All about CRM and ERP
If you work anywhere in the modern business world you’ve probably heard these acronyms before – maybe among other acronyms or very possibly dismissed as mere business IT jargon. But to dismiss them out of hand would be a mistake, as these are both concepts of which you should really be aware.
CRM stands for Customer Relationship Management, ERP is Enterprise Resource Planning and whilst they’re both generally applied to particular groups of information system solutions, both also refer to wider business processes that you’ve probably been using time immemorial; even before you had a computer in fact. In short, they’ve always been there but you just didn’t necessarily label them in the same way.
A CRM system is a means of recording all information relating to customer interactions. In pre-electronic days, this would essentially be what was referred to as a sales ledger and was probably a huge leather-bound book on a filing cabinet behind the boss’s desk.
But as with so much else in business, it’s been revolutionised by technology. With information technology being what it is, the CRM has grown in function and now does a tremendous amount more than simply recording transactions. A CRM also provides a comprehensive store of customer data. This can be updated in real-time and shared instantly round the organisation in a standardised format, so that the sales teams and executives are all getting the same information whether out and about on their laptops or mobiles, or back in the office. The main goal of the CRM is to provide information for maximising sales and retention rates, but a good CRM will tie into marketing, and customer support.
Unlike the CRM, the ERP is focused on internal business processes. Its goal is keeping track of who does what within the organisation, when they do it, and how each function relates to the others. It’s designed to assist with planning of the production processes and automatically alerts the relevant teams when a problem in one area is likely to impact another. The focus of the ERP is reducing overheads and cutting costs, and therefore it’s vital in accounting, warehousing, inventory functions and supply chain management, particularly within a disparate organisation.
For large organisations it’s not a matter of either/or when choosing between the CRM and ERP; they’re both necessary to some extent. Both are used to increase the overall profitability of the business and whilst they can overlap and be integrated with each other, their core functions are completely different. Both rely on rapid sharing of standardised information across broad sections of the organisation, and both can be accessed and updated by a range of employees across different functional units.
You may have reached the conclusion that the ERP is a back-office function whilst the CRM is purely front office and the twain shall never meet, but ideally they should be integrated together as a cohesive unit in order to facilitate effective business management. For example, suppose you have a website on which customers can register their details and buy your products? If you don’t have one yourself then you’ve probably used someone else’s.
As you feed in your details to make a purchase, you are contributing information to the CRM. But in making that purchase, you’ve also informed the ERP, which has adjusted the inventory to reflect what you just bought so that the buying unit or production team can maintain the stock levels. Working together, the two systems make for a much more efficient supply chain.
So Which Comes First?
If yours is a small business based in one room where each department sits behind its own desk and information can be exchanged with a roll of the eyes, then an ERP is probably less necessary unless you have particularly complicated production processes to keep track of. However any organisation with a large number or a rapid turnover of customers will most likely need a CRM of some sort even if it’s just that old leather-bound volume on a filing cabinet.
The crucial thing about these systems, is the capacity for growth of the business. Your systems must grow in tandem with your organisation, and it’s always best practice to future-proof your IT. CRM and ERP solutions can also be backed up effectively and integrated with other systems, providing a simple, comprehensive business management solution that’s always available to those who need it.