No, ERP and CRM are not the same. They are separate software packages, although they do overlap and share common features. The clue is in the name. Enterprise Resource Planning (ERP) was designed for managing the entire enterprise while Customer Relationship Management (CRM) from the get go was focused on the Customer.
What is ERP?
ERP is an integrated software package that manages the business processes of the entire organization. It includes:
- Buying and purchasing
- Manufacturing and shop floor control
- Inventory management and warehousing
- Delivery and shipment
- Accounting and finance
- Invoicing and payment
- Employee administration and payroll
What is CRM?
CRM is a system that manages the relationship with customers and prospective clients of an organization. Whereas ERP focuses on the traditional processes of an organization, CRM encompasses customer-centric processes and aims to integrate and automate the sales, marketing and service processes such as:
- Social media and marketing campaigns
- Lead and opportunity management
- Sales process and pipeline management
- Contract management
- Customer interactions and analytics
Comparison between ERP and CRM
CRM can be considered a subset of ERP and was popularized after ERP. It is customer-oriented and focuses on increasing sales profitability.
ERP has been around a long time and has traditionally concentrated on back office activities versus CRM’s front office focus. ERP is enterprise-oriented and had a traditional focus was on controlling costs.
Is there overlap between ERP and CRM?
To complicate things there is overlap, although the overlap is usually ERP handling CRM functionalities rather than CRM taking care of ERP’s business.
As its name suggest ERP looks at the Enterprise, while CRM focuses on the Customer. As enterprise system ERP encompass all elements of an enterprise, including Customers, Vendors and Employees etc. Hence ERP systems will often incorporate limited functionalities of a CRM system, such as Quote Generation.
So why not just use ERP instead of CRM?
ERP may be sufficient for some CRM purposes however it will not provide the richer Customer functionalities that CRM can. If customers are important to an organization they may want to use a CRM system.
What part does organization size play?
Today most larger organizations will use both an ERP and CRM system.
Small companies may not use either. Small companies may use an accounting system in place of an ERP and track the rest of its ERP and CRM processes in a spreadsheet. On the other hand a company may use an online CRM system but track their accounts in a spreadsheet and offload to their accountant.
Which departments and who are the users?
The typical users of a CRM system would be the customer sales and customer support departments. Typical users of an ERP system would include the accounting, warehouse, production and purchasing departments.
CRM users would be external customer facing whereas the ERP users would be internal and supplier facing, although as usual it is not so neat. There may be CRM users who monitor their internal salespeople, for example sales managers (see SFA Salesforce Automation).
The servicing department may need to deal with both customers and suppliers, which might take place in CRM or ERP. Similarly the Accounts Receivable section of accounting will have to deal with external customers yet their processes will take place in ERP.
The original ethos of enterprise systems was that the organizational process are linked together regardless of department.
Can ERP and CRM work together?
If you use both ERP and CRM then how does this work in practice. One of the key integration points between systems is the Customer. Both systems will need to know Customer data and will store Customer data separately. This can become a problem. In fact there are whole separate systems in place to handle the synchronization – Master Data Management.
Each system will have different views of the Customer. For example, the CRM system will record prospects in the early stages of their customer journey, while ERP systems may only record data once the customer becomes a definite customer. Perhaps the CRM system will be the trigger for Customer setup within the ERP system.
The CRM system will also help manage the softer aspects of account management.
Another key integration point is the order or contract, the CRM system obtains the order while the ERP system fulfills the order.
So the ERP and CRM systems can work together but it can take work, that’s one thing that makes ERP the same as CRM, they both require care and maintenance.