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Software technologies have been helping business owners offload the management headaches from their lives by large volumes. From manually writing every record to managing employees, software tools have changed everything for the better. Today, whether it's a local bakery shop or a big corporate office, every business is becoming more tech-savvy by having a CRM and/or ERP tool in their office computer systems.
But before we jump into the functionalities of a CRM and ERP and how they help businesses, let us first understand the difference between a CRM and ERP.
CRM (customer relationship management) is a technology that helps businesses manage relationships with their customers, whereas ERP (enterprise resource planning) comprises technologies that companies use to automate their business processes. Both CRM and ERP can either be on-premise software or cloud-based SaaS (Software-as-a-service) tools. But since on-premise software comes with a lot of maintenance and expenses, most enterprises prefer SaaS-based tools to run their businesses smoothly.
Now to understand the exact difference between a CRM and an ERP software, let's dig into the 7 comparisons between them-
Basic Difference
A CRM is all about giving solutions for customer-facing, i.e., external problems. On the other hand, an ERP offers solutions to an enterprise's internal management and planning-related issues.
Exemplary Functions
As their names suggest, a CRM helps a company build relationships with their customers by telling how they're interacting with their online business websites, social media handles, content, and marketing campaigns. Whereas an ERP ties different parts/processes of the business together like accounting, project management, logistics and supply chain operations, compliance to create an efficient working process.
Motives & Endpoints
Since CRM's job is to tell about the customers and their activities, it's directly related to the business' sales and revenue growth. It is also responsible for service personalization for white glove customer service, aligning marketing campaigns & sales pipelines, contact management, and communication-building with customers. This allows the company to understand and put their customers at the center of their business strategies with a customer centricity approach.
In contrast, ERP software responsibilities are concerned with almost every business process. For instance: financials, procurements, product lifecycle management (PLM), warehouse management system, risk management, inventory, manufacturing, HR (human resources), and sometimes even CRM.
Responsible Teams & Executives
The teams and decision-makers inside a company concerned with the CRM tool include sales teams, creative teams, marketing managers like CMO, marketing analysts, promotion managers, growth marketers, product managers, and PR teams.
ERP systems often involve a partnership with the finance officers like CFOs, CIOs (Chief Information Officer), COOs (Chief Operation Officer), and other key executive leaders.
Market Share & Future Predictions
According to research by Gartner, the ERP software market grew 9% to a market size nearing $39 billion in 2019. Research also suggests that the ERP market is expected to reach $86.30 billion by 2027, with a yearly growth rate of a CAGR of 9.8%.
CRM remains one of the fastest-growing in the software market, with Gartner predicting the CRM market to grow to $43.5 billion by 2024.
Industry Usage
Though almost every industry is getting familiar with ERP solutions, the manufacturing industry is the No. 1 user and captures 47% of the industry share. Other industries like construction & services, defense, government utility, aerospace, and IT are also on the list that use ERP in their businesses.
CRM fits for every kind of business, but some particular industries like retail, healthcare, IT, telecom, government & education, banking, finance, consulting are leveraging this the most.
Saving Money & Making Money
If we look at the entire business from the outside as a third person, you can find that an ERP tool focuses on minimizing overall management costs by increasing efficiency. It provides information and data on every activity and every loophole in the entire business system. In brief, ERP helps a company save money.
A CRM tool's primary aim is to increase revenue by utilizing customer-related information and building loyal relationships with them. In short, a CRM helps a business make money.
ERP or CRM? Or Both? What Does YOUR Business Need?
Though every business needs enterprise planning and customer relationship building, their volume of dependency varies according to their type and size.
Here Is A Quick Checklist For You To Analyze If Your Business Needs A CRM Or An ERP
1. Business Type
Even if your business is small, you'll still need an ERP tool to streamline routine tasks and avoid unnecessary organizational hassles.
But if your products are self-built, like providing services or consulting, and you do not depend on anyone to serve your customers, a CRM with an FMS tool (Financial Management Software) can seamlessly work for you.
2. Business Size
An ERP includes managing multiple functions like finance, accounting, HR, operations, supply chain, etcetera. But several businesses do not need such a vast set of teams and can function well with minimal resources.
If you have a small team that you can manage well with a set of tools like a CRM, a PMS (Project Management Tool), and an FMS (Finance Management Software), you don't need to opt for an ERP.
3. Budget
Whether it's CRM or ERP, you will need to
Invest money and time to make the most out of these tools.
- Pay the subscription fee,
- Search and hire expert teams to operate and supervise the activities, analyze data & reports, and strategize leveraging those data
- Arrange salaries for the new teams according to their expertise.
With more tools comes more responsibility. It is up to you to decide if your business needs such fancy settings, or you can rock your world just by being simple.
4. Future Goals
If you're running your business easily just by using a CRM and happy with your growth, you might not want to disrupt it and make it chaotic. If that's the case, you probably don't need an ERP.
Whereas if you're planning to build more products and diversify your working environment and workforce, it will help if you strategize accordingly, and invest in ERP software to become future-ready.
Conclusion
CRM and ERM both add to the profit margin of a business. However, since both are different, a company should look at them as stand-alone systems and choose one depending on their needs.
Ross is known as the Pambansang Blogger ng Pilipinas - An Information and Communication Technology (ICT) Professional by profession and a Social Media Evangelist by heart.
