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ERP Vs CRM – The Differences!

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For an entrepreneur who is planning to expand, these terms often trouble him. They seem to require a great deal of software knowledge which, I believe, majority of entrepreneurs (especially non-IT folks) won’t have. More than entrepreneurs, students in B-Schools lose the bigger picture and take ERP as a painful punishment.

“What is ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) and how are they different? Is there any relation between them? How are they useful to my business and should I implement them?”

if you are a consultant, these might sound very familiar statements. If you are not a consultant then believe you me, any business owner would have these questions in mind.

Let’s talk the layman language

Consider this; when you send a courier through any logistics company like DHL, FedEx, DTDC etc they give you a receipt with an alphanumeric code on it. You can then log on to their website and track the delivery status of your parcel to the destination with the given code. You can precisely track as in which city has your parcel reached, is it in air cargo, or delivered to destination. How is it possible?

ERP (Enterprise Resource Planning)

Plans the resources of an organization and hence is Organization-oriented. This is a software tool to keep a track of various departments of an organization at a central database. With expansion of a business, an owner’s biggest concern is to manage the chaos happening around and this gives a complete picture of what’s happening. It’s a multi-module tool that maintains information about finance, accounting, procurement, inventory, payments, delivery, support, payroll, human resource, and the list is endless.

erp-crm-differences

[source]

Consider it as a crystal ball in the hands of each department that is transparent and gives information about other departments and business as a whole. You ask a question and ERP gives you an answer. Of course, this doesn’t happen by its own; each individual adds his own piece of information in bits and slowly becomes immense pool of information for the business.

You handover the parcel to the shop owner, he enters the details into his ERP-UI at his desktop along with the tracking code. The moment parcels of the day are loaded on to the truck, the shop owner changes the status of all parcels accordingly and the process is followed each time.

Information about the payment received from customer goes to the finance department, which also captures other information like cost to company, salaries due and other operations costs. If it’s a manufacturing company, information of procurement and production are also captured by respective departments. For the time being, you may call this, capturing of this information at all levels and analysing it later for business benefits, as “Analytics”.

CRM (Customer Relationship Management)

In my previous articles we learnt about CRM, you must check them out here and here; they are probably easiest definitions! CRM is Customer-oriented and managed by marketing and sales department which often represents organization to the world. Just like ERP manages information inside organization, CRM manages information about existing and potential customers so as to build better relations with them.

The objective of CRM is to make marketing and sales department capture maximum information about customers to offer them better deals and maintain relations by understanding their needs.

ERP vs CRM

Is there a connection between the two? Definitely yes! They do have a little overlap in the operations. Moreover, a CRM can be clubbed with ERP at the central database level and both can interact easily.

Maintaining leads via website is an integral part of CRM. An online store of any product needs to interact with inventory management module of ERP to check the availability of a product before it is displayed on the website. Along with this, the supply chain module should interact with CRM so that customers can be promised a specific delivery date and time.

Not every B2C business model can keep detailed information about its customers. Therefore, a provision is made where you enter your courier code through website; it interacts with concerned ERP module and gives you desired information about delivery status of parcel. To bring a smile on customers face, CRM can shoot mails to customers informing them about confirmed delivery along with name of the person who received it.

With time, CRM is becoming a vital part of ERP, which was not true until early years of this decade. However, the requirements and possibilities of implementation depend from business to business. If you (or your IT department) are smart enough, you can tweak the model of the combination favouring your business.

  1. Isabella says

    Interesting article.The basic difference between these two terms are CRM softwares are used to manage front end activities where as ERP softwares are used to handle backend activities.

  2. arshi marwaha says

    Amazing article. really helpful to have a better understanding of ERP and CRM. If you want to read more about ERP and CRM you can go to http://www.knowledgement.ie/

  3. srinivasaragavan says

    An excellent article, just like the other one about CRM. Here I would like to share my views with readers. Just my two paisa :) For any business to start and then survive and to grow, the following parts are required, with out which any business can not survive. 1. A Business recognizing a demand for a certain product. (It can be any thing, steel, electricity, commodity, IT or any service) 2. Recognizing the raw material for that product. (It can be iron ore, coal, farmers or software) 3. Recognizing the equipment to convert the raw material to the product. (It can be steel mill, power plant, processing plant or computers) 4. Recognizing the manpower required to operate the equipment, run the procurement of raw materials, run the sale of final product. 5. Recognizing the finance required to run all the above operations. (It can be Banks, share holders, Financial institutions) From the above simple model of the business, it is evident that the business model is made of the following parts : 1. Customer (for sale of company produce) 2. Vendor / Supplier (for the raw material) 3. Equipment (for processing raw material to finished product. It can be machines or technology) 4. Manpower (to run the entire operations) 5. Banks / Shareholders (to finance the business model) I have read many articles in many blogs which focus their energy in substantiate the importance of a singel piece of the above jig.

