What’s the Difference Between ERP and CRM?
In the world of business, you’ll hear the acronyms CRM and ERP thrown around quite a lot. The letters stand for Customer Relationship Management and Enterprise Resource Planning. Scour the web for information on the topics, however, and you’re most likely to find an abundance of sales-driven copy pushing benefits and spouting buzzwords without really getting into the crux of the matter. In this article, we’ll help you get a basic understanding of what CRM and ERP involve. We’ll also discuss how Microsoft Dynamics consultants can help in your own CRM or ERP implementation.
Let’s start with the similarities…
Before we delve into the differences, let’s first make note of what CRM and ERP have in common. After all, at their most basic level, CRM and ERP are similar. Both fall into the category of software applications that enable employees to share and coordinate data within a business or organisation. They also create reports and forecasts based on the collected information which can help company executives make important business decisions.
The keys to a successful business
Business owners have one aim: to succeed by making the most profit possible. Realistically, there are two ways for a company’s profits to grow — they can either increase sales, or reduce costs. Pretty simple concepts, right? Well, apply these concepts to CRM and ERP and you’re well on your way to understanding how the two applications differ. CRM software is all about increasing sales, while ERP is all about reducing costs.
How does CRM work?
CRM is particularly important in the early days of a business, or while the business could still be described as small to medium-sized. In order to grow, businesses need to find a way to build their customer base and increase sales. But the process of acquiring customers is a costly one and, as such, it pays to combine this substantial cost into a single system that comprises sales, marketing, customer service and contact management.
For example, whenever a salesperson gets a lead, they will immediately record it in the CRM, with data added that fits in with that business’ requirements. The CRM allows the salesperson to track and keep in touch with all their leads, and also directs (or simply reminds) them of the next step in the relationship. With this system in place, the business is able to better control and grow its customer base.
How does ERP work?
There is a point in the growth of a business when increasing sales is no longer the most effective way to increase profit; instead, cutting costs becomes the key goal. Once the business has grown large, poor organisation can result in costly errors and low levels of customer satisfaction, stifling and even reversing growth.
At this point, an ERP system comes into play. ERP systems help streamline business process to ensure company data remains structured and easily accessible. Employees are able to locate, store and share information in a centralised database that can be accessed by anyone else in the company, assuming they have security access. This leads to fewer errors, greater efficiency and higher customer satisfaction.
Examples of CRM and ERP software
There are many CRMs and ERPs in the world, but perhaps the most well-known fall under the Microsoft Dynamics family of business applications. Microsoft Dynamics CRM, for example, is a popular CRM, while Microsoft Dynamics AX is an ERP application for Tier 1 and Tier 2 organisations. A CRM or Dynamics AX consultant can work with your organisation to help make the transition to this software as smooth as possible.