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What’s the Difference Between an ERP and CRM?
The difference between an ERP and a CRM (ERP vs. CRM) is that ERP handles back-office functions like accounting, finance, and business operations functions, whereas CRM handles front-office functions involving customers.
What is an ERP?
An ERP (enterprise resource planning) is a unified relational database software system used throughout a company that handles finance and accounting, payroll, HR, manufacturing, warehouse management/fulfillment, eCommerce, supply chain management, procurement/purchase orders, sales order and invoice processing, inventory management, project management, and other business processes.
What are the Benefits of Using an ERP?
The benefits of using ERP software are:
- Unified system available to authorized users throughout the company, based on role permissions
- Elimination of system silos used by different departments
- Production planning, master production schedule, bills of material, inventory tracking, and cost accounting
- Standardized or customized reports, cash forecasting, and results dashboards
- Reduced need for preparing error-prone and time-consuming spreadsheets
- Information security and audit trails
Some modern cloud-based ERP systems offer real-time views and dashboards. Financial management uses ERP tools to create financial statements, improve business analysis, decision-making, and results, and perform better cash management.
How Much Does an ERP System Cost?
ERP systems are available at three price points, depending on the complexity of the software solution, the modules selected, and often the number of users. Low-cost ERP systems are targeted at small businesses, moderate-priced ERP systems are targeted at mid-market companies and high-end ERP systems are targeted at the largest enterprise companies. ERP systems costs can range from a few thousand per month on a small business SaaS plan to over a million dollars for an on-premises license of a high-end system like Oracle or SAP.
Besides the ERP system cost, companies pay for implementation, customization, training, and attending user conferences. For on-premises and hybrid systems, businesses purchase servers and other IT equipment, have IT staff costs, and may incur system hosting, public cloud services usage charges (like Microsoft Azure, Google Cloud Platform (GCP), or Amazon AWS), and annual ERP system maintenance charges.
What is a CRM?
A CRM (customer relationship management) is a unified relational database system that handles front office customer and potential customer interactions and relationships, sales pipeline, contact management, customer quotes (configure/price/quote – CPQ), and other sales processes, salesperson commissions and productivity, marketing, and customer service.
What are the Benefits of Using a CRM?
The benefits of using CRM solutions are:
- Using available customer or potential customer information during sales calls to increase revenues and build relationships
- Historical trail of customer interactions, and sales are visible to help the sales team upsell and make further customer contacts
- Sales rep productivity measurement, including sales conversions
- Customer service interactions and related customer data
- Marketing automation efficiency for marketing campaigns
CRM automation systems streamline workflows and business processes and help companies increase revenues and profitability. Like Hubspot, CRM tools provide contact information in a central database to use when making customer-facing sales. CRM features improve the customer experience, customer support, and customer satisfaction.
Marketing automation campaigns include emails, text messages, social media posts, and advertising, which includes the creation of messages from templates and scheduling planned contacts. Marketing automation and CRM systems track the customer journey of leads, prospects, and current customers and their interactions through the funnel to sales conversion. The intent of these recurring marketing campaigns is customer retention and getting renewed interest in buying products or services.
How Much Does a CRM System Cost?
The cost of a CRM system varies depending on which modules your business selects and the number of users. Most CRM systems, like Salesforce, are cloud-based and use a SaaS pricing model. Some companies with ERP products, like Microsoft and NetSuite, offer CRM systems that compete with third-party Salesforce CRM software.
Salesforce prices its CRM software for small teams at $25 per user per month, at $75 per month for larger sales teams, and at $75 per month for larger customer service teams. The Salesforce marketing automation software tools are priced at $1,250 per user per month. All Salesforce SaaS plans are billed annually.
Salesforce also licenses other owned software products through SaaS subscription billing plans, including Tableau business intelligence data visualization and Slack team communications software.
Besides the SaaS software costs, your company may also pay implementation, customization, and training costs.
The Similarities Between ERPs and CRMs
Both ERPs And CRMs are unified software systems with multi-functional and unified relational databases available to company-wide employees with role permissions. ERPs and CRMs include contact management, forecasting, marketing, sales orders, commissions, and customer service cost tracking or functionality. Both ERPs and CRMs provide analytics and metrics regarding results.
How can your business digitize payables and invoice processing with ERP integration?
Download our eBook, “The Last Mile of ERP: Payables Transformation Strategies,” to learn how your growing business can use add-on AP integration connected to your ERP.
Use ERP-integrated AP automation software with self-service supplier onboarding, invoice processing, including automated chart of accounts coding of invoices, data synchronization with your ERP, and fast automated payment batch reconciliation to the GL.
Which to Choose: ERP or CRM?
Decide when it’s time to choose an ERP vs CRM for your business and if it’s time to move up to a next-tier ERP system.
When to Choose an ERP for Your Business
When your company outgrows an accounting software system because it goes beyond the maximum number of users, its business needs become more complex, or it seeks more types of functionality, then it’s time to switch and migrate financial data to a new ERP system.
Startups and small businesses can start with lower-cost accounting software to match their budgets like QuickBooks Online, QuickBooks Desktop, Xero, or Sage Intacct before they may need to implement a more comprehensive ERP system. Even the smallest businesses should start with accounting software instead of relying on spreadsheets to generate financial reports.
Accounting software vendors provide marketplaces for customers to license third-party software that enhances the functionality of accounting software to make it ERP-like. An example of third-party add-on software with integration to ERP or accounting software is Tipalti AP automation software.
Tipalti automation software helps you maximize your ERP investment. AI/ML-driven Tipalti AP automation software lets you streamline operations, increase productivity, eliminate manual data entry and paper-based systems, use robotic process automation (RPA) for repetitive tasks, and achieve better-informed decision-making.
Some medium-sized businesses still use QuickBooks Desktop Enterprise software and Sage Intacct accounting software. Although Xero’s target market is small businesses, Xero adds Growing or Established SaaS plan features for multi-currency and some other more advanced needs like advanced analytics. These higher-level Xero plans work for businesses needing to process an unlimited number of transactions and allow an unlimited number of users.
And some small businesses choose ERP solutions either initially or as an upgrade.
When to Choose a CRM for Your Business
Choose a CRM for your business as soon as possible to enhance your sales team’s productivity and information available to make sales and build customer relationships. CRM vendors offer small business rates that are an affordable path to get started. As your business budget grows, you can expand the functionality of your customer relationship management system by adding more components.
CRM integration with an ERP system is useful.
The Ultimate Setup: Using an ERP and CRM
In summary, we provided definitions for ERP meaning and CRM software meaning and described how these multi-functional systems are different and similar. The question that we posed is: CRM vs ERP – which is better? But, in this case, the best answer is to get both for your growing company as soon as your business can afford these unified software systems.
CRMs provide the most value when integrated with ERP systems or accounting software. We suggest that you use both ERP and CRM systems (that work together well) instead of pitting one against the other as a battle of ERP vs CRM. And use ERP system integration for add-on finance automation software products from Tipalti. Read our guide “What is an ERP Integration? Everything You Need to Know” to begin your company’s AP automation journey.
