ERP vs. CRM: which type of software is more important for your business?

It’s a legitimate question. If money were no object, you would simply identify the best-of-breed in each category and buy them both. You’d run your business on the best software available, using the two platforms side-by-side to crush your competition.

Unfortunately, software budgets are limited. And even if your company ownership is willing to spend big, you want to make sure you’re not buying the software you don’t really need.

This brings us back to ERP vs. CRM. If your company can only afford one of them, which one should you choose?

We say both—and we’re not being silly, seriously. There’s a way to make that happen even within a fairly limited budget. Before we get into that, let’s take a look at what the typical ERP system and customer relationship management (CRM) system have to offer.

ERP and CRM: Defining our Terms

Everyone has heard of enterprise resource planning (ERP). But not everybody has an intimate knowledge of what ERP really is or does. There’s a vague sense that ERP is essential for running a growing business, but as far as what to look for in a new platform, decision-makers are often confused.

One good ERP definition would be this: ERP is software that enables you to run your financials, project accounting, customer relationships, inventory, reporting, payroll, and business intelligence on one platform.

As for a CRM definition, customer relationship management is designed to help you manage the entire customer lifecycle—from initial contact through the total product ownership experience—on one platform.

It’s not hard to see how there would be significant overlap between these two areas. Customers are the lifeblood of your business, so any discussion of financials will revolve around your customer base.

What about project accounting? When you look at the profitability of a project, you’re naturally going to want to determine the profitability of the customers involved, too.

And as you run reports and seek to establish a level of business intelligence that can help you maximize profitability, you’re going to want to include metrics and key performance indicators (KPIs) that measure the health of your customer relationships.

Perhaps, then, the real challenge isn’t to determine the pros and cons of ERP vs. CRM. For most companies, the question is, “How can we use CRM with ERP?”

Three Reasons Not to Choose Tacked-on CRM

The best way to ensure you can get the maximum benefits of ERP and CRM is to choose an ERP platform that has CRM functionality built into it from the start. If you choose an ERP that added CRM features later in the game, you’re likely to run into a few problems:

1. The CRM functionality will likely be superficial and weak. Too many ERP vendors got into the CRM game only because they didn’t want to get left behind with no CRM offering. So they threw together some basic CRM features and tacked them onto their ERP platform. These vendors may not have a deep understanding of which CRM features customers need most and how CRM fits into the real-life business processes of many companies.
2. Integration between the two applications may be inconsistent. Imagine building an ERP platform and offering it on the market for 10 years, and then building a new CRM module. Your developers who are used to doing things one way now have to consider this new module in every product update they release. There are bound to be inconsistencies in the codebases, connections that haven’t been properly tested, and miscommunications between the development teams. When CRM is added as an afterthought, it often becomes apparent in the amount of data that somehow doesn’t make it from one application to the other.
3. The two applications may be on different upgrade schedules. Doesn’t it drive you crazy when you have to bring your business to a halt just because your software vendor has released a new upgrade? You know you want the new and enhanced functionality that will come from the upgrade, but it’s painful to have to tell your sales team they can’t work any leads for the next few hours because the upgrade hasn’t gone live yet. CRM that’s part of the ERP platform doesn’t have this problem.

So, rather than weighing the advantages of ERP vs. CRM and settling for an ERP system that only offers basic functionality, looks for an ERP that has always included CRM as part of the package. Here’s how.

Four Key Traits of a Good ERP System

Want to deploy CRM with ERP in ways that streamline your processes, accelerate your sales cycle, and increase your bottom line? Here’s what to look for in a new ERP system.

1. An ERP that has always included CRM. We’ve already explained the importance of this often-overlooked characteristic. Choosing “Frankenstein” technology for your business is never a good idea. But it goes deeper than that. When you choose a vendor that has always offered CRM, you’ll be working with a partner that really understands the importance of managing customer relationships alongside all other aspects of the business. In other words: a partner that really “gets” the way you work.
2. Integrated content management. CRM can generate a staggering number of records. Think of how many times your sales and customer service team generate written reports on your customers. Every purchase, every service call, every marketing campaign responded to, every company event attended….all of these interactions get written up somewhere.

