ERP and CRM systems appeared in the mid-90s and became two main platforms to support business growth and success. Today CRMs are dedicated to customer life cycle management through sales, marketing, and customer support, and ERPs take care of back-office workflows by connecting financial and operational systems.
However, recently, the distinctions between the two systems started to blur. They have overlapping functions, such as automation and business performance optimization; both serve as databases that can reside on the same platform or integrate with each other to share data.
We will describe the core functions of each system and try to explain in which cases businesses may require an ERP, what kind of needs a CRM can cover, and when it’s time to adopt both.
CRM: core functions
A CRM system is a hub where sales, marketing, service and commerce teams can streamline and build strong and productive relationships and coordinate their mutual efforts to deliver omnichannel and personalized customer experience. According to Gartner, the landscape of the 2020 CRM leaders looked like that:
By turning to CRM consulting, companies are able to develop a CRM adoption strategy, improve customer acquisition and retention, boost loyalty, and, consequently, increase revenue. Let’s look at the major CRM functions in detail.
Getting a holistic customer view
A CRM system accumulates and processes all kinds of customer data via different data sources, be it internal systems or integrated third-party apps, like email, ERP, CMS, social media, POS, call centers, or data analytics tools. When data is concentrated in a single platform, it allows customer-facing teams to be on the same page when they interact with customers, thus providing a superior customer experience.
- Marketing teams can identify and categorize leads in order to prioritize the most promising ones and cater to those in need of nurturing. They can also track every lead’s entire journey, from the first inquiry to the deal. With a comprehensive view of every customer, marketing reps can engage them with the right content through day-to-day communications and targeted marketing campaigns.
- Sales reps get sales automation software that helps make more informed decisions and more accurate forecasts by providing a clear view of the sales pipeline. Thanks to insights into customer needs, they get more opportunities to upsell and cross-sell.
- Service reps can interact with customers across multiple touchpoints no matter where, from home, office, or in the field, and provide a highly relevant solution based on analyzing the customer’s full history with the company. They can also delegate part of their responsibilities to chatbots or enable other self-service options.
- Commerce teams can scale ecommerce efforts by introducing new delivery methods, adapting B2C practices for B2B customers, using connected devices, and more.
A CRM system serves as a central location where all customer-facing departments can store their data and, what’s more important, make it visible to anyone in the company who may need it. Thus, the implementation of a CRM strategy may result in cross-departmental collaboration, higher productivity, and a truly connected customer experience.
For example, service agents can see whether a customer has already got in touch with other departments or service agents, use the available information in their communication, and make customers feel pampered (and even upsell additional products or services to them). As another example, physicians relying on a CRM solution for their healthcare practice can track how their interactions with patients impact their desire to come back to the clinic.
Automating and making use of AI
CRMs help automate a number of time-consuming administrative tasks, freeing up time for more creative challenges, for instance, selling instead of entering data. Using low code CRM customization options, employees can configure workflows that can trigger auto-filling of customer profiles, lead scoring, task creation, bulk records updates, or ticket routing.
What’s more, many CRMs come with AI already built into them. AI helps make sense of accumulated data by structuring it and providing analytical insights in the form of reports and visualizations. Further on, smart algorithms can predict customer behavior, find hidden opportunities, and personalize customer journeys based on these insights.
7 signs you need a CRM
Though CRMs are extremely popular with companies of any sizes, some of them are not ready to invest into this type of platform and instead resort to other customer experience technologies.
However, there are some signs this CRM gap should be bridged:
- You can’t keep up with the business
You’re facing a sudden growth or entering new markets only to realize you can’t keep up with an influx of leads, particularly when it comes to sorting, analyzing, and prioritizing those most promising. You have a vague idea about allocating extra resources properly because of the low visibility into sales and marketing activities, with each representative having their own way of doing things. Your marketing and sales teams hardly communicate and feel that lead and deal management needs to be streamlined.
- You have too many customer channels
You realize that your customers try to interact with your brand via an array of channels, like email, phone, chatbots, social media, messengers, surveys, etc. You can’t track all communication attempts, follow up, or understand the sentiment, let alone provide consistent and personalized experiences.
- You lack data to get a 360-degree customer view
You don’t have all customer data sources connected to a central location, which results in a fragmented view of your customers and less informed decisions by your teams.
- Customer service is struggling
Your customer service reps work hard but as they have to manage a few screens at once and lack customer service automation, response times are increasing and the service quality declining. As a result, customers don’t get comprehensive information and lack personal touch.
- There’s a big share of manual repetitive tasks
Your employees have to enter data, follow up, and generate reports manually, which leaves less time to complete more valuable tasks and creates room for errors and data duplicates.
- You have departmental silos
Your sales, marketing and service teams don’t share data with each other and have no single source of truth. As a result, instead of enjoying smooth experiences, customers have to repeat their details, send reminders, or just switch to your competitors.
- Your reporting is not efficient
You generate reports manually by entering data into spreadsheets. It affects planning and forecasting and prevents you from interacting with data in real time.
ERP: core functions
An ERP system (for instance, the one built with accelerators like SAP B2B) serves as a central data and operational hub where companies involved in sales, logistics, and manufacturing can efficiently manage their resources. The ERP vendor leadership looked like that in 2020:
ERPs embrace many more business operations than CRMs and can even include customer relationship management as one of their modules. The following are their major functions.
Fostering data integrity
An ERP system is usually built on top of a common database for all financial and operational data, replacing standalone data storages and spreadsheets. The system ties together various data sources and ensures that every department, be it finances, logistics, engineering, or human resources, operates off the same data, can access necessary information to carry out their responsibilities, uses common definitions, and shares the same operational standards and tools for collaboration.
