Difference between CRM and ERP


If you are a business owner, manager, or businessman, you have probably heard of the terms ERP and CRM. However, some of you may not know the difference between them. This article will explain the differences between ERP and CRM and provide an overview of ERP and CRM, so refer to it if you want to know the differences and consider implementing them.

What is the difference between ERP and CRM?

The main differences between ERP and CRM are the purpose of implementation and the scope of information to be handled. Understanding the differences between the two will make it easier to distinguish between ERP and CRM.

The difference in the purpose of implementation

The use of computers in the business world started in the late 1960s. At that time, large computers for core business operations called mainframes were implemented mainly in large corporations.

While mainframes were used for core business operations such as financial accounting and production management, the systems for each department were dispersed. There was a need to integrate relevant business data between these departmental systems, which led to the focus on ERP, a system specialized for corporate information management. CRM, on the other hand, is a system that aims to improve business operations by centrally managing customer information. 

CRM does not aim to integrate business data like ERP, but rather specializes in customer information management and aims to increase sales by improving the efficiency of sales activities.

Differences in the scope of support

ERP and CRM share the same goal of centrally managing information for each department, but they differ in the scope of the information they support.

For example, ERP can manage employee information to streamline business processes such as general affairs, human resources, and labor relations. Specifically, this information includes salaries, overtime hours, and the progress of labor procedures.

On the other hand, CRM can manage the information of business negotiations, maps of places visited, complaints, business cards, etc. The main focus is on customer-related information necessary for sales activities.

If you remember that ERP is a system that can manage information for the entire company, and CRM is a system that specializes in managing customer information, you will not be confused.

What is an Enterprise Resource Planning system?

To understand the difference between ERP and CRM in-depth, you need to know the characteristics of ERP and CRM respectively. First, let's take a look at the overview of ERP, also known as an integrated core business system, its role, functions, and benefits of implementing it.

Overview of ERP

ERP is an abbreviation for Enterprise Resource Planning, and it is a system for unifying the core business operations of a company.

In general, a company's main business uses separate databases to process information for each type of business. 

However, it is not uncommon for major operations to not be completed with only information from each department.

For example, in the case of the production department of the manufacturing industry, it will be difficult to optimize the operation by the production department alone because it is necessary to make a production plan based on the forecast of the sales department.

By centralizing the information of each department in a company through 

ERP, information sharing among major operations becomes smoother.

The role of ERP

In recent years, it has been pointed out that there is a risk of losing international competitiveness due to the inefficiency of information utilization in management using legacy systems based on past technologies.

This is where the promotion of DX (Digital Transformation) comes into play, which uses digital technology to streamline corporate operations so that they can respond to rapid changes in the business environment.

ERP, a system that visualizes business situations by centralizing information, is attracting attention as a promoter of DX because it serves as a clue to corporate management improvement.

Main functions of ERP

ERP is equipped with functions that cover the entire range of a company's core business operations.

One of the main functions of ERP is the sales management function. The sales management function allows for the centralized management of information on scheduled receipts and shipments, which are divided among various departments such as manufacturing, purchasing, and sales. This reduces shipping omissions and enables quick response to inquiries.

Other functions that support business operations include a trade management function for import order processing, a cost management function for cost simulation, and an accounting management function for bill management.

In addition, since corporate data is centrally managed in ERP, user authentication and log management functions are used to enhance security measures. In addition, backup of the consolidated business data is another important function.

Advantages of ERP implementation

The information that a company has accumulated in the process of performing its main business will eventually become the material for management decisions. However, it will not be possible to make correct management decisions by referring to obsolete data such as monthly and quarterly information.

With ERP, data from all departments can be checked in real-time, allowing for accurate and quick management decisions.

ERP also includes functions to analyze management information. For example, tools that report on profitability and efficiency, using return on total capital and return on equity as indicators.

In addition, it is also possible to perform forecast and actual analysis to compare budget and actual results and to visualize fund procurement and management in a table. In addition, it can be useful for analyzing sales, expenses, and sales volume in terms of the break-even point.

What is CRM (Customer Relationship Management)?

CRM is similar to ERP in that it is a system that supports business, but an overview of CRM shows that there are significant differences. This section will provide an overview of CRM, also known as customer relationship management, its role, main functions, and the benefits of implementing it.

