ERP vs. CRM | What Is the Difference?

ERP systems help your operations team complete daily tasks more efficiently, increase communication between departments and allow each department to access what they need through centralizing data and advanced integration capabilities. Key elements of ERP systems include:

Inventory Management

ERP systems provide real-time insights into inventory stock levels. This helps you as a business owner manage optimal inventory levels while reducing waste for products on the shelf. Specifically, ERPs bring team members real-time visibility into accurate inventory levels. For example, using an ERP you can set default levels, often called “par,” which sets the standard to allow the team to properly forecast when new orders need to be made as well as predicting cash flow based on sales volume.

Accounting

Most ERP systems come fully loaded with everything that a finance department needs for efficient operation. From standard accounting software to monthly financials to systems that help streamline the accounts payable process, ERPs help you better manage accounts payable and receivable.

Human Resources

ERP solutions assist in managing employee data, payroll, recruitment and other HR-related processes. For example, automatically triggering reminders for new employee benefits after their mandatory wait period. Other items such as performance improvement plan scheduling can also be scheduled through an ERP system to reduce manual requirements and oversight.

Supply Chain Logistics

ERP is critical for supply chain management like purchasing, processing and delivery logistics. The system aggregates the internal functions of the business to ensure all departments are integrated from procurement to finance. For example, manufacturing companies that survive on the efficiencies of process and integrated data across the supply chain would greatly benefit from an ERP system.

CRM is a software for businesses that creates a centralized database for customer communications and engagements. CRMs manage customer relationships and directly support sales conversion through pipeline tracking metrics, sales reporting, forecasting and automation.

Implementation of different types of CRM in a business can facilitate strong project management and yield higher performance. Read more about CRM.

ERP vs. CRM at a Glance

ERPs and CRMs serve two completely different purposes. They both offer similar solutions that appeal to completely different audiences.

The simplest way to think of the differences between an ERP system and a CRM system is that one (CRM) is outward and customer-oriented while the other (ERP) is internal and helps employees collaborate and complete their daily tasks as efficiently as possible. Dual implementation may drive significant value, providing smooth operations and improved customer experience.

Many ERP platforms exist; however, there are two commonly known as leaders in the ERP market.

SAP ERP

SAP is a German-based technology company offering advanced ERP solutions advertised as “ready to run.” SAP offers solutions that may otherwise be add-ons from competitors. Reviews show the top three SAP benefits being overall user-friendliness, strong integration capabilities and robust data reporting. However, reviews also state that initial setup can be complicated, and there are additional limitations regarding the learning curve. Getting from set up to implementation can take some time and extra employee education.

SAP ERP Pricing

SAP has entry level pricing on their SAP by Design ERP solution. User pricing is one element of the total pricing. As a business owner, you should plan on setup and development fees to allow for the ERP to serve specific business needs.

Oracle is another major leader in the ERP market and is headquartered in Austin, Texas. Cloud-based ERP is one of the leading solutions offered through Oracle, and they are known for their ability to support enterprise level solutions with a long list of features, such as integration capabilities, security and ability to scale to various industries.

Oracle also offers a CRM solution that is particularly applicable to the manufacturing industry as well as commerce, which requires supply chain management and cross departmental coordination. Pairing Oracle CRM with Oracle ERP could create a competitive advantage to streamline all areas of the business.

Pricing is often listed as a limitation to Oracle as well as the learning curve. As with other large enterprise level solutions, the add-on features may be beneficial or distracting – depending on the user and their level of experience.

Oracle ERP Pricing

Pricing for Oracle ERP is not as straightforward as Oracle CRM; the level of engagement can vary. Below is a snapshot of user pricing.

Pay special attention to the contract terms when reviewing pricing for Oracle ERP, especially regarding the minimum level or users and the cost for the initial build. User pricing is only one element for ERP; setup and development fees can quickly add up.

There are many great CRMs available known for both small business and enterprise level implementation. A few notable examples include Salesforce, Oracle, HubSpot and Zoho CRM.

