CRM vs ERP: What’s the difference and which do you need?

CRM vs ERP: What’s the difference and which do you need?

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Both CRM and ERP systems handle contacts, companies, quotes, orders and forecasts… and they may handle line-item configuration, bundles, delivery schedules and invoices. Where does one start and the other stop? Behold this is the guide for the bewildered.The footprints of enterprise resource planning (ERP) and customer relationship management (CRM) systems seem to overlap — they both handle contacts and companies and lots of details about orders.

CRM

The main users of CRM systems are in the sales and support organizations – they are ultimately customer-facing and they don’t do the actual work of producing and fulfilling orders (they just yell at the people who do that).

ERP

In contrast, the ERP users are focused on the process and logistics of producing the widgets: factory managers, production schedulers, buyers, supply chain types and finance types. ERP users are internal and supplier-facing, rarely calling a customer except to reply to a complaint of some kind.

The ERP and CRM users do not party together, they work at different paces, and they would barely recognize the other group’s software as useful to them. Essentially the only people in your organization to have logins on both the CRM and ERP systems would be IT folks charged with integration, data warehousing or analytics.

For large enterprises, the decision has already been made: they need to have a full-fledged ERP system to manage multiple factories, distribution centres, supply chains and currencies. They also need a full-fledged CRM system to manage their sales, support and some of their marketing functions across international markets.

Smaller companies will never face that issue and can grow profitably with fragmentary ERP and CRM feature sets. For example, a professional services firm (engineering, legal, accounting, investment banking, etc.) can grow to significant size with little more than an accounting package and a contact management system. There will be problems as they grow internationally and make acquisitions, but a professional services firm can operate with multiple accounting systems and contact managers. Even if that approach has ugly warts, they will never be life-threatening.

How integrated should CRM and ERP be?

If your company is large enough to need an accounting package (and let’s face it, that’s everybody), it is large enough to need basic integration with your system (even if that’s just a contact manager). In this era of cloud computing, there’s not much of an excuse for using spreadsheets for this integration – but it still happens.

Thanks to Impax and their low-cost integration approaches, the integration can be automated.

The situation at larger companies is driven by two needs:  supply chain and delivery/service management that may need real-time ERP-CRM interchanges and data warehousing/analytics requirements that can typically be fine with a daily batch update cycle.