ERP Vs CRM – The Differences!

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.

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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.