Salesforce

As one of the largest leaders in the CRM space, Salesforce has solutions for all sizes of businesses and specifically excels at the enterprise level. Some key features include robust third-party app integration capability, strong customization options and advanced technology features such as Einstein AI.

Limitations are commonly associated with the technical expertise needed for advanced customizations. 

Oracle

Oracle CX (customer experience) is a leading CRM solution that is differentiated in the market through a suite of solutions that “go above and beyond traditional CRM solutions. They are widely known for advanced features such as sales automation, deep customization options and embedded B2B and B2C capabilities to empower customer engagement.

As with Salesforce, Oracle has a technical barrier to entry that throttles a novice user’s ability to make customizations without the help of a subject matter expert.

Zoho CRM

Off the shelf, Zoho CRM is an easy-to-use platform that heavily appeals to small businesses due to customization options, affordable costs and ease of use with little to no technical expertise.

Limitations include a lack of flexibility for integrations or a level of sophistication needed to execute integrations due to the number of available add ons.

HubSpot

HubSpot is a leader in the CRM market, offering a suite of products available a la carte, providing a plug and play capability to match their system needs with company growth. Their free account stands as a great entry point for small businesses to begin trying a CRM for the first time.

The main limitation associated with HubSpot is the ease of use when setting up external integrations. 

Comparing CRM Pricing

Technology growth continues to force businesses to evolve and maintain strong customer experiences. Consumers have more access to information quicker than ever before, but their needs to feel supported haven’t changed. What has changed immensely is a business’s ability to implement technology without sacrificing customer satisfaction.

Businesses operating with integrated ERP and CRM solutions have significant competitive advantages to those without. 

• Proactive communications: ERP allows businesses to have real-time insights on inventory and sales transactions, enabling departments to execute proactive customer communications regarding speed bumps in the supply chain that will directly impact their orders.
• Speeds up decision-making: Centralized data access between departments creates visibility which can reduce downtime for decision-making that would otherwise be dependent on another employee or subjected to human error. An example of this could be a unique refund request that was the result of a logistics issue.
• Builds loyalty: ERP creates visibility into the customer’s financial habits. When deployed correctly, this data could help the sales team create special terms for low-risk customers that have meaningful impacts on ROI.

The key to maximizing the customer experience is internal discipline around using the data and insights generated from both ERP and CRM in a unified manner to make proactive, customer-centric decisions. When systems are centrally integrated and communicated to consumer-facing departments correctly, the result is unmatched.

CRM and ERP implementation and training share some common differences and similarities. Let’s first look at implementation.

Implementation at a Glance

Implementing both ERP and CRM requires multiple steps of preparation.

• Needs analysis by department: Understanding the needs of each business unit is fundamental to a successful implementation and launch. This requires coordination with each team to understand needs, map processes and document business requirements.
• Integration wish list: Every company has some type of external system and should identify the systems they would like to consolidate via integration into the new CRM or ERP. Each system should also be mapped to understand the impact it has on other areas of development.
• Output goals and KPIs: CRMs should provide visibility to leadership to help manage team KPIs, and both ERP and CRM should output data to make the KPIs measurable.
• Cleaning and preparing data: This is a critical step in the implementation process and in some instances can take the longest due to the level of risk associated with going live on a foundation of inaccurate, poor or completely wrong data. Time should be spent mapping fields, assigning values, understanding format needs and identifying where each piece of data lives within the ERP or CRM. ERP can tend to be a bigger lift due to the additional data and systems needs that will ultimately be required for a smooth integration with CRM. 
• Testing: Testing can certainly live at the top of the list for most time intensive components of integration. This is where you’ll find out that the little details can have massive impacts. Testing takes time and needs to be methodical.
• Deployment: Deployment is an ever-changing process as the ERP and CRM systems will continue to evolve with the business. This is why companies that utilize both ERP and CRM often have dedicated systems teams.  

As you can see, the integration of ERP and CRM systems has many steps that need to be executed in specific order, making a strong argument for leaders to employ dedicated systems integration teams. These teams will document the full process based on the business needs and project manage the process to completion as well as work with leaderships on the change management requirement to maximize team member participation.

