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The search for suitable ERP, CRM (and their unique differences) - occupies all companies offering consultancy-intensive products. Major changes in the competitive environment, digitalisation and the associated new business processes challenge companies. Remaining competitive is one of the major challenges, many companies therefore ask themselves whether there is a suitable software that supports them in this. This quickly leads to the question, are ERP and CRM systems able to support us in a modern market environment?
ERP systems and CRM systems are often discussed in parallel in the same context and when introducing an ERP system it is important, but not always easy, to understand the differences between the two I.T. solutions.
What is a CRM-System?
The core functions of the CRM software include the management of potential and current customer relationships. Powerful marketing tools such as social media management, online advertising campaigns and automated emails are part of the CRM suite that drives lead generation. Especially sales people and sales in general is always very attentive and demanding when implementing a CRM system, hence this brief explanation of what a customer relationship manager (CRM) is, versus enterprise resource planning (ERP).
Once leads become customers, the CRM software also manages the order creation and support processes, e.g. help desk and call centre. Business analytics such as buying trends and loyalty metrics are other standard features.
At a high level, most CRM systems include the following functionalities:
- Marketing
- Automated marketing emails
- Online campaign management
- Social media management
- Lead management
- Sales support
- Call centre functions
- Order confirmation (usually highly automated in the online-shop area)
- Customer enquiries - hotline
- Service enquiries - customer service
- Budget information
- Sales opportunity information
- Purchase trends and analyses
- Loyalty management
An important task of the CRM system is to provide the various company divisions with information about contacts, customers, customer behaviour, the complete communication (customer relationship). The common data storage for the framework of customer master data, contact persons etc. is often defined in CRM systems.
Here too, however, it is important to consider where the source of the information lies. Where does all this data come from? Who qualifies this master data within the ERP software, within the framework of master data management? so that all data would be entered there, qualified or is it located in the CRM software?
What is an ERP-System?
Unlike CRM software, ERP software has a wide range of functions for all business operations. From managing payroll for your company's employees to creating a bill of materials for the goods you sell, an ERP system is designed to run your business from start to finish without the need for additional software packages. Enterprise Resource Planning (ERP) systems were designed to manage materials and resources. The complete management and control of tasks within a production supply chain. In the course of the further development of ERP software, manufacturers have begun to integrate more and more functions as well as business processes.
As a result, ERP systems have naturally become more and more complex. However, the most important business driver has always been the efficient use of all resources (human as well as material resources) and process efficiency. Whereby this efficiency can include the lead time, the use of machines as well as the time until the customer order is fulfilled.
What Modules do ERP Systems Normally Incorporate?
- Sales and marketing
- Purchasing
- Human resources
- Inventory management
- Warehouse and transport management
- Product management
- Planning and production
The great advantage of an integrated ERP module is, among other things, the common data storage. The generation of I.T. documents across the entire value chain (supply chain) is another advantage that should not be underestimated. System breaks and duplicate entries as well as the reduction of interfaces are advantages of integrated systems. This also applies when considering CRM functions within an ERP solution. This has motivated software manufacturers to integrate financial software and its functions in particular.
Therefore, these ERP systems contain the requirements for: -
- Accounts (Payable) Management
- Accounts (Receivable) Management
- Asset Accounting
and the user can demand modern, integrated software here.
Complex consolidation tasks in the context of company participations, integration of foreign companies can also be solved today with ERP systems of the large software manufacturers. For this purpose, independent financial accounting with an ERP interface is usually no longer necessary. Some ERP software products are more specialised in certain industries, for example manufacturing, retail/wholesale, or service providers, and may have more comprehensive industry functions and connections to special software in these areas. When selecting an ERP, a thorough comparison of several ERP providers is necessary, as each ERP system possess its own strengths and weaknesses, however, this comparison must by no means be limited to a comparison of functions. It must refer to the support of the existing and planned business processes in the company. Pure functions do not support processes - this applies to ERP systems as well as to CRM systems.
We recommend to our clients that their ERP software must fulfil the majority of their ERP requirements in order to avoid or at least minimise the amount of customisation required thereafter.
