CRM vs ERP: What Are the Key Differences?

Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) have a lot in common, and the two terms are occasionally used interchangeably. They’re often housed in the same software portal, which is usually cloud-based. When it comes to CRM vs. ERP, you don’t have to choose.

Read more: What Are Key Features of Healthcare ERP Solutions?

CRM vs ERP

CRMERP
ExternalInternal
SalesSupply Chain
MarketingOperations
Customer ServiceRisk Management

What Is CRM?

Customer relationship management software is an interface through which a business and its customers interact. It consolidates previously separate functions related to sales, marketing, and customer service. Salesforce is a big name in this industry, but other CRM options have emerged on the market.

What Is ERP?

Enterprise resource planning software manages internal resources to ensure a streamlined workflow. It’s the application of technology to essential business functions. ERP systems aggregate data from across the enterprise, from accounting to supply chain management. Some big players in this arena include SAP S/4HANA and Oracle Netsuite ERP.

CRM and ERP work hand in hand. While ERP relates to the internal functions of the business, CRM is the system that interacts with clients.

Read more: Best ERP Software & Systems for 2021

Why Your Business Needs Both CRM and ERP

All businesses ultimately need both types of software systems. You need to keep an eye on both the internal workings of your business, such as finances and operations, as well as external processes, such as customer acquisition and retention.

Because they tend to work with related data, many vendors consolidate CRM and ERP functions into one comprehensive portal.

Sometimes Less Is More

Given the prevalence of all-in-one software platforms that combine ERP and CRM tools, two things thing to watch out for feature creep and price.

Typically, a business will want to keep adding products to a platform in order to accommodate all potential scenarios. Poorly configured portals can be overwhelming and unruly for internal and external stakeholders alike. To combat this, you must configure a portal to only show what the end user needs to see.

More importantly, as you add products, modules, or features to an all-in-one platform, there’s additional costs associated with each new tool. Further, adding roles or seats within a given product incurs additional fees. Licensing agreements are specific to the enterprise, so your ultimate costs will depend on your negotiated service contract.

When selecting which products are best for your company, keep these things in mind:

  • Prioritize core functions when selecting tools
  • Consider the cost of integrating additional features
  • Assess how much users will actually benefit from new products
  • Only pay for the seats you will use

Are ITSM Tools Crowding the ERP Space?

Information Technology Service Management (ITSM) tools oversee how various IT-related services are delivered across an organization. This typically includes ticketing and incident management. ITSM tools automate what a customer service representative or IT technician would otherwise have to do, and share many of the same core capabilities of ERP software.

However, ERP is more broad and covers a business’s essential functions. ITSM tools draw from the same data as ERP, but oversee IT-related functions within the organization and signal incidents, alerts, and requests within the system. Examples of ITSM software include ServiceNow and Zendesk.

ITSM is an internal tool that keeps the functions of ERP and CRM systems running smoothly. It serves both internal as well as external stakeholders.

ERP is born out of the same principles as ITSM, as IT services are essential to ERP. These two tools are therefore deeply intertwined and rely on one another. Much like CRM and ERP, ITSM and ERP are not so much competitors as they are partners. As such, you often see ITSM tools baked into larger ERP platforms.

You Don’t Have to Pick a Side

Given their increased integration, ERP and CRM are often confused for one another, but their functions differ.

While ERP automates and oversees all essential business functions, CRM focuses on sales-related, outward-facing features. You don’t have to pick a side when it comes to CRM vs. ERP.

ITSM tools will continue to play a supportive and essential role to both ERP and CRM systems ensuring technology runs smoothly. Because all these tools support each other, many businesses are opting to fold them into all-in-one platforms.

Read next: Three Key Advances in ERP for 2021

Lauren Hansen
Lauren Hansen is a content writer covering IT strategy and trends, enterprise networking, and PM software for CIOInsight.com, enterprisenetworkingplanet.com, project-management.com, and technologyadvice.com. When she's not writing about technology trends, she's working out or spending time with family.

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