ERP Vs. CRM: What Are the Pros and Cons of Each System?

January 26, 2023

Ensuring company success entails proactively looking for ways to keep up with changes in the increasingly competitive business landscape. In an effort to stay ahead of the curve, companies have likely encountered enterprise resource planning (ERP) systems and customer relationship management (CRM) platforms. So, ERP vs. CRM: how do they compare?

Both ERP and CRM systems are designed to improve business workflows. However, while the software shares similar features, these systems have many different uses. Therefore, it’s important to carefully compare ERP vs. CRM to determine which platform is more suitable for a company’s needs.

To help decision-makers make an informed choice, this guide will outline the core functionalities of ERP and CRM platforms as well as their pros and cons.


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ERP vs. CRM: Core Functions

ERP and CRM platforms serve as data repositories and central databases for business operations. Both aim to improve an organization’s access to data, enhance task management using automation, and maximize overall profits. However, they have several key differences.

Functions of ERPs

ERP tools are built to gather, manage, and interpret data to maximize the use of company resources. With this software, businesses can streamline a number of back-office activities, including inventory management, supply chain management, accounting, and task delegation.

When considering ERP vs. CRM, the former’s focus is on keeping workflows as efficient as possible and reducing operational costs. As a result, it covers a broader range of business processes.

While modules may vary between providers, there are similarities between different ERP systems. These are some of the core features:

1. Supply Chain Management

This provides a comprehensive overview of supply chain processes, from manufacturing to fulfillment. It could include tools for purchase order management, logistics, and distribution.

2. Financial Management

This collects, tracks, and analyzes critical financial data. In addition, it can often generate financial reports, budget forecasts, spending trends, and the like.

3. Inventory Management

This feature keeps tabs on inventory levels as well as the movement of goods during daily operations. It simplifies the automation of inventory planning and logistics and eliminates the risk of downtime due to insufficient raw materials.

4. Human Resources

This is a module focusing on any employee management efforts, from hiring and onboarding to timekeeping and payroll.

5. Customer Relationship Management

Depending on the current ERP system, it could also have integrated CRM features. These often include tools like contact management, unified inboxes, and lead tracking.

Functions of CRMs

CRM platforms are created to collect client data that can be used in building relationships with leads and current customers. They focus on front-office processes such as sales pipeline management, marketing campaigns, and customer support. As a result, companies will have all the information they need to maximize each customer interaction.

Between ERP vs. CRM software, the latter puts more emphasis on increasing sales numbers. As such, it tends to have a more limited toolset than ERP systems. However, because CRMs focus on a specific aspect of a business, they offer more advanced functionalities for customer-facing processes than an ERP.

Here are some CRM software features:

1. Lead Management

This tracks multiple touchpoints to capture prospective customers. From there, it scores and qualifies leads to ensure enough time and manpower are dedicated to strong leads.

2. Contact Management

This module primarily serves as a unified database that stores information on leads and existing customers. This includes their names, contact numbers, addresses, and transaction data to help agents pick up where another left off.

3. Reporting and Analytics

This is a system that collects and interprets all data that goes in and out of the CRM software. It tracks key CRM metrics such as customer retention, return on investment (ROI), and lead conversion to help understand the status of a company’s performance.

4. Pipeline Management

This visualizes the different stages of the sales cycle from first contact to closing so agents can see the status of leads and ensure none fall through the cracks.

5. Automation

This eliminates repetitive tasks like collecting customer information and sending follow-up emails.

6. Document Management

A feature that enables users to draft, edit, and share documents from within the CRM system. This is useful for storing templates of contracts and emails as well as sharing important files with colleagues.

Benefits of Using ERPs

Businesses big and small can reap rewards from using ERP systems. These platforms can help a company:

Boost Efficiency

Most ERP systems leverage artificial intelligence (AI) to automate processes. With this, users can eliminate repetitive manual processes such as product tracking, demand forecasting, and procurements. As a result, employees can reduce time and effort in daily activities.

Reduce Costs

With tools for inventory planning and forecasting, ERPs can help companies optimize the use of resources, which can translate to long-term savings on purchasing and freight expenditures. In addition, thanks to task management and automation functions, ERPs can help companies maximize billable hours.

Streamline Processes

As most ERPs collect data proactively, users can gain insights into key operational metrics. This simplifies data-driven decision-making, which can help companies continually improve business processes.

Enhance Collaboration

ERPs serve as unified hubs where users have access to shared documents, communication systems, and task-queuing systems. With all information in one place, teams can closely collaborate at all times.

Increase Productivity

As ERPs use automation and provide centralized data hubs, teams can focus more on attention-demanding and revenue-generating work. They can also closely monitor productivity numbers and ensure they are making the most of their workday.

Improve Customer Relationships

Many ERPs provide CRM functions. Therefore, sales agents and marketing staff can have the customer information they need to ensure seamless customer journeys.

Benefits of Using CRMs

Looking at ERP vs. CRM, one can’t deny the former offers more extensive toolsets. However, that doesn’t mean CRM platforms can’t keep up when it comes to the advantages they offer. Using these, businesses can:

Centralize Customer Data

CRMs keep all data about leads and customers, from basic contact information to transaction records. As a result, all team members have instant access to files they can use to follow up on or convert leads.

Identify More Leads

With lead-scoring features, CRMs can help teams identify strong leads. This way, employees can dedicate their time to prospective clients who are more likely to convert.

Target Marketing Strategies

CRMs can help you segment leads, determine buyer personas, and generate reports on customer data. Therefore, you can create more targeted marketing and sales strategies that are sure to convert leads.

Reinforce Data-Driven Decision-Making

Much like ERPs, CRMs also collect and analyze information to help users make data-backed business decisions. With this, users can get access to metrics such as conversion rates, lead-generation status, and agent performance.

Improve Collaboration

CRMs may use Kanban boards, Gantt charts, unified document databases, and in-platform communication systems like ERP systems do. As such, they can help team members stay in the loop on the status of all leads and customers.

Which Is Better for Your Company, ERP or CRM?

ERPs and CRMs benefit businesses in different ways, so it’s hard to say one is better than the other. For instance, if the goal is to improve lead conversion, a CRM platform is ideal. But, it won’t help much if the goal is to eliminate supply chain inefficiencies. On the other hand, if a company needs a solution for multiple business processes, an ERP would be a better choice.

However, with changing consumer demands and industry standards, businesses probably require a multifaceted approach to operations. So, having both platforms in the tech stack is worth considering. Luckily, companies don’t have to weigh ERP vs. CRM. Simply invest in integrated solutions.

For example, Approyo offers a comprehensive suite of solutions. With its SAP consulting services, businesses can easily deploy an ERP system that includes a CRM module. This gives access to all the features needed for day-to-day processes. Contact Approyo today to learn more about what they can offer.

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