A CRM (Customer Relationship Management) system supports interactions with clients, from the initial conversation to the quote. An ERP (Enterprise Resource Planning) system handles what comes next: orders, inventory, invoices, and accounting. The CRM is the front office; the ERP is the back office. If both your sales team and your order fulfillment are growing, you’ll usually need both, with an integration between them.
What does an ERP do?
An ERP plans and records an organization’s resources in a single database: inventory, purchasing, sales orders, invoices, and the general ledger. Its defining feature is integration. A sales order reserves inventory, the delivery posts it to inventory, and the invoice is automatically entered into the accounting system.
In the Netherlands, you’ll often come across AFAS, Exact, and Microsoft Dynamics 365 Business Central. The modules, how they work, and how they differ from WMS and PIM are explained in “What Exactly Is an ERP?”
What does a CRM do?
A CRM keeps track of who you’re in communication with and the status of those interactions. Contacts, appointments, emails, quotes, and the sales pipeline are all in one place. This allows the entire team to see what’s been discussed with a client, even when the usual point of contact is unavailable.
A CRM looks ahead: what opportunities are on the horizon, what needs to be followed up on this week, and which quotes are still open. Well-known CRM packages include HubSpot, Salesforce, and Pipedrive.
What’s the difference between ERP and CRM?
The difference lies in their focus: a CRM centers on the relationship before the order is placed, while an ERP focuses on order fulfillment once the order is placed. The following section compares them across six key points.
ERP
- Covers: handling orders, inventory and finances.
- Users: administration, purchasing, logistics and finance.
- Data: orders, invoices, inventory, general ledger, accounts receivable and accounts payable.
- Typical modules: finance, purchasing, sales, inventory and production.
- Choose it when: inventory, purchasing and invoicing strongly affect one another.
- Wrong choice: a sales team tracking its pipeline in a system that wasn't built for it.
CRM
- Covers: contact with clients and sales before the order.
- Users: sales, account management, marketing and service.
- Data: contacts, conversations, opportunities and quotes.
- Typical modules: pipeline management, contact management, email and opportunity reporting.
- Choose it when: you have many ongoing sales conversations that need follow-up.
- Wrong choice: invoicing and inventory that have to be tracked manually alongside the CRM.
Do you need both systems?
You’ll need both as soon as sales and order fulfillment generate enough work that a single system can’t adequately handle one of the two. A retail business with a sales team and its own inventory will quickly reach that point. A service provider without inventory can often get by with a CRM, accounting software, and a time-tracking system.
The line between them is blurring. Many ERP packages include a CRM module, and CRM packages increasingly offer quoting and order management features. Such a built-in module is a great starting point if your sales process is simple. As it becomes more complex, a full-fledged CRM running alongside the ERP often works better for the sales team.
How do you integrate a CRM with an ERP?
You integrate a CRM with an ERP by defining, for each data type, the direction and timing of data flow. A common setup: when a sales opportunity is won, the CRM creates the contact and the order in the ERP. The ERP system sends back order, delivery, and invoice statuses, so the account manager can see what has been delivered and what is still outstanding.
Technically, such an integration runs through the APIs of both systems, either directly or via an intermediary layer. The bulk of the work lies in defining the rules for each field and determining how to handle conflicts. Details on how to set this up can be found in the section on ERP integration. If your financial accounting runs in a separate system, be sure to read about how to integrate your accounting software with your ERP. To see which other systems you can connect to a CRM, check out the overview of ten CRM integrations.
Where is the line between the two in practice?
The line isn’t drawn between systems, but between data types. Customer data exists in both systems, and that’s where most of the hassle arises. The solution is to agree, for each data type, which system contains the definitive information.
A workable division: contacts, meeting notes, and opportunities are managed in the CRM. Account number, billing address, payment terms, and pricing agreements are managed in the ERP. The other system reads the data but does not modify it. This approach is called a “single source of truth.” If the standard division of your software packages doesn’t align with how you sell, you can add the missing step by customizing your ERP.
In short.
A CRM supports contact with clients up to and including the quote, while an ERP handles the process from the order onward: inventory, invoicing, and accounting. Organizations with both a sales team and their own order fulfillment usually need both. Integrate them via their APIs, and agree on which system is the primary source for each data type. That way, you won’t have two versions of the same relationship anywhere.
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Questions about ERP and CRM? No problem.
Yes, many ERP packages include a CRM module, and some CRM packages offer order processing capabilities. This works well for a simple sales process. For a more complex process, you’ll often choose two integrated systems.
Both, but not the same data. Contacts and conversations are usually managed in the CRM, while customer ID, billing address, and payment terms are managed in the ERP. Define this division by data type.
That depends on where the bottleneck is. If follow-up on sales calls is falling through, start with a CRM. If inventory, purchasing, and invoicing involve too much manual work, start with an ERP.
Often not. A CRM system with an accounting module and time tracking covers most of the work. An ERP system becomes worthwhile when projects, purchasing, and invoicing start to heavily influence one another.
That depends on the software packages, their APIs, and the number of data types that need to be exchanged. Standard integrations are set up faster than custom ones. To get an estimate, we’ll need to briefly assess your IT landscape.