Article

ERP vs. CRM software: Meaning, differences, and uses

ERP and CRM systems can take your business to the next level. Learn what they are and how they can work together to improve processes.

By Donny Kelwig, Contributing Writer

Published June 16, 2021
Last updated February 18, 2022

Looking for software solutions for your company can often feel like staring at a bowl of alphabet soup. You’ve likely seen terms like ERP and CRM floating around, but the specifics of each are as unclear as murky broth.

Make no mistake, though—ERPs and CRMs are key for sales teams. These tools are often at the top of the list of potential business solutions. The ERP software market is expected to reach $78.41 billion by 2026, while the global CRM market size is estimated to reach $96.5 billion by 2028. In the modern market, tech solutions are no longer luxuries: they’re necessary tools to stay competitive.

If you’re considering investing in an ERP or CRM software solution for your company, you need to understand the basics of ERP and CRM systems: what they are, how they work, and how they can integrate together in order to exponentially improve productivity. We’re here to arm you with the information you need to use these tools to their full potential and take your business to the next level.

What is an ERP?

Enterprise resource planning (ERP) software collects information from various departments across companies—including accounting, manufacturing, marketing, sales, supply chain, and human resources—and stores it in a centralized database. It helps businesses share data and improve internal operations and processes.

ERP systems focus on the organization as a whole. ERP software can help with finances (such as accounting and payroll), order processing, tracking manufacturing and supply chains, inventory management, and much more. Some ERPs even have basic customer management and support capabilities. Rather than using multiple systems, companies can use a single ERP’s enhanced reporting capabilities to see a snapshot of the whole business.

Because an ERP collects data from different parts of a company, departments can easily collaborate and share important information through ERP integration. That level of visibility helps spotlight inefficient processes and opportunities for synchronization, such as automating repetitive tasks. Overall, this increased efficiency saves businesses time and money.

Benefits of using an ERP

ERP systems are particularly beneficial for sales and support teams because they provide a big-picture view. Sales agents can see outstanding payments or credit status, for instance, when determining whether to upsell a customer. They can also get alerts about supply chain or order processing issues. Using these tools, they can proactively let the customer know about potential delays and provide other options.

Other benefits of ERP systems for your company include:

  • Better business reporting
  • Improved customer service
  • Decreased inventory costs
  • Increased cash flow
  • Safer data security
  • Process improvements
  • Smoother supply chain management

What is a CRM?

Customer relationship management (CRM) systems gather information about all the ways a customer interacts with a company and compile that data in a centralized database. So, is a CRM an ERP system? It’s similar, but it has its own key functions.

A CRM system focuses on the customer-facing side of your business and front-end processes. CRM software benefits include the ability to build customer profiles, automate marketing campaigns, build out self-service features (like messaging and help centers), and track sales. CRMs also make it easy to sync departments that directly connect with your customers, including sales, marketing, and support.

Benefits of using a CRM

With access to data regarding customers’ contact information, purchase history, and previous interactions, marketers can create targeted, personalized campaigns that help attract and retain customers. They can also automate messages and segment their audience lists so messages reach the right people at the right time—without a lot of repetitive work on the back end. Reporting features can give you a unique analysis of sales goals, too, so it’s easy to see what products to promote.

Other benefits of CRM systems for your company include:

  • More in-depth client profiles and buyer personas
  • Clearer segmentation
  • Decreased customer churn
  • Better sales preparation for an improved customer experience
  • Faster communication with clients and teammates
  • Increased data protection
  • More time with clients (due to paperwork automation)

ERP vs. CRM: Which one is right for your business?

ERP and CRM systems both bring incredible benefits, but you still might not know which one is best for your business. To pick the right tool, you’ll need to consider your organization’s unique operations and needs.

Key ERP and CRM software similarities

ERP vs CRM

All ERP or CRM systems work to streamline your processes and create better communication, efficiency, and accuracy throughout your company. Both systems also increase your data security by keeping your information within a system and not on various communication platforms.

Additionally, both ERP and CRM tools save your sales reps massive amounts of time in data reporting. Both systems generate quick and accurate reports regarding everything from finances to sales metrics.

Given all of the similarities, it’s easy to feel as though the two systems are redundant, but that’s not the case at all.

Key ERP and CRM software differences

ERP vs CRM

The high-level distinction between ERPs and CRMs is clear: ERPs focus on back-end processes, while CRMs focus on front-end processes and customer management. While they do have many similarities, the systems work best when used in their intended departments.

If you’re trying to use your CRM to look at finances and budgeting in regards to inventory, it’s simply not going to do that as well as an ERP can. You’ll get further than you would with no sales software whatsoever, but it’s not what the CRM is designed for. Similarly, you’re not going to get the best client profiles and buyer persona breakdowns out of an ERP. Integration of the two is always best.

When to use an ERP

Looking for a one-stop solution for balancing employees, customers, and inventory? The “full-service” functionality of an ERP system may be just what you need.

Consider using an ERP system if:

  • You want to improve back-end processes. ERP software (and ERP integration) can help you streamline hiring, accounting, supply chain management, and more, to make your operations more efficient.
  • Your business is growing rapidly in all areas. By synthesizing key data and aligning departments, a robust ERP solution can help you overcome growing pains and keep everyone on track.
  • You’re using numerous tools or tech services. Using multiple solutions can get confusing and costly. An ERP system enables you to consolidate the information you need in one database.

According to Terillium, an ERP consulting company, industries that commonly benefit from ERP systems are manufacturing, professional services, distribution, construction, and healthcare. Whether large or small, these types of businesses all have complex operations and processes. An ERP is essential for keeping all departments aligned.

When to use a CRM

When a company is just starting out, a simple spreadsheet may be enough to keep customer information organized. But as the business grows, it will need a more robust system for managing customer data and keeping it accessible to employees. That’s where a CRM system comes in.

Consider using a CRM tool if:

  • Your customer relationships are complex. While some ERPs have limited customer management capabilities, they’re often not as robust as CRM software features. A dedicated CRM system will help you handle a large customer base and focus on valuable long-term accounts.
  • Sticky notes and spreadsheets will only get you so far. When it comes to organizing customer data, a CRM is often a great place to start, especially for businesses that don’t need additional back-end features. This is because a CRM generally costs less and is easier to onboard than an ERP.
  • You aren’t looking to launch any new products in the foreseeable future. ERPs are fantastic on the production side, but if you’re looking to push existing products, CRMs are far more useful for marketing tactics and customer experiences.

Any business that deals with customers can benefit from a CRM system. Here at Zendesk, we see a variety of industries embracing different types of CRM tools. Hotels, retail and ecommerce businesses, banks, and real estate companies are some of the most common CRM users, but many other industries also use this tool.

Integrate your ERP and CRM for the best results

ERPs and CRMs have traditionally remained separate, even when companies rely on both. But at Zendesk, we recommend CRM and ERP integration to give everyone the best of both worlds. All departments will get a real-time view of key data surrounding customers, financials, inventory, pricing, and more.

Say someone from the accounting team (who uses the ERP) or someone from the customer service department (who relies on the CRM) updates a customer account. If the two systems are integrated, there’s no need for manual updates because both tools are pulling from the same database.

Request a demo of our CRM and ERP tools today, and experience how integration can drastically improve efficiency, profitability, and customer satisfaction for your organization.

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