The Benefits and Risks of Mixing or Replacing Your CRM With ERP

ERP Software / December 2023

CRM and ERP are the heavyweight tools of the corporate software world. Both boost revenue and improve business performance, but they go about it in very different ways.

CRM (Customer Relationship Management) Software is front-end focused, managing the endless battle to drive sales. CRM is solely focused on the relationship between a business and its customers’ activity, personal/business details and purchase data. CRM adoption is predicted to grow at a compound annual growth rate (CAGR) of 13.9% up to 2030 globally.

ERP (Enterprise Resource Planning) Software lurks less glamourously in the back-office. ERP aims to bring together data from many applications and departments to create a unified view of the business. ERP software is also available for those working in various vertical markets, with specific features for that sector, such as manufacturing. ERP Software is predicted to see a CAGR of 11.0% to 2030 globally.

Differences and Similarities of ERP and CRM

In the increasingly interlinked world of digital business, where do these juggernauts of ERP and CRM fit in the IT landscape jigsaw? And how do you get them to work in harmony?

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Benefits of Using ERP for Customer Relationship Management Tasks

Many companies or sales teams will already have a CRM, and when an ERP system comes along to support broader business processes, typical initial questions that leaders need to answer are:

  • Will ERP replace our (beloved or loathed) CRM?
  • Can ERP and CRM integrate easily?
  • What are the primary benefits of the change?
  • And what are the complexities?

ERP delivers across-the-board benefits for any business that is increasingly digitally focused. As firms move from spreadsheets to specific point solutions such as Accounts Software, their data footprint grows and as more apps are adopted, complexity increases.

The modern ERP helps to unify and understand data from your applications and how it impacts the business, providing:

  • A user-friendly interface for non-technical roles
  • Integration with other business applications and platforms
  • Dashboards for managers and leaders to provide real-time data insights and drive decision-making
  • Advanced reporting and analytics capabilities to improve business operations
  • Mobility to access live data from anywhere
  • AI and low-code features to encourage in-house development and analysis

The Primary Functions of a CRM System

CRM systems focus purely on building relations with customers and maximising the quality and volume of sales revenue the business can generate. CRMs are loaded with features for sales and product teams, including:

  • Contact management to identify different types of customers and create personalised and segmented campaigns
  • Opportunity management and lead scoring to identify conversion opportunities and improve sales processes and methods
  • Lead management helps to engage customers using demographic and psychographic statistics
  • Sales analytics delivers insights into the results of campaigns to help improve sales performance
  • CRM can rapidly improve the customer experience, something ERP is not designed for

Both types of applications enable businesses to better understand large amounts of complex data through plain English dashboards.

While CRM is largely the preserve of the sales team, departments and roles that benefit from ERP include:

  • Accounts and finance departments
  • Human resources and people managers
  • Strategy and project teams
  • Sales and invoicing
  • Supply chain managers
  • Risk and compliance management

The Overlap of Functions Between ERP and CRM

At the highest level, the key goal of using an ERP and/or a CRM is to improve business results. Each solution does this by providing data for managers and leaders to make informed decisions.

CRMs support this endeavour by providing sales forecasting, automation and analytics. Sales teams can use this data to improve their immediate performance. ERPs broaden that with insights with an accounts focus across the supply chain, production, and other departments, focusing on management-level insights.

Both solutions can natively provide access and insights into customer contact information, quotes and sales, customer service activity, and sales forecasts.

Whatever you currently use, a growing business need not fight over ERP or CRM but can find both integrate well to deliver additional value over a mix of software.

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The Combining Benefits of CRM and ERP Integration

As a business evolves, the need to align sales and operations tasks becomes greater. Working together, with additional integrated value, ERP and CRM can improve visibility and operational efficiency.

Application integration used to be a daunting task for many businesses. However, as ERP Software becomes the dominant force in data alignment and capture, applications strive to make integration as simple (or least painful) as possible.

Choosing the correct ERP for your CRM is the first step. Either one that integrates natively or has a suitable add-on or third-party module to process the integration of data. An ERP also adds features like privacy and compliance management, added security and other features that a CRM might not focus on.

Ensuring all users migrate over to the ERP along with your data is also vital, requiring the appropriate training and ensuring compliance, security and privacy rules are sufficient to protect data.

Sales workflows typically cross-marketing, the sales pipeline, customer touchpoints and orders. Linking them to stock management, logistics, buying and production control can deliver multiple benefits:

  • Improved data and analysis efficiencies
  • Eliminating duplicate data entry and systems
  • The ability to make and deliver higher-value customised products at reduced cost
  • Reduced stock lag and the ability to predict future demand
  • Provide a single view of the customer in relation to the product
  • Simplify interactions between sales and product teams

What System Set-up is Best for Your Business?

There are multiple paths to take on your business growth journey, but these main choices will drive leadership decision-making:

ERP-only: If your business has a limited number of sales customers, there is minimal reason for a CRM, especially if most of your data crosses finance, production and manufacturing.

CRM: A pure sales-focused business model, or an e-commerce business, that has no or minimal production facilities can focus on the data from its CRM and evolve its operations around those insights.

ERP and CRM: A company that started with a strong sales force and then changed to producing or manufacturing its own products is a prime candidate to run both products, or migrate from a CRM to ERP. Similarly, companies that are aggressive acquirers of others may need (or face) a blend of both tools in place to function until their next digital evolution phase (or upgrade).

So, ERP and CRM: Do You Really Need Both?

Most workers and leaders hate complexity in their office day, and the answer is really about the question: “How much complexity is your business willing to tolerate?”

A powerful and easy-to-use CRM that does its job well need not be replaced, but the data can still get siphoned into an ERP to generate leadership insights.

And, if the ERP works just as well as your CRM, then a migration can take place, bringing additional benefits.