ERP is not CRM

by | Nov 2, 2016 | CRM

An ERP system is useful, but it’s not CRM

ERP (Enterprise Resource Planning) is a useful system, but it’s not CRM. Do companies still need CRM systems now that ERP packages are increasingly offering CRM modules? The answer is: YES. ERP systems are used for entirely different processes than CRM systems. An ERP system is built for the purpose of Enterprise Resource Planning and selected based on the organization’s specific wants and needs for the system. But extending an existing ERP system with a supplementary CRM module isn’t a terribly logical move.

The story of the car and the tractor

It’s often a choice borne out of convenience and supported using statements such as “we’re already using some of this vendor’s other products anyway”. There is a very real risk that the supplementary CRM module will prove to be completely unable to meet the organization’s requirements and desires. This is easily explained using the example of a car and a tractor. A farmer will be very well-served by owning a tractor, but that doesn’t mean having a regular car to drive to the supermarket is an unnecessary luxury.

ERP is not CRM

ERP vs. CRM

The most important distinction between ERP and CRM systems is their goal. A CRM system exists to serve the purpose of managing relationships: Customer Relationship Management. An ERP system is used to facilitate financial and other processes. CRM systems are fully focused on relationship management and are equipped with additional tools and integrations with, e.g., email-marketing software. Meanwhile, ERP systems also target a different process: financial and logistical handling of orders and payments. CRM will focus on the processes that take place both before (leads) and after these orders (after-sales and relationship management).

The advantage of separating CRM from ERP

The main benefit of keeping CRM and ERP separate is that both systems can (vendor-independently) be chosen based on the ‘package of requirements’ that’s been drawn up. Picking a single all-in-one solution from a single vendor entails a risk of damaging compromises. In the end, there is a looming danger that both the ERP system and the CRM system cannot be optimally used for their own specific purposes.