When these reports are stored in disparate databases on a series of hard drives, they’re little more than a nuisance. But when they’re stored in a single database, they can give you a 360-degree view of each customer—a view that will enhance the effectiveness of all your future sales and marketing efforts.
3. Integration between financials, marketing, sales, and service. For years, companies were happy just to determine the profitability of marketing campaigns. They would launch a campaign, count leads generated, track those leads through the sales cycle, tally up the total sales made, and credit the campaign with generating, say, a 150 percent ROI.

In recent years, companies have realized they can do better. They can track the lifetime value of a customer—and thus, the true profitability of any customer relationship—by digging deeper beyond simply how many sales each marketing campaign generated. All it takes is an ERP system that offers true integration between all aspects of the business. Here’s another area where it’s essential to stop thinking in terms of ERP vs. CRM and start thinking about how ERP & CRM. the two systems can work together seamlessly.

When CRM, core financials, inventory, HR, and business intelligence are on the same platform, there’s no need to build finicky integrations between modules—and then fix them every time they’re broken during a software upgrade. More importantly, information can flow freely between applications so that you and your staff can form an honest view of which customers are profitable and which are not.

There’s even another benefit to having this tight integration between modules. Delays and errors in billing can cost businesses thousands or even millions of dollars per year. One common cause is human error—and human error often stems from technology that doesn’t integrate properly. Any time your finance staff must re-enter data from a sales quote into an invoice, there’s a good chance they’ll make a mistake that results in a failed delivery or inaccurate payment.

When your finance and sales modules are on the same tightly integrated platform, you can eliminate these opportunities for error. For example, when a customer accepts a quote, you can generate an invoice directly from the quote.
Visibility. An ERP system that integrates CRM has nothing to hide. You should be able to use intuitive dashboards to monitor real-time sales data alongside all the other information that indicates the overall health of your business.

Give bonus points to any ERP platform that also offers outstanding visibility to your customers. For example, a customer portal can help you communicate and collaborate more effectively with your customers—and can even enhance customer satisfaction by letting customers meet more of their own needs instantly through self-service.

Another Way to Use CRM with ERP

Now, what if you’re already using a CRM and wondering whether you also need an ERP system? In other words, what if you’re researching ERP vs. CRM with a mind to determine whether ERP would simply be overkill for your needs.

In spite of everything we’ve just said, don’t think that implementing an ERP platform with built-in CRM is the only way to go. There’s good news for heavy CRM users who want to get the benefits of ERP, too: it has never been easier to integrate CRM with ERP.

It’s no secret that Salesforce is the industry-standard CRM. It’s a cloud solution that has revolutionized the way companies market and sells. As an industry leader, Salesforce makes it a priority to play nicely with other software platforms.

This is not to say that Salesforce will work with absolutely anything. But if you’re already on Salesforce, focus your search on cloud ERP solutions that specifically offer integration with Salesforce. In particular, look for a vendor that can claim real-time synchronization with Salesforce—and then ask them to back it up with a demo.

When you choose an ERP that offers bi-directional real-time synchronization of data with Salesforce CRM, you’ll empower your users to work simultaneously in both systems. Your leads, contacts, opportunities, and sales prices will flow freely from your ERP to Salesforce and back again. Think of the hours of productivity you can save—and the countless errors you can avoid.

Settling the Question of ERP vs. CRM

We hope you can see by now why the battle of ERP vs CRM really isn’t a battle at all. If you’re serious about maximizing the efficiency of your business and letting everyone work off of a single version of the truth, you need both systems.

The good news is that you don’t have to implement two platforms. As we mentioned, there are ERP vendors who offer built-in CRM functionality so that you can make effective customer relationship management a core business activity—not just the exclusive domain of the sales staff.

Still not sure you can afford such a powerful ERP system for your growing business? Keep in mind that some of today’s cloud ERP vendors allow you to ramp up your usage gradually, paying a monthly subscription fee that’s based on your number of users.

Even better, Acumatica allows you to pay based on your usage of computing resources, so that if you have a fairly large number of users but they’re only logging on occasionally, your fees will remain relatively low.