One of the important things you have to know if you are dealing with customer management to increase the complete effectiveness of company is to know the difference between CRM and ERP. If you want to develop a strategy to increase the profit, then you will probably use both systems. But what exactly is different between those two – CRM vs ERP?
What is ERP?
ERP is a term for Enterprise Resource Planning. ERP is some kind of system or a strategy that is focusing on helping different organizations to successfully manage their overall finances of company, operating, reporting, manufacturing and human resources areas. ERP systems are often focused to automate parts of company. If you create a right ERP system and pick the right ERP software, then all the processes in your business could become much easier to organize and the important decision-making will be easier. ERP systems give you:
- Better control over accounting, cash flow and overall finances.
- Option to streamline purchasing, inventory, manufacturing and sales order processes.
- Better CRM! ERP will also help you to improve relationship with customers.
- Better project management that will help you to deliver all the projects and finish all the work on time.
- Improved business intelligence thanks to better information that help with decision making.
Those are just some things you get with ERP system, but the main benefits of ERP for business are:
- Easy integration to all the parts of business. All the areas from customer relationship area, finances and planning to the manufacturing and distribution of services or products.
- Automation of business processes which leads to faster and more efficient work and less work for employees.
- Thank to easy integration and automation ERP ensures work without much errors and brings positive effect to overall business performance.
- ERP gives help with bringing a complete analysis of every aspect of business and helps with getting overall performance of business.
- You can even integrate ERP system to partners outside of organization like suppliers or customers to increase efficiency even more.
CRM vs ERP
If you read my article “What is CRM” then you probably already know what CRM is so I don’t have to explain it. And now you learned what ERP is too. Can you see the difference? It is easy to see that both systems mainly focus on increasing the profit of organization. But, CRM focuses more on customers. With CRM you will try to increase the number of sales by analyzing different customers and focusing on their needs. And thanks to large amount of information and pretty easy analysis is it easy to do that with the right CRM system. On the other hand, ERP focuses more on business. One of the main goals is to reduce overhead and cutting costs. With ERP you will make all the business processes more efficient and therefore reduce the amount of money spent to fund all those processes.
Another difference is that CRM systems can be very useful and needed in small business while ERP can make life complicated in some small office. Why is CRM needed in small business? Well, even if you have small amount of customers it is always easier to have a nicely built software that will organize all the information about that customers of a nice way. That is much better than writing all the information on the paper or in some file. And why ERP is not a good choice? All the areas of organization are probably together and very close to each other in small business and there is really no need for ERP system to connect all of that. But when business starts to grow it will be easy to notice when the need for ERP system appears.
Which is more important, ERP or CRM?
There’s really no good answer to that expect for – they are equally important. Just like I mentioned above, if you have small business then CRM is more important but for every growing business with pretty established organization structure there is need for both systems. CRM drives the business forward and ERP guides that business in some direction where it should go. When those two systems work together effectively it will be much easier to increase the profit of business and reduce costs.
And if you are wondering which system comes first? You already know that ERP focuses on guiding the processes of business and reducing overall costs. Well, to guide the processes a business first must have some and you have to make some profit before cutting costs. That’s why CRM should be the first thing to invest money in. With the right CRM system like Maxi CRM sales will grow along with the complete organization and later on ERP system will be necessary.
Now you learned the difference between ERP and CRM. But how about the difference between eCRM and CRM? That’s not the same thing. Read about it in the article – “CRM vs eCRM”.