Understanding the difference between ERP and CRM systems

As technology continues to advance at a staggering pace, and business systems are deliberately enhanced to do much more than originally intended, it’s no wonder there is confusion about which tools to use, especially when it comes to enterprise resource planning (ERP) and customer relationship management (CRM) systems. Both systems handle contacts and companies and details about orders. ERP takes the upper hand when it comes to financials and the management of factories, distribution centers, supply chains and currencies. But which one is right for your business?

Let’s start by clearing up the confusion about who uses ERP vs. CRM systems.

The primary users of CRM systems are sales and support organizations – those companies focused on customer interaction before and after the sale (and not the actual work of producing the widget or fulfilling orders). These are people who manage sales, support, and some marketing functions across markets. ERP users are typically the folks in the factory who are all about the process and logistics of producing the widget. They’re focused on production schedules, procurement, and managing inventory, et al. and rarely have the need to contact a customer except to reply to a complaint. ERP and CRM users typically do not interact because they work at different places in the organization. The only people who might be in both CRM and ERP systems at once are likely found in the IT group and charged with integration, data warehousing and analytics.

Your need for a CRM system is probably greater than your need for a dedicated ERP system.

Considering the phenomenal growth in B2C e-commerce sales in North America over the past 7 years — $293.09 billion in 2010 vs. $660.4 billion in 2017 – the need for a CRM systems is crucial for their support of sales force automation (which is the aspect of CRM focused on things are aren’t true yet: people who might purchase, companies that might become a customer, orders that might close). CRM manages growth opportunities and the system you choose must support the following sales business processes:

• Lead qualification
• Early sales funnel (i.e. demos and call scheduling)
• Forecasting and pipeline management
• Quote generation and order configuration
• Contract generation and fulfillment
• Renewals and repeat orders
• Ongoing account management (customer feedback, repeat purchase activity, add-ons, etc.)

Other tools to look for that might be very useful to your organization are: sales pipeline models, lead monitoring, business process modeling, contract management and templates for customer quotes. There are also systems offering ROI calculators and email campaign modules that allow organizations to design, deploy and track campaigns in a single dashboard.

The ERP user is almost entirely focused on hard facts from “done deals” – addresses of companies that are customers, orders that have been placed, contracts that have been signed – so the output of your CRM should be an input to the ERP system, but only for those companies, customers and orders that have been signed. Depending on the size of your organization, ERP might be your QuickBooks archive, or a carefully curated group of Excel spreadsheets managed by your accountant. Some CRM systems have integrated ERP functions.

As your organization grows, it is helpful for your sales force to have insight to your ERP for purposes of upsell, cross-sell, and finding “like” business prospects in your market for new deals. And due to GDPR and other regulations, it is essential to keep customer data private and financial information in as few (heavily fortified) systems as possible and integrated EDP and CRM systems can help make that process easier.

CRM is an essential tool for efficient business growth and customer management and you have a lot of options. From to lead generation and contact management, to progressive brand positioning and creative — FUEL VM leadership can help you find the solution that’s best for you.