About ERP and CRM
Businesses looking to automate core business processes typically look at two main software solutions, enterprise resource planning (ERP) and customer relationship management (CRM). ERP helps companies run successful businesses by connecting their financial and operational systems to a central database, while CRM helps manage how customers interact with their businesses.
Both serve as vital data repositories. Both also touch on multiple departments and, while they are sometimes built on the same platform, the software is often bought separately and integrated where needed.
What is CRM?
In short, CRM is software that manages all the ways a customer interacts with a business. Initially, CRM features were first developed for sales departments and were sometimes known as sales force automation (SFA). Other systems were soon developed to manage customer service interactions and marketing, particularly in the call center — or as it became known, the contact center, once the telephone became just another channel for customer service.
Through acquisition and development, software vendors began to combine all of these disciplines under one umbrella, called customer relationship management. Sales performance management and sales incentive compensation are also included in some CRM systems, but they’re often sold separately because of their complexity.
The central promise of CRM is to give the business a central repository of all customer data, tracking all customer interactions. Armed with this information and using analytics, businesses can make more informed decisions on which customers to pursue for added revenue, how sales teams are performing, how to service customers efficiently and appropriately, and more.
For example, with a centralized CRM system, sales reps will know whether customers they’re visiting have outstanding customer service tickets and can respond accordingly. Alternately, customer service can quickly see whether a caller is a high-value customer, or a potentially high-value customer, and route them to the appropriate service tier.
What is ERP?
Enterprise resource planning (ERP) evolved out of material requirements planning (MRP), which was a way for manufacturers to understand and manage all the resources needed to operate a successful business. ERP serves as a shared database to all the parts of an organization. At its core, this means finances, including the general ledger (GL), accounts payable, accounts receivable, payroll and financial reporting.
But ERP also extends to inventory management, order management, supply chain management and data related to services organizations. ERP touches on procurement, production, distribution and fulfillment as well. Some ERP systems also offer Human Resources Management Systems (HRMS), CRM and ecommerce.
The benefits of an ERP system come from having a single, shared database for all financial and operational data. This greatly impacts reporting — both static monthly reports and ad hoc reports requested by leadership. A single source of financial and operational data also means employees can drill down into reports to uncover financial insights without the need for IT or finance teams to conduct the analysis and reporting. This allows businesses to make faster, data-backed decisions that can impact everything from profitability to new growth opportunities to creating efficiency across the organization.
Another benefit of moving to an ERP system companies frequently cite is a faster financial close. Finance teams typically account for all income and expenses and tabulate the results at the end of each month or quarter, commonly known as closing the books. Closing the books using spreadsheets or entry-level accounting systems typically requires extensive manual work, data entry and contacting different departments for financial information. With a centralized ERP system automating many of those tasks, companies have reported reductions in monthly close times; this task now may take only a week to just a few days.