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CRM v. ERP Software: Which One is best for Your Business?

Posted By Paul Robbins, Monday, February 13, 2017
Updated: Wednesday, April 26, 2017

Enterprise software solutions are created to meet the needs of a business organization, as opposed to an individual, to help such business improve its productivity and efficiency through the provision of business logic support.

Furthermore, enterprise applications collect and manipulate large amounts of data and automate business processes with that data.

Examples of enterprise software are Enterprise Resource Planning (ERP), Business Intelligence (BI), Human Capital Management (HCM), Customer Relationship Management (CRM), Enterprise Forms Automation, and so on.

However, this article will be focusing on just 2 of these, CRM and ERP, with the aim of helping you determine which best suits your business.

Let’s start by discussing what each of these software solutions do.

What is CRM software?

CRM (Customer Relationship Management) software is a category of software that helps a company manage its interaction with current and potential customers by storing information and analyzing data about every customer’s history with a company, in a bid to improve business relationships with customers and ultimately boost sales.

CRM helps you to better understand your customer, retain more customers, provide excellent customer service, win new clients, and increase profitably overall. You can use CRM to analyze a customer’s interaction with the business, and use this data to create marketing campaigns tailored or personalized to the customer – based on his/her behavior.

What is ERP Software?

While analyzing the various CRM and ERP functions, TEC Select describes ERP as “systems that integrate the many day-to-day business processes of most organizations. In addition to supporting accounting functions (General Ledger, A/P, A/R, and payroll), ERP solutions usually also cover areas such as project costing, manufacturing operations (if applicable), and inventory management.”

ERP software is basically used to manage the business. It integrates everything from project planning to development, manufacturing, financials, sales and marketing, and more.

What then is the difference between both CRM and ERP software solutions?

The major difference is: while CRM handles the front-end processes of the business, including marketing, sales, customer service, etc, ERP handles the back-end processes, like ordering, shipping, tracking, billing, accounting, and so on.

We can safely say CRM focuses on the customer, while ERP focuses on the business.

CRM and ERP are two sides of the same coin. They work together to make the company profitable at the end, but from different angles. While CRM helps the business increase profits by bringing in more sales, ERP helps the business to reduce overheads and cut costs – by making the business processes more efficient to reduce the expenses on them.

So, if you’re asking the question of which one is perfect or best for your business, that might be a wrong question to ask, as both solutions work hand-in-hand to make your business successful.

The better question is: when is the best time to get which?

When a business is just starting out, it needs customers to grow, and all departments are most likely within each other’s easy reach or earshot. There are probably no business processes too complex at this stage to warrant ERP software. At this stage however, the business needs good Customer Relationship Management (CRM) systems that would help it attract clients and also improve client relationships in order to grow to the level where ERP ultimately becomes needed.

So, CRM is great when a business is starting out, while ERP can come in as the business expands.

Moreover, once your business gets to the phase where you start thinking of an ERP solution, integrating both CRM and ERP systems might be the perfect solution, in order to prevent any information gaps – since they work hand-in-hand.

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