CRM vs ERP: Know the Differences (2024)

Customer relationship management (CRM) and enterprise resource planning (ERP) are two options for companies looking to simplify and improve their business processes. Both are enterprise software solutions that connect data across multiple departments and automate manual, time-consuming tasks. And while they have some similar advantages and functionalities, they are not interchangeable—each serves its own distinct purpose.

CRM systems support and connect front-office business functions, such as marketing, sales, advertising, and customer service. ERP systems, on the other hand, primarily support and connect back-office functions, such as finance, supply chain operations, and HR.

Read on to learn more about the benefits of CRM and ERP, the differences between them, and whether one—or both—are right for your business.

Key Takeaways

• CRM and ERP are both software solutions that drive business value by centralizing and connecting data and automating processes.
• CRM automates customer interactions and insights, while ERP automates business processes and operations.
• CRM and ERP systems deliver improved business efficiency and productivity when integrated.
• CRM and ERP integration further reduces data silos and helps you get the most out of your systems.

What Is CRM?

Customer relationship management is enterprise software that automates how a customer interacts with your business. It is commonly part of a larger suite of customer experience (CX) applications that may include marketing, advertising, ecommerce, and customer service solutions. A CRM system tracks and stores all collected customer data, including customer communications with sales representatives, proposals, purchase history, and service requests.

Many CRM solutions supplement those customer records through third-party data sources to make sure that contact data is complete and up to date. All this customer data can then be shared throughout an organization, so users can better understand what happened at each touchpoint. Best-in-class CRM solutions also use artificial intelligence (AI) to analyze a customer’s history and suggest recommended next actions for sales.

CRM Benefits

By automating customer-related processes—including day-to-day customer interactions, marketing campaigns, and the sales cycle—CRM systems give businesses more time and insight to build better customer relationships and drive growth. With CRM, employees across sales, customer service, support, marketing, and other teams gain a complete, shared view of each customer’s business and history with the company. This data can be analyzed to create more consistent, personalized customer experiences and build the trust needed to increase sales. When properly deployed, CRM systems can:

• Improve customer service: Think of your last customer service interaction. How long was your wait? Were you shuffled to several different representatives, having to repeat yourself each time? By managing customer data in a central location, CRM creates more accurate customer profiles that can speed up response times and lead to smoother collaboration between sales, service, and marketing representatives. All these features work to increase customer satisfaction and, therefore, the odds of turning a first-time customer into a repeat, loyal customer.
• Increase productivity: CRM tools and automation simplify common, mundane tasks, such as data entry and updating customer information. This speeds up processes, reduces errors, and frees employees to focus on more meaningful work. CRM systems also automate and digitize many customer interactions, delivering them through digital channels, such as email, live chat, chatbots, or social media. Tools, such as live chat, connect customers with representatives immediately, generating quicker responses. Chatbots that connect AI to the sales, service, and support knowledge base are available around the clock to improve customer satisfaction. AI can also improve personalization and relevance in email campaigns to efficiently target outbound marketing efforts.
• Distill insight: CRM creates and manages massive amounts of data, including customer demographics, their preferences, their interactions with your company, and their buying history. This data can be analyzed to optimize various aspects of the customer relationship, such as managing invoices and improving sales forecasting. It can also give development teams insight about customer needs and demands so that they can create better products and services. Sales and marketing teams also use analytics to deliver the personalized communications that make customers feel seen and heard.
• Boost customer retention and sales: Armed with comprehensive insights into customers’ interests, needs, and history, sales can make better decisions about how to service them more efficiently—and pinpoint which customers may be targets for additional revenue. Specifically, the consolidated view of all documented customer interactions, transactions, contact information, and preferences within CRM systems helps manage interactions with both customers and prospects. This information can be used to provide insights about customers and establish more personalized relationships. By tracking conversations, messages, notes, and interactions representatives have with customers, CRM systems also make customer records accessible and up to date, so customers won’t need to repeat information or engage in redundant interactions.

What Is ERP?

Enterprise resource planning is a type of business software that manages, automates, and connects day-to-day back-office business processes, such as accounting, procurement, project management, supply chain management, risk management, and human resources. An ERP suite may also include enterprise performance management: software that helps plan, budget, predict, and report on an organization’s financial results. Unifying these business processes within a single technology platform can streamline operations and simplify workflows. By collecting an organization’s shared transactional data from multiple sources, ERP systems enable the flow of related data between departments, eliminate data duplication, and provide data integrity by storing data in a central location—a single source of truth.