With accurate, up-to-date and complete data, C-suite and their subordinates alike can generate regular or ad-hoc reports to get access to insights, like inventory trends or employee overhead, streamline data interpretation, and make plans based on accurate forecasts.
Managing and aligning business activities
ERPs are usually associated with finance departments, helping them manage the general ledger, budgeting, and accounting. However, today ERPs might extend to inventory, order and supply chain management, production, distribution, human resources management and ecommerce operations. ERPs help align teams and workflows in pursuit of the bottom-line growth:
- Finance departments get complete control over budgets and cash flows, increased security with role-based access to sensitive data, and a faster financial close enabled by automating tasks related to invoicing, accounts payables and receivables, payrolls, etc.
- Supply chain managers make use of tools for monitoring order and delivery fulfillment, timely replenishment of warehouses, up-to-date and personalized pricing, collaboration with partners and vendors, and more.
- Production managers have access to tools for monitoring product development in real time, controlling product quality and production security, managing production expenses, optimizing schedules, labor capacities, and the use of materials and resources.
- Human resources departments use tools for streamlining recruiting, onboarding, corporate learning, payroll and benefits schemes, retirement payments, diversity management, and more. ERPs can accumulate and analyze employee records, like personal details, skills, performance KPIs, certificates, and salary.
- Compliance officers can see where data is stored in the system and, following data privacy and security regulations, can ensure there are necessary customer consents received. ERPs also help decide which additional measures and safeguards should be in place to protect customer data according to applicable regulations.
5 signs you need an ERP
If you don’t have an ERP or use standalone apps for separate ERP functions, watch out for the following situations—it might be the time to migrate to a full-scale ERP system.
- Your quoting efforts are inadequate
You can’t estimate the true cost of products you manufacture due to limited intelligence into the costs of all production processes and market fluctuations, which leads to poor quoting.
- Your business systems don’t communicate with each other
You have a few disconnected databases, spreadsheets, and an accounting app. As a result, your accounting team might use one system for accounts receivable and payable, the sales team will use another for registering orders, and the warehouse staff will have its own system for shipment tracking. With data residing in silos, employees have to waste time on manually downloading and cross-checking information, which can lead to errors, inaccuracies, and duplicates.
- Inventory management is reckless
Your sales, customer and inventory data is not synced, resulting in situations when you have excessive or insufficient stock, your storage space is filled with slow movers, there are missing items in delivered orders, and you can’t keep track of inventory at multiple locations.
- You have problems with production planning
You schedule production based on incomplete supply and demand data and limited visibility into available human resources, raw materials and equipment, which compromises your ability to release products profitably and timely. Manual scheduling prevents employees from seeing a bigger picture and consumes a considerable share of their time.
- Accounting is sluggish
Your employees have to download data and enter it manually into different systems, rely on spreadsheets, and work with paper-based invoices. Accountants have to request IT help to reconcile data and generate financial reports with data consolidated from multiple systems. Closing the books is not automated and takes a few days.
ERP vs CRM: differences and similarities
As a rule, ERPs deal with end-to-end organizational operations and can include a CRM module. CRMs, in their turn, can’t function as ERPs independently. In cases when CRMs use transactional data, it means they’re integrated with an ERP system and pull data from there.
Apart from the fundamental difference in these systems’ end users, ERPs and CRMs differ in how they improve the bottom line. ERPs help optimize and automate business processes to cut overheads and improve the company’s health. CRMs, in their turn, are designed to improve customer experience and reach the final goal—boosting sales. For this reason, each system has its own metrics.
CRM success is based on customer acquisition and retention rates that can be influenced by multiple efforts, like marketing and ad campaigns, website optimization, better customer service, and more. ERP success translates into revenue increase and cost savings as well as better KPIs. To put it simply, ERPs help companies save money, and CRMs help earn more.
At the same time, the two systems have one fundamental similarity—both are fueled by data, which is the most valuable asset for them. For this reason, data accumulation, unification and analysis are the staples of their operation. Both systems equip their users with the tools for making data-driven decisions and accurate forecasts.
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ERP/CRM integration for advanced enterprises
A company’s decision to invest into either a CRM or an ERP first depends on its business model. If it deals with complex financial operations while having a moderate customer base, such a company is likely to choose an ERP system. When a company stakes on growing its customer base while having straightforward financial operations not burdened with logistics and manufacturing, it goes for a CRM.
However, as their operations scale up, any company eventually realizes that it can benefit from adopting both systems:
- CPQ capabilities help CRM users configure custom prices and quote a realistic price or quantity.
- Resource management helps CRM users optimize their resource allocation and direct saved funds where they’re needed most.
- Users of both systems can work in sync and share records, get access to up-to-date data, act on a single source of truth, and get visibility into any stage of their company’s activities.
- Synchronization will prevent record duplication, free employees from downloading, entering and cross-checking data from multiple sources, and provide comprehensive analytics.
It’s possible to manage both systems via one platform or integrate standalone CRM and ERP systems. In many cases, platforms have pre-built connectors that allow syncing separate processes, which can be enough for some companies. However, if it’s necessary to connect both systems seamlessly, it’s a good idea to request your IT team’s help or seek enterprise application integration services. This way you will be able to implement custom integration that will require little maintenance in the future and ensure long-term operation.
Cooperation, not competition
It’s clear by now that ERPs and CRMs do not compete with each other—they are designed to support different business functions. However, when they are in sync, they create a productive environment for companies to grow, win new markets, and provide outstanding products and customer experience.