What is the difference between ERP and CRM software?

ERP and CRM software are designed to help businesses run smoothly. The main difference between ERP and CRM software is that ERP is focused on managing the back-end operations of a business, while CRM helps sales teams manage customer relationships.

ERP and CRM software solutions have overlap in what they do, but have several key distinctions as well. 

Below, you’ll learn the advantages and disadvantages of ERP and CRM to help you understand the differences between the two types of software.

What is an ERP system and how does it work?

ERPs, or enterprise resource planning solutions, help businesses manage and simplify:

  • Accounting processes.
  • Manufacturing and inventory management.
  • Supply chain management.
  • Sales, customer relations, and more.

ERPs have come a long way since their earliest iteration as the material requirements planning (MRP) system in the 1960s. 

These systems made it easier for manufacturing businesses to manage all the resources needed to run a business. MRPs helped with material planning, inventory, purchase orders, work orders, and reporting.

MRPs then evolved into MRP II systems or manufacturing resource planning systems. 

These solutions allowed manufacturers to increase efficiency by merging manufacturing data with accounting, marketing, and logistics monitoring functions.

Today’s ERPs are even more advanced — integrating and streamlining core business processes across a variety of departments. 

Some of the most popular ERPs for small businesses are cloud-based, meaning they’re accessible even outside of the office or production plant. 

Most software vendors allow users to access their solutions via desktop, tablet, and mobile phone.

The key functions of an ERP are to:

  • Consolidate business data into a central database that can be accessed by multiple teams and departments.
  • Automate a wide range of tasks and internal processes, from invoicing to payroll.
  • Create accurate forecasts and financial reports.
  • Aid businesses in monitoring trends to keep up with customer demands and market changes. 

Pros of an ERP system

  • Eliminate data silos.
  • Boost collaboration between teams.
  • Enhance employee satisfaction.
  • Improve customer service.
  • Reduce operational costs.

Cons of an ERP system

  • Time-consuming software implementation.
  • Labor-intensive data migration.
  • Steep upfront costs.

What is a CRM system and how does it work?

CRM stands for customer relationship management. It is software designed to:

  • Help businesses manage all customer interactions.
  • Keep current customers happy.
  • Turn leads into new customers.

CRMs started as sales force automation (SFA) tools — systems designed to automate workflows and streamline processes for your sales team. 

Today’s CRMs combine various disciplines into one system. This provides you with a single database for customer and sales data. 

CRMs automate workflows to save time on repetitive tasks like sending emails, following up on leads, and creating invoices.

The key functions of a CRM are to:

  • Provide a central repository for all customer data and customer communication.
  • Capture lead information on leads. 
  • Track how leads progress through the sales cycle. 
  • Provide insights on how potential customers can be nurtured and converted into sales
  • Create accessible reports and dashboards. 

With accurate, real-time data in the palm of your hands, you can make split-second decisions about where to take the business thanks to your CRM.

Pros of a CRM system

  • Increases your revenue.
  • Boosts sales team efficiency.
  • Improves customer service and customer loyalty,
  • Allows for remote access to all relevant data and functions.
  • Reduces operational costs.

Cons of a CRM system

  • Sometimes support resources are an additional cost.
  • Functions are often limited to marketing, sales, and customer-related features.

What is the biggest difference between ERP and CRM software?

The biggest difference between ERP and CRM systems is that, while they automate business processes and improve profitability, they do so using different approaches.

CRM and ERP systems are management tools with centralized databases from which all verified users can view information and perform a range of tasks. 

However, CRMs help teams boost their sales volume by saving them time and resources that would otherwise be spent:

  • Looking up customer and lead data.
  • Performing manual and repetitive tasks.
  • Creating reports and forecasts. 

When you keep track of customer data and interactions through a centralized database, everything from sales tracking to customer service becomes more efficient. A CRM specializes in this. 

ERPs, on the other hand, help businesses reduce overhead costs by automating core functionalities across departments. 

Most ERPs support back office activities like finance and accounting, human resources, supply chain management, inventory, procurement, etc.

CRM vs. ERP vs. BPM

The main difference between BPM, ERP, and CRM software is their areas of focus. 

ERP, CRM, and BPM all perform similar tasks for businesses but do so in different ways.

BPMs, or business process management software, aid in identifying areas of opportunities for existing business processes. They automate workflows to mitigate risks and develop more standardized procedures.

While BPMs can be used by many different types of businesses, ERPs are mainly used by manufacturing businesses, as the latter has key functionalities that focus more on manufacturing processes.

CRMs, on the other hand, primarily aid businesses in customer, sales, and marketing management. CRM use is widespread across industries and business sizes. 

Do I need CRM or ERP or both?

Whether you need both CRM and ERP depends on the system(s) you choose. 

Many modern ERP systems come with a CRM component. In that case, you won’t need a separate CRM system. 

However, some ERPs do not come with a CRM component or have very limited CRM capabilities. In this case, you’ll need to find a CRM that can integrate with your ERP system.

CRM ERP integration

CRM ERP integration is critical for a few reasons. Let’s get into them.

Improve internal efficiency 

Using separate systems means having to manage two sets of data that need to be updated constantly. 

Manually transferring data takes up time that employees could spend on more important tasks.

Eliminate data silos

A data silo is a collection of data that is isolated from one or more departments. 

When different departments use separate systems to track their data, it creates silos that prevent teams from collaborating. 

As a result, departments spend more time:

  •  Going back and forth responding to data requests.
  • Digging up “missing” data that isn’t accessible to others.

ERP and CRM software remove silos and keep efficiency optimal.  

ERP vs. CRM: Which one is better?

ERP and CRM software are essential for businesses but serve different purposes. An ERP system is used to manage the back end of a business, while a CRM system is used to manage customer relationships.

In the battle of CRM versus ERP, there is no clear winner. Most businesses need both an ERP and CRM system to run smoothly.

Method: The best ERP and CRM software

If you’re a small business in need of an ERP with CRM capabilities or vice versa, consider Method.

This powerful automation tool offers functionality that exceeds a traditional CRM but is more agile than enterprise ERP solutions. It is best for small and mid-sized businesses who have QuickBooks and Xero at the core of their operations.

Method is beneficial to many industries, but those in manufacturing, wholesale, distribution, and contracting get the most value from it. 

Below is an overview of what Method can do for your business. 

 

With this solution, manufacturing businesses can easily:

  • Sync customer data, payments, sales orders, and invoices from their accounting tool.
  • Access job routes and team schedules.
  • Run and integrate over 3,000 third-party applications.

Get started with your free trial of Method:CRM.

ERP and CRM software FAQs

What is ERP CRM software?

ERP CRM software are integrated systems that automate key processes such as accounting, inventory management, procurement, human resources, and customer relationship management.

How are ERP and CRM related?

ERP and CRM are related as they both centralize business data into a single source of truth to improve efficiency. 

These two management systems work hand-in-hand (and are often integrated parts of a larger system) to help your business grow in an automated, scalable way. 

Who should be using an ERP?

All types of businesses, but especially those that manufacture goods, should use an ERP. 

ERPs are designed specifically to help those in the manufacturing industry with things like inventory, procurement, work order fulfillment, warehouse management, etc. 

Get the best of ERP and CRM software with your free trial of Method!

Image credit: Ivan Samkov via Pexels

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Focus on growing your business

The more you automate your business, the less time you’ll spend on manual tasks.


Find out how Method:CRM can fuel your growth:

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Focus on growing your business

The more you automate your business, the less time you’ll spend on manual tasks.

Find out how Method:CRM can fuel your growth:

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