ERP Benefits

ERP systems collect and store data from multiple back-office departments in a common database. This unifies critical business functions, breaks down data silos, and gives employees a single source of truth for more accurate decision-making in financial management, supply chain management, human resources, and other areas. ERP also expedites business processes and drives productivity by automating many manual tasks, such as data entry, that can slow work down. Additionally, ERP systems can:

• Save money: ERP lowers operational costs by consolidating several business functions into a single system and automating processes across the organization. ERP systems mitigate or eliminate many administrative and operational costs, for example, manual data entry or processes that are often redundant. This means more work can be done in less time and with fewer resources, and staff can spend time on more innovative projects that drive growth. As one example, Blue Shield of California saved nearly $500,000 in costs by implementing a cloud ERP system.
• Boost efficiency: Modern ERP systems use process automation and artificial intelligence to optimize manual, repetitive tasks that are prone to human error. By automating finance and accounting processes with ERP, for example, companies can shave days off the time it takes to close their books—allowing staff to focus on more strategic activities. ERP also helps companies by tracking all materials in every stage of the inventory lifecycle, as well as all customer orders, on one single system. This improves visibility and supply chain planning—and helps get the right products into customers’ hands on time.
• Improve decision-making: An enterprise-class ERP system offers users a comprehensive view into financial and operational performance, with customizable reports and real-time insight, without the need for manual reporting. It can also reduce the time needed to complete many tasks by making processes more straightforward and by reducing the time spent searching for the information they need. This, coupled with automated processes and connected systems, helps teams get accurate information to decision-makers fast—so they can respond to changing business and economic conditions.
• Encourage collaboration: ERP systems provide a single source of data and a common interface, allowing users from across departments to easily share information and improve tasks such as financial planning, sales and inventory management, logistics, workforce planning, and customer experience. Instead of departments working with multiple software solutions that only one group can access, teams can work proactively and access information independently—rather than requesting it from another part of the organization. HR and finance teams, for example, overlap on several business functions, including workforce planning, payroll, time and labor, procurement, and accounting. Sharing a single employee record between these teams can provide alignment and reduce errors.
• Reduce risk: A proven ERP system can help ensure data integrity and enforce financial controls. With a centralized system and permission-based access, only the right employees can see sensitive data, improving audit trails and reducing financial and operational risk.

CRM vs. ERP: Understanding Key Differences

CRM and ERP systems both help businesses increase productivity, improve automation, and boost revenue generation; so you may still be wondering, What is the difference between CRM and ERP? Can one replace the other?

The main difference between the two is that ERP software is primarily used for financial data and operations, and CRM software is used on the sales and customer service sides of the business. Whereas ERP systems primarily support back-office functions (such as accounting, procurement, HR, and compliance), CRM supports front-office functions (think marketing, sales, and service).

Many ERPs contain CRM features, but CRMs do not contain ERP features or handle transactional data. Both CRM and ERP are critical components of a successful business IT system, and one cannot replace the other. See how Varsity Scoreboards gained the full benefits of both by integrating the two platforms.

CRM and ERP Integration

There are dozens, sometimes hundreds, of interactions between a company and a customer, and they occur across several departments with different charters and goals. The ideal is to deliver consistent interactions across all touchpoints, giving customers one unified experience. To deliver that kind of modern, frictionless experience, companies need to integrate their CRM and ERP systems to effectively share data, rather than maintaining two separate sets of data.

Take ecommerce sales, for example. Once a customer pays for products and services in the front office (online), the back office (finance) records the transaction details and revenue. If the CRM and ERP systems aren’t working together from one consistent set of data, mistakes can occur, orders can be lost, and profits can go unreported.

By linking and analyzing front-end CRM data with back-office ERP data, companies can also understand customer habits to improve budgeting and forecasting; provide faster, more personalized customer experiences; and anticipate future demands. Sales reps can also track new opportunities, create quote requests, and merge new quotes with existing accounts in real time.

Most importantly, CRM and ERP integration can drive profitability. Technology research firm Nucleus Research found that CRM integration with other internal applications brought “productivity increases across sales, service, and operations and a 20 to 30 percent growth in business.”

Choose the Right Solution for Your Business

To adapt to the demands facing modern businesses and gain a competitive advantage, leaders need the right tools. Now that we’ve covered the differences between CRM and ERP, you can hopefully make a more informed decision about the many options.

Whether it’s to improve customer retention, streamline accounting, increase sales, or get a better handle on supply chain issues, CRM and ERP systems help businesses by unifying data on a single platform and giving a detailed view into all processes. This makes life easier for business leaders, employees, and customers.

Oracle Fusion Cloud ERP and Oracle Advertising and Customer Experience (CX) use AI and predictive analytics to help organizations deliver exceptional customer service, simplify common tasks, and stay current. Take advantage of a unified cloud platform that provides a complete view of every customer engagement and every dollar spent.

CRM vs. ERP FAQs

Can ERP replace CRM?
No. While ERP and CRM share common benefits, they are not interchangeable.

What is the difference between CRM and ERP?
CRM supports front-office functions, such as sales, service, and marketing, and ERP supports back-office functions, such as accounting, operations, and HR.

Can your ERP be integrated with your CRM?
Yes, with the right plan in place, the two can be connected to synchronize business data, manage customer relationships, and drive growth.

Who should use an ERP?
Any business that wants to unify their back-office data into one, centralized location and automate finance, operations, and HR processes.

Who should use a CRM?
Any business that wants to unify their front-office data into one, centralized location, deliver better customer experiences, and create better products and services.