ERP vs CRM: What's the Difference?

Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) are similar in many ways, as they are both used to increase the overall profitability of a business.Some features of them actually overlap, and many systems are integration-compatible with one another. Some ERP systems even include lightweight CRM or CRM-like features.

ERP

ERP emphasizes more on the utilization, management, and integration of enterprise resources. As the name suggests, it starts from a plan, which may be an order or a strategic goal of a company, that requires supports in multiple resources like labor, production, equipment, fiscal, procurement, customer resources.

For instance, if a company intends to reach an output of 5,000 pieces of products worth 100 million yuan at the end of this year, then it should establish a product components/parts purchasing plan, production equipment introduction plan, a 50-million-yuan fund raising plan, a production personnel introduction plan, a production employment plan, an end-user development plant, etc. The senior management will keep focusing on the implementation and progress of all the plans.

This is how ERP works: by understanding, managing, controlling effective plans to utilize resources. It is especially suitable for medium-sized and large enterprises.

CRM

CRM is more than managing your customers. In essence, it improves the sales capacity of an enterprise to improve its profitability through a customer-centred model.

As mentioned above, ERP is suitable for large or mature enterprises, but CRM would adapt to your company regardless of its size, even you just registered today and established a sales division.

CRM helps you know where your customers are (pre-sales market investigation), which product is more popular (product sales analysis), how well your team performs (sales activity), customers in which region or industry or of which type are more likely to cooperate with you, and the expected profit in the next year (sales prediction).

With CRM, a company will have a complete and detailed picture of how many percentage points it has increased in sales and how many leads and potential customers its promotion last month has brought about.

What the two systems have in common is that they both allow you to quickly share standardized information across the company's departments, allowing both management and employees to enter information into the system, creating an updated and comprehensive overview of the company. That way each individual department across the company can at an early stage observe a problem in another department and plan ahead of it before it becomes a problem in their own department.

On the other hand, as a tool for promoting sales, CRM attaches greater importance to optimizing customer experience, onboarding new customers and retaining repeat customers, while ERP focuses more on internal procedures of a company, streamlining all the operation formalities.