    1. Arun Prabhudesai says

      Thanks for an excellent comment Srinivasa….

  4. Tekshapers software says

    thanks for share this article..excellent……

  5. James says

    Thanks for useful information Satyam sir.I think both are important for a Enterprise
    ERP is a good business application but CRM also play important in sales,makreting,services and support system.

  6. akshay.patil says

    thanks

  7. phani says

    Excellent article, with simple examples and i clearly understood, thanks a lot :)

  8. Mahi Singh says

    thanks….

  9. Majid Korai says

    coooool

  10. Sonia says

    Thanks for the clear explanation. It really helps.

  11. Anonymous says

    Hi Satyam Gambhir! This is a very good article. You explained thoroughly about ERP to laymen as well as techies. Great article

  12. Chanti Kasa says

    thanks for explaining….

  13. Sahaj An Illusion says

    good post. very well explained.

  14. ravi says

    very nice

  15. Elifelet SoldierBoy Blandin says

    Good Post Thanks!

  16. Cyril Vimal says

    good one!

  17. Pippy Lam says

    THANK YOU!

  18. Thakor Pankit says

    Good Post Satyam Gambhir
    I Think SAD is BAD!!!!

  19. Satyam says

    Thanks Shweta, pleasure!

    Anindya, the very confusion coaxed me to write this! Thanks for sharing the link, its useful. Why not put up videos to showcase how salesgenie works? This will be of great help.

  20. Anindya Chatterjee says

    Hi Satyam,
    Nice post.
    We sell a CRM product on SAAS model primarily in the Indian market and we have certainly seen a lot of confusion in the customer mind about where CRM ends and ERP begins and the overlap.
    I gave some examples in a recent blog; comments welcome.
    http://marketingdunia.wordpress.com/2010/11/15/where-does-crm-end-and-erp-begin/

  21. Satyam says

    Altaf

    Your two paisa has again proved to be a cherry on the cake for my article. It puts a different viewpoint. Thanks a ton.

    Well, ERP is way to make your business processes simpler and organized. You have put forward a view from a manufacturer’s view. Great!

    Look forward for your comments (two paisa) on future articles too. :)

  22. shweta says

    A very simplified and well molded article…
    good versions on the blog..giving another reason to visit trak.in.

  23. Altaf Rahman says

    An excellent article, just like the other one about CRM.

    Here I would like to share my views with readers. Just my two paisa :)

    For any business to start and then survive and to grow, the following parts are required, with out which any business can not survive.

    1. A Business recognizing a demand for a certain product. (It can be any thing, steel, electricity, commodity, IT or any service)
    2. Recognizing the raw material for that product. (It can be iron ore, coal, farmers or software)
    3. Recognizing the equipment to convert the raw material to the product. (It can be steel mill, power plant, processing plant or computers)
    4. Recognizing the manpower required to operate the equipment, run the procurement of raw materials, run the sale of final product.
    5. Recognizing the finance required to run all the above operations. (It can be Banks, share holders, Financial institutions)

    From the above simple model of the business, it is evident that the business model is made of the following parts :

    1. Customer (for sale of company produce)
    2. Vendor / Supplier (for the raw material)
    3. Equipment (for processing raw material to finished product. It can be machines or technology)
    4. Manpower (to run the entire operations)
    5. Banks / Shareholders (to finance the business model)

    I have read many articles in many blogs which focus their energy in substantiate the importance of a singel piece of the above jig.

    Some claim employees are the most important part of the company. (Most of the articles are written by sad employees who are not given due respect by their companies and their anger and frustation made them jot down articles)

    Some claim customer is god (Most of the articles are written by sellers who are fighting for survival in a buyers market)

    I have not read any article explaining the importance of vendors, equipment and finance.

    Even if some one has written on these subjects, I do not agree with them.

    Every one has to recognize the bigger picture of the business model and understand that they are part of the business model. Unless they stop thinking that they are of paramount importance to the company, they are not doing justice to the job responsibility.

    Now from my above explanation, CRM deals with the customer (who is one important part of the over all business model)
    There are rational HR & Admin models to take care of Manpower.
    There are departments to take care of company vision regarding equipment.
    There are departments to take care of Finance.
    The last two are very confidential and no one knows more about them. Even if they know they wont spill knowledge (in fear of blowing life into compitition)

    This article of ERP is the complete module for any successful business model.

    Just my two paisa :)

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