Change Management

ERPs and CRMs are only as effective as the quality of the data and the discipline of the users. Training for these systems should be carefully planned and tactfully executed to avoid unnecessary business interruption. Too much too fast will often make staff members resistant to adoption. Clear communication and showing the benefits of the system in the context of each department is a critical component to positive change management.

Just as the implementation process is carefully planned, the deployment and training plan should be equally prioritized as to ensure a seamless rollout to the organization.

A successful integration and deployment of both systems will provide leaders a real-time view of the business from a perspective to allow deeper visibility and understanding of the unique needs that drive growth and efficiency.

Once integration between ERP and CRM is deployed in a business, it’s hard for many leaders to think about how business was ever conducted before. Thoughtful planning paired with realistic implementation and testing results in an immense competitive advantage.

Output generated from an integrated system is only as good as the input during the front-end planning process. API feeds and ERP-CRM connector tools such as Zapier have drastically improved the data integrity and output of insights through the reduction of human error as well as decreased time to ingest critical data from third party systems. For example, a company HR process requires background checks for new hires and through API feeds connects to a third party database to instantly pull the required applicant’s data into the HR system. Another example could be an enterprise-level marketing firm utilizing an ERP-CRM connector tool such as Zapier to capture data from a third party that doesn’t yet have an API function.

The use of both API and connector tools allows businesses to efficiently capture data, remove manual efforts and keep employees focused on critical business tasks.

Below are the common benefits of an integrated ERP and CRM solution:

• Centralized data: Centralized data in operations can provide insights to sales and marketing that directly impact the improvement of a business’s customer experience.
• Cross-departmental visibility: Centralized data allows a company to manage customer touchpoints as well as track accountability and KPIs internally to ensure teams are operating efficiently and following predefined processes.
• Sales forecasting: Sales forecasting is a function of reviewing the number of sales transactions and pipeline conversions through the CRM while at the same time comparing that data to retention trends and real-time lifetime values which are managed on the ERP within finance.
• Operational efficiency: Operational efficiencies are realized across an organization when ERP-CRM are fully integrated and include everything from HR onboarding to streamlining inventory procurement and managing sales forecasting.

The benefits of ERP and CRM are endless once an integration is completed and deployed. This solution is not fit for every business, but those it does fit will never look back.

Deciding on the implementation of CRM vs. ERP depends largely on the type and stage of a business. Below is a look into both scenarios as well as recommendations.

Choosing ERP

ERP is best known for industries such as manufacturing, distribution and retail.  The common denominator is supply chain management and its critical role in delivering the end product at scale.

ERP optimizes internal processes for operations resulting in data that can maximize revenue without necessarily requiring an increase in sales volume or adding new products.

If you are in manufacturing, logistics or retail, reviewing ERP should be a top priority especially for those balancing costs.

Choosing CRM

CRM is what most businesses are accustomed to as it provides the ability to manage relationships with prospects and customers. CRM is particularly strong for sales-driven business and the end result provides a business the ability to better manage customer expectations, identify communications opportunities and reduce complaints.

Small businesses and sales organizations are ripe candidates to choose CRM first before considering ERP implementation.

ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems, while both integral to modern businesses, serve distinct functions they have very different use cases. ERP systems are designed to centralize and manage data from various departments, ensuring streamlined operations across finance, HR, and more. They excel in environments where operational efficiency and inter-departmental synchronization are paramount. On the other hand, CRM systems focus primarily on managing customer interactions, sales, and marketing, making them ideal for businesses aiming to grow their customer base or enhance customer relations.

The integration of ERP and CRM systems can amplify the benefits of both, offering a holistic view of a company’s operations and customer interactions. This integrated approach ensures real-time updates, reduces data discrepancies, and enhances decision-making capabilities. For businesses deliberating between the two, it’s crucial to identify specific organizational pain points. If the primary challenge lies in managing internal operations, an ERP might be more suitable. However, if enhancing customer relationships and sales is the focal point, a CRM should be prioritized. Regardless of the initial choice, integrating the two systems can provide comprehensive insights and operational advantages.