ERP vs CRM: Key Differences & Benefits

CRM (Customer Relationship Management) is a system for managing relationships with customers. It is a customer service solution that organizes customer data and manages customer interactions - whether that be an email, a phone call or a meeting - and then using that information to gain insights into sales and customer behaviour.

Key CRM features for managing relationships with customers include:

1. Recording interactions with customers (emails, phone calls, meetings)
2. Tracking sales and customer purchasing trends
3. Systematising customer interactions
4. Gaining insights into marketing campaigns
5. Understanding which products are selling
6. Identifying changes in customer purchasing behaviour

The core purpose of a CRM system is to centralise and organise customer relationship information to help businesses better understand their customers and improve customer service.

ERP (Enterprise Resource Planning) is a comprehensive business management platform that connects business operations, transforming operational data into actionable insights and enabling organisations to make informed decisions across operations, finance, and sales.

It includes or integrates with CRM, handling broader operational aspects beyond customer relationships, such as invoicing, job performance, financial management and supply chain management.

The key features of an ERP system may include:

1. Financial Management and Reporting
2. Inventory Management
3. Customer Relationship Management (CRM) – included or integrated
4. Operations Management
5. Payroll and Workforce Management
6. Project Accounting
7. Field Services

ERP software can either include CRM as part of its functionality or integrate seamlessly with a separate CRM system. The key is the system's ability to provide interconnected data across different business functions and operational systems to provide insights into the financial and operational performance of the company.

ERP transforms businesses by delivering interconnected insights that enable higher productivity, deeper understanding, and strategic agility across all operational functions.

By eliminating manual information searching across multiple departments, ERP systems give business owners the time and tools to uncover hidden efficiencies and make strategic decisions.

The system's ability to automate financial reporting, ensure compliance, and simplify IT infrastructure means businesses can focus on their core operations. Accelerated decision-making becomes possible as financial and operational data is transformed into actionable insights, reducing operational risks and providing a clear view of business performance.

ERP gives you the agility to respond to market changes, scale operations seamlessly, and continuously improve operational effectiveness, turning data into a strategic asset that drives growth, competitiveness and customer satisfaction.

CRM and ERP represent different areas of business management. CRM focuses narrowly on managing relationships with customers and suppliers - tracking external interactions like emails, phone calls, and meetings. It's about understanding and managing customer data to gain insight into customer behaviour and sales trends.

ERP, on the other hand, is a much broader system that encompasses CRM as one small part of its functionality. Where CRM systems are about the customer, ERP systems look at the entire business health, managing everything from quote to cash. It handles internal processes that happen as a result of customer interactions - like purchasing, job performance, supply chain management, inventory management and overall operational performance.

Most ERP systems will include CRM functionality, though not all do. Some can integrate seamlessly with existing CRM software systems.

The key distinction is scope: CRM is about external relationships, while ERP manages the entire internal ecosystem of a business, transforming customer data and interactions into comprehensive operational insights.

CRM is typically cheaper to implement because it's a smaller system. However, there are a wide range of systems from entry-level to high-end.

An enterprise class ERP system will typically be more expensive and take longer to implement. The key is right sizing the system to the specific business needs.

At their core, ERP and CRM are fundamentally about data management. They're systems designed to capture the vast amount of information flowing through a business on a daily basis, transforming raw data into meaningful insights.

Both systems are focused on more than just storing information. They're about utilising that data strategically, analysing it to understand business performance, customer behaviour, and operational efficiency. Whether it's tracking customer interactions in a CRM or managing business-wide processes in an ERP, the goal is the same: to gain a competitive advantage.

The power of these systems lies in their ability to take complex, disparate pieces of information and turn them into actionable intelligence.

By capturing, managing, and analysing data, ERP and CRM help businesses make more informed decisions, streamline operations, and ultimately drive business performance.

The need for CRM, ERP, or both varies depending on the individual business.

Some businesses dealing with a handful of customers might not need a CRM solution. Others managing many customers but few products might prioritise CRM software.

Many businesses need both CRM and ERP functionality if they want to understand what is truly happening inside their business and set themselves up for future growth.

When integrating ERP and CRM systems, you want each to be "best of breed" - keeping your preferred CRM while bringing in a best-of-breed ERP. The key is avoiding manual data entry between these systems, which is prone to errors and inefficiency.

Look for systems with a public API (application programme interface) that enables software to talk to each other seamlessly. This enables you to push and pull data between your CRM and ERP, keeping both systems functional and interconnected. 

The key is having systems that can integrate smoothly and automatically.

The benefits are significant: you'll eliminate double handling, reduce errors, and save the costs associated with manual data transfer. A proper integration keeps your data clean, reduces duplicates, and ensures that information is consistent across both systems.

By choosing systems that can communicate effectively, you create a more streamlined and efficient business process.

Integrating ERP and CRM systems comes with significant challenges, primarily around data management.

Determine the master data source

Work out who is going to be the "boss" of each piece of data. For example, customer data might be mastered in one system, while quotes are mastered in another.

Training

Users must understand where each piece of data is mastered and how to navigate between the CRM or ERP system. Without clear guidance, employees can become confused about which system holds the authoritative information.

Key person risk

This is perhaps the most critical challenge of CRM and ERP integration. If the person handling the integration leaves, you can find yourself in a messy situation.

These challenges emphasise the importance of shared knowledge about ERP integrations within your business or partner businesses, and ensures that everyone understands where and how data is managed across different systems.

When it comes to integrating ERP and CRM systems, it's not just about connecting two pieces of software; it's about understanding the entire ecosystem of your business data.

Have a clear vision

Having a clear vision for integration means understanding exactly what you want the integration to achieve. It's not just about connecting two systems, but knowing precisely how these systems will work together to support your business processes.

You want to be clear about what data you're going to push, in what direction, and why. It's about understanding the specific business outcomes you're looking to achieve through this integration. Are you trying to streamline sales processes? Improve customer data management? Reduce manual data entry?

Having a clear, specific vision helps guide the entire integration process and ensures you're not just connecting systems for the sake of it, but doing so with a strategic purpose.

Understand who is responsible

You need to understand who is going to be responsible for the integration. The complexity of having multiple parties involved - typically two vendors and the customer – can result in everyone pointing fingers when something goes wrong.

This means understanding each party's role: what the CRM vendor will handle, what the ERP vendor will manage, and what responsibilities fall to the customer. The goal is to have a clear, agreed-upon framework of accountability.

The risk of not doing this could end up in a messy situation where no one takes ownership of integration issues. By establishing clear responsibilities upfront, you reduce the potential for confusion, blame, and ultimately, integration failure.

Manage change

Both your business and the software will continuously evolve. Future-proof your integration, ensuring it remains effective as things shift. You can't just set up an integration and forget about it.

Your business processes may change, the software will get updated, and your ERP systems will need to adapt. A flexible approach that allows for adjustments and updates will ensure your integration can handle these changes without breaking down. This requires shared knowledge within your organisation about how the systems are connected, so you're not dependent on a single person's understanding.