Overlapping Functions Between ERP and CRM
Since ERP systems today also include customer management and sales functions, there are some areas where the two software packages overlap. With most ERP programmes, a company can manage customer data, create marketing campaigns, create quotations and generate sales orders. However, when it comes to supporting marketing campaigns or tracking sales trends, CRM software has much more comprehensive features.
Market Shares of the Leading Providers in the Sales of Customer Relationship Management Software (CRM) Worldwide in 2017 and 2018
Should You Choose An ERP or CRM System?
This answer depends upon two factors:
What are your current business needs (business processes) and I.T. capacity and what are your future needs?
If you want to optimise all your processes and replace an existing I.T. solution or software suite of a non-integrated applications, an ERP system may be the solution for you. On the other hand, if you need targeted capabilities for marketing and customer management, a CRM system is probably the best choice. For example, many CRM systems allow salespeople to use real-time data to personalise customer interactions.
Checklist on the Difference Between ERP and CRM
Ask yourself the following questions ...
Where could you find the greatest benefit? Process efficiency or increased sales volume?
An ERP system primarily increases your profits by increasing efficiency through the streamlining of business processes and reducing overhead costs.
Compared to ERP systems, CRM systems are not so much about lean process improvement. Instead, a CRM system primarily increases your profit by increasing your sales volume. This is achieved by equipping employees with the tools to improve customer service to generate higher sales.
Could your business achieve a higher ROI by making your business processes more efficient than your sales volume? Then an ERP system is a good choice for you - and vice versa.
Do you need a new financial system - a new financial accounting system?
If you answer yes, you probably need an ERP system. Unless your business consists solely of a sales and marketing model, where all your needs can be met by a CRM system, you probably need a financial system. This will enable you to better manage both internal and external document flows. You will also get better information for management decisions in less time.
Is your company ready to tackle an ERP implementation?
While an ERP implementation is a huge undertaking compared to a CRM implementation, the benefits are still significant. If your I.T. department has the resources and your company has the funds for an ERP project, an ERP project is probably worth the investment.
Does your I.T. department have the ability to develop integrations (interfaces)?
A CRM system that is isolated from your ERP system will not have the full efficiency it could provide. Fortunately, many ERP vendors offer products with almost "plug-and-play" configurations that integrate with popular CRM software. While this definitely helps speed up your ERP to CRM integration project, customisation is often required to integrate the two seamlessly. Most often, this is required in interface management.
Is your project part of a digital transformation?
This is an important question to ask yourself regularly, as it relates not only to the choice between ERP and CRM, but also to your overall digital strategy. This also takes into account the changes in the market environment in order to maintain and expand competitiveness.
Companies pursuing digital transformation want to create new business models. These companies usually need a scalable ERP solution with a promising software product roadmap. If this describes your company, it is important to evaluate the product and business development of software vendors. It is in this environment that questions need to be answered by vendors as part of the independent software selection process, best described as: Cloud, SaaS, on premise, hybrid and many more. However, if you are not driving digital transformation, a full ERP system with a significant number of modules may be too much of a good thing for your business. Instead, it would be worth considering whether a CRM system might not be a better fit for your business.
Choosing the right software and technology for business process optimisation:
The decision between ERP and CRM software (or combinations and hybrids) can lead to interesting, controversial discussions within the ERP project team at management and departmental level. We strongly recommend deciding on the basis of the process requirements, which are documented in a requirements specification within the framework of a requirements engineering. This way you reduce the decision risks and achieve resilient results.
What Questions Should You Answer?
- Which business processes are crucial?
- Which process optimisations are necessary? (Resource Planning)
- Which new processes need to be defined?
- Which customer requirements will be new for our company in the future?
- Which customer services absolutely have to be improved?
These requirements are usually met within the framework of the use of independent consultants from process optimisation, data analysis (process mining) and experts in the independent search for the best software solution and the best software house.
It is important that external consultants have sufficient experience and expertise in IT. security and data protection (ERP and CRM systems store personal data). Of course, this also applies to all questions in the context of data processing and I.T. security. We are noticing more and more in our consulting projects that precisely these requirements and questions are increasing. Sensitivity to the requirements of the Data Protection Ordinance (DSGVO) and I.T. security has become a higher priority.
