ERP and CRM Systems: Understanding Their Functions and Importance

Posted on Dec 11, 2024 in Other subjects

What is ERP?

Enterprise Resource Planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management, compliance, and supply chain operations.

  • ERP systems tie together a multitude of business processes and enable the flow of data between them.
  • Collects an organization’s shared transactional data from multiple sources, eliminates data duplication, and provides data integrity with a single source of truth.
  • ERP systems will also provide transparency into your complete business process by tracking all aspects of production, logistics, and financials.
  • These integrated systems act as a business’s central hub for end-to-end workflow and data, allowing a variety of departments to access.
  • ERP systems and software support multiple functions across the enterprise, mid-sized, or small businesses, including customizations for your industry.
  • Suitable for different types of businesses of different sizes and different industries.

How Do ERP Systems Work?

  • An ERP system consists of integrated module solutions or business applications that share a common database that connects them.
  • Each ERP module typically focuses on one business area, but they work together using the same data to meet the company’s needs.
  • Companies pick and choose the module solution they want and can add and scale as needed.
  • ERP systems can also have industry-specific requirements, so they have vertical modules.

ERP has helped remove barriers and working in silos.

Different Types of ERP Systems

  1. On-premise
  2. Cloud
  3. Hybrid
  4. Multicloud

What is CRM?

CRM means Customer Relationship Management.

CRM encompasses both the strategy and the processes that comprise the acquisition, retention, and partnership with specific customers in order to create superior value both for the company as well as for the customer itself. It requires the integration of the marketing, sales, customer service, and supply chain functions of the organization to achieve greater efficiency and effectiveness in the delivery of customer value.

CRM has helped to remove barriers, reduce working in silos, and have a better understanding.

  • CRM is customer relationship management, and it is a system for managing all company interactions with current and potential customers.
  • CRM helps improve relationships and make the business grow with current and potential customers.
  • A CRM helps companies track interactions that can include calls, customer service, emails, and more.
  • A CRM system gathers, links, and analyzes all collected customer data (contact information, interactions, purchases, service requests, proposals, quotes, among others).
  • The system accesses that data to get an understanding of what happened in each touchpoint and to develop a customer profile in order to build a solid relationship between the company and the customer.
  • Customer data can also be used for incentive compensation modeling, sales forecasting, territory segmentation, campaign design, product innovation, and other sales, marketing, and customer service activities.
  • Furthermore, CRM will help companies streamline their customer engagement process, close more sales deals, establish strong customer relationships, build customer loyalty, and ultimately increase sales and profits.

Why Are They Important?

ERP

  • Improved business insight from real-time information generated by reports
  • Lower operational costs through streamlined business processes and best practices
  • Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders
  • Improved efficiency through a common user experience across many business functions and well-defined business processes
  • Consistent infrastructure from the back office to the front office, with all business activities having the same look and feel
  • Higher user-adoption rates from a common user experience and design
  • Lower management and operational costs through uniform and integrated systems
  • ERP system as a tool to provide a single source of data across the business.
  • ERP systems bring order to the company
  • With a secure and centralized data repository, everyone in the organization can be confident that data is correct, up-to-date, and complete.
  • Data integrity is assured for every task performed throughout the organization.

CRM

  1. A single source of truth: Gives you a clear and unified customer profile
  2. Cost savings: Having a single source of truth is beneficial not only for customers but also for sales teams as you have in one single place all the information related to customers.
  3. Connecting all your teams: Sharing information makes everybody’s job easier and more productive.
  4. Increasing productivity: With the aid of AI, some tasks like drafting sales emails, crafting marketing messages, and writing or localizing product descriptions can now be done in a matter of seconds. CRM gives the power to employees to work on more accurate predictions to reach their sales targets.

What is the Difference Between Each Other?

  1. Focus and Functionality:
    • ERP (Enterprise Resource Planning): Primarily focuses on internal business processes like finance, supply chain, manufacturing, and human resources. It integrates various operational aspects of an organization, ensuring smooth workflows and data consistency across departments.
    • CRM (Customer Relationship Management): Centers on customer-related activities, including sales, marketing, customer support, and engagement. It helps businesses build and maintain relationships with customers to enhance satisfaction and drive sales.
  2. Purpose:
    • ERP: Aims to streamline and optimize core business processes for operational efficiency and resource planning.
    • CRM: Focuses on improving customer interactions, retention, and loyalty to boost revenue and customer satisfaction.
  3. Modules:
    • ERP: Includes modules like accounting, procurement, inventory management, HR, and production planning.
    • CRM: Comprises modules for sales force automation, marketing campaigns, customer support, and analytics.
  4. Data Scope:
    • ERP: Consolidates enterprise-wide data to create a single source of truth for internal operations.
    • CRM: Aggregates customer-specific data to provide insights into customer behavior, preferences, and engagement history.
  5. User Base:
    • ERP: Used across various departments like finance, HR, and supply chain.
    • CRM: Primarily used by sales, marketing, and customer service teams.

Most Famous Vendors

The most famous vendor for ERP is SAP, and for CRM is Oracle.

ERP Vendors

  1. SAP
    • Overview: SAP is the leading global ERP vendor, offering solutions for businesses of all sizes, from SMEs to large enterprises. Its flagship product, SAP S/4HANA, is a cloud-based, AI-driven ERP platform known for its robust capabilities and real-time analytics.
    • Key Features:
      • Comprehensive modules for finance, supply chain, HR, manufacturing, and more.
      • Real-time data processing and advanced analytics.
      • Scalability and customization for industry-specific needs.
    • Market Presence: SAP dominates industries like manufacturing, retail, and financial services, with a strong presence worldwide.

CRM Vendors

  1. Oracle
    • Overview: Oracle CRM is part of Oracle’s broader suite, offering capabilities for sales, marketing, customer service, and analytics.
    • Key Features:
      • Integration with Oracle ERP and other enterprise systems.
      • AI-driven insights and predictive analytics.
      • Robust tools for marketing automation and sales pipeline management.
    • Market Presence: Strong foothold in large enterprises, particularly those already using Oracle ERP.