frequent among SMEs, since they can adapt to them more easily, given that it offers scalable technology and features that can also be of value to larger companies.

 

Which is the best option for my company?

If you’re trying to decide whether a CRM or an ERP would be a better match for your company, it all depends on the size and setup of your business as well as many other factors.

 

If you’re wondering whether CRMs and ERPs are compatible, the answer is yes. In fact, ForceManager CRM can easily integrate with your company’s ERP, meaning you can enjoy the benefits of having everything integrated within the same platform. 

 

You might also find interesting: Mobile CRM vs Traditional CRM: Important Statistics you Need to Know

This entry was tagged in CRM, Business Management

Bevan Hornsby

International Sales Development Representative at ForceManager. BSc in Astrophysics from Aberystwyth University and MSc in Management from Pompeu Fabra University, Barcelona. Passionate about modernizing sales teams to increase sales performance.