Overview of CRM

CRM stands for Customer Relationship Management and is a customer management system. It is also known as a method and a way of thinking for companies to improve their relationship with their existing customers and acquire new customers smoothly.

Role of CRM

The role of CRM is to help companies increase sales by managing customer information.

To increase customer satisfaction, you need to provide the products and services you want. Information management is the key to understanding the desires of these customers and the challenges they face.

CRM, which can rationally manage customer information, can be said to be indispensable for companies to expand their sales.

Main functions of CRM

One of the most important functions of CRM is the customer management function. The customer management function allows you to manage the most basic information about your customers, such as age, gender, and contact information, as well as purchase records, such as the date and frequency of purchase of products and services.

Some tools can read business cards and convert customer information into data for management, while others have a comment function that allows employees to share customer data.

In addition, inquiry management is another typical function of CRM. Inquiries from customers can be viewed and answered in real-time. 

The inquiries are stored in a database, so that data can also be used to improve the quality of products and services.

In addition, there are functions such as negotiation management, email distribution, and sales forecasting. 

As you can see, implementing a CRM can support your business with various functions.

Benefits of implementing CRM

CRM enables the sharing of customer information across various departments, which brings many benefits to each department.

For example, marketing departments can use CRM to analyze data on their best customers. By understanding the characteristics of customers who are a good match for the company, it will be easier to target them in the future.

In the sales department, managers can grasp the accuracy of orders for each person in charge's case (the possibility of introducing products and services) and the estimated value of orders through CRM. This will enable them to follow up on their approaches to customers appropriately.

Customer departments can check customer information in CRM when they receive inquiries, which helps prevent incorrect responses due to insufficient information.

Differences between CRM and SFA

SFA is an abbreviation for Sales Force Automation, also known as a sales support system.

The difference between CRM and SFA is the scope of departments with which data is shared.

The difference between CRM and SFA is the range of departments that share data. CRM shares information among a wide range of departments, including not only the sales department but also the customer and marketing departments. SFA, on the other hand, is only for consolidating sales information of salespeople into the same system.

Which should I implement, ERP or CRM?

Some of you may be confused about whether you need to implement ERP or CRM. 

The following explains the system you should implement based on the functions of ERP and CRM introduced so far.

After understanding your company's situation and issues, please consider implementing the most appropriate system.

ERP for centralized information and business analysis

If coordination between systems and departments is inefficient, an ERP system that can centralize information for the entire company is suitable.

For example, suppose that when data is changed in one department, it takes a long time to correct the related data; with ERP, the database can be integrated so that when the original data is changed, the relevant data is also updated in real-time.

ERP also has the feature of being able to make use of the integrated database to advance management decisions. With functions such as forecast and actual analysis and break-even point analysis, ERP is also excellent for streamlining management analysis.

CRM for customer management and sales activities

In an industry where the market is crowded with competitors, you never know when you might lose a customer to another company. Therefore, a system is required to maintain good relationships with contracted customers and to continue doing business with them as long as possible.

CRM is a system that can increase customer satisfaction by effectively utilizing customer information. For example, it can deliver information of interest to customers at the right time by distributing emails suitable for each customer based on the customer information.

In addition, to increase customer satisfaction, it is also essential to conduct sales activities efficiently. Since CRM can check the history of customer visits, it is possible to visualize the priority of companies to visit and improve the efficiency of sales activities.

Thus, if you want to optimize your customer management and sales activities, CRM is the right choice.

ERP and CRM can work together

There may be cases where CRM and core systems are implemented separately, and customer information and order data are not managed centrally. In such cases, you should consider implementing an ERP and linking ERP and CRM. For example, by linking CRM and ERP, it is possible to share estimated data entered in CRM with ERP. This will streamline the process from the acquisition of potential customers to negotiations, quotations, orders, and invoicing.

In addition, since CRM quotations and sales activity records can be viewed from the ERP management screen, not only the sales team but also the management can grasp the situation in the field.

Understand ERP and CRM and choose the best one for your situation!

ERP and CRM are both systems that can centrally manage information, but they differ in the purpose of implementation and the scope of information to be covered. To improve the efficiency of your business, you need to understand the features and differences of each and then choose the system that best fits your situation.

See also:
Reasons for Failure in Implementing CRM Tools
SaaS – Benefits of Implementing SaaS
Advantages of Cloud Services
Benefits of Implementing ERP for the Retail Industry
Benefits of Moving to Cloud ERP for SMEs

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