DIFFERENCES BETWEEN CRM AND ERP SYSTEMS: DEFINITION AND FUNCTIONALITY

The acronym ERP stands for Enterprise Resource Planning. It is a management system that integrates all the relevant business processes of a company, including administration, accounting, supply of resources, production, logistics, purchases, sales and much more. This system allows you to control and manage all the organisational and operational flows of a company. An ERP is able to integrate all the business processes into a single system, thus allowing work to be optimised in terms of efficiency and profitability. With a classic management system every single sector of the company works independently, with ERPs it creates a sort of IT interconnection between all the sectors.

HOW DOES AN ERP SYSTEM WORK?

The fundamental principle of the ERP systems is the centralised collection of data from multiple departments and company activities. In this way, the problem of duplication and misalignment of data is eliminated and the company can count on a single and complete database, capable of updating itself in real time whenever a user of any department and hierarchical level performs an operation within the system.

In general, an ERP system is divided into suites, modules and functions:

  • The suite is the ERP management global structure: the information system composed of the modules selected and configured according to the specific needs of the company;
  • The modules are the different software applications that manage a specific business process: accounting, production, warehouse, purchases, sales, etc;
  • The functions are the individual operations that the users can perform within each module and correspond to the different activities that each company department must perform.

IN-CLOUD ERP

When an ERP system is received “in service” in the cloud, it runs on a network of remote servers, rather than within a corporate server room. The cloud service provider adjusts, manages and updates the software several times a year, instead of applying an expensive update every 5-10 years (or more) locally. The cloud offers significant advantages, in fact, it is able to reduce operating and capital costs, eliminating the need to purchase any software and hardware or to hire additional IT personnel. These resources can rather be invested in new business opportunities and the organisation is always updated on the most recent ERP software. Employees can focus on more valuable activities, such as innovation and growth, and spend less time on IT management.

THE ADVANTAGES OF AN ERP SYSTEM

It is impossible to ignore the impact of ERP in today’s business world. Since data and business processes are integrated into ERP systems, companies can align the different departments and workflows, with significant savings in terms of profits. Examples of business advantages include:

  • Better efficiency of managerial structure and processes;
  • Lower operating costs through simplified business processes and best practices;
  • Increased collaboration between the users who share data in contracts, requests and purchase orders;
  • Better efficiency of the activity flow obtained by minimising the number of operations required for each task and standardising their duration;
  • Single database to work on even in the case of multinational companies or companies with different locations;
  • Risk reduction, through greater data integrity and financial controls;
  • Lower management and operating costs through uniform and integrated systems;
  • Better allocation of human resources through the evaluation of personnel based on specific and measurable results.

The implementation of an ERP management system is now crucial for every large company that wants to be competitive and wants to develop its business properly. The positive aspect of adopting an ERP system is not only related to the speed of communication between the company departments (that visibly improves), but rather linked to the quality of these communications. Targeted, rapid and effective.

HOW DOES A CRM SYSTEM WORK?

The CRM (Customer Relationship Management) platform deals with the management of the relationships within a company and the interactions with customers, helping companies to keep in touch with them and simplify internal and external processes, improving profitability. By doing so, CRM systems help the company to focus on business relationships with users, colleagues or suppliers.

The term CRM, however, refers specifically to three things:

  • CRM technology, usually a cloud based product that analyses and creates reports on the interactions between the company and the users;
  • CRM strategy, or the philosophy of a company regarding the way in which relations with customers should be managed;
  • CRM process, which is the system adopted by a company to consolidate and manage relations with the outside.

The CRM software described in this article records information about the customers and obtains new data. In this way, the system offers you a complete report on people and companies, giving you the opportunity to study and analyse relationships over time, and to improve the management of the relationships with customers. The CRM software allows a company to deepen relations with customers, service users, colleagues, partners and suppliers, which is fundamental for customers’ acquisition and retention. Furthermore, it is expected that by 2021 the CRM technology will be the main item of expenditure in terms of revenues for business software.

THE ADVANTAGES OF A CRM SYSTEM

Companies may obtain several advantages from the adoption of a CRM system within their organisation:

  • Sales teams can keep track of sales processes in a more controlled way;
  • Sales managers can get information on the progress of each team member towards achieving their goals and verify their performance;
  • Sales managers can better understand their customers and best fit their needs;
  • Marketing teams can monitor the progress of a campaign in a more accurate way;
  • Account managers can track the customer's entire journey, from the first request to the sale, and understand how to behave in the future;
  • The customer support team can effectively monitor conversations with customers in several channels;
  • The human resources team can use CRM to accelerate the hiring process and monitor employees' performance;
  • Human resources accelerate the recruitment process, automate the candidates' management process and support staff retention.

The other positive aspects of this type of CRM arise from the collection and organisation of data coming from the interaction with customers, and include:

  • Advanced management of contacts and sales;
  • Collaboration between teams;
  • Increased productivity;
  • Improved sales forecasts and metrics;
  • Reliable reports creation;
  • Increased customer loyalty;
  • Maximised marketing ROI;
  • Advanced products and services.

DIFFERENCES BETWEEN CRM AND ERP SYSTEMS

The difference between a CRM and an ERP system is that the first one generates and organises marketing and sales information relating to the customer, while the second one coordinates all the organizational and financial flows of a company.

An ERP system deals with:

  • Managing costs, quantities and times of the production department;
  • Managing financial activities and coordinating the supply chain.

On the other hand, a CRM system works on:

  • Automating customer's management processes and sales activities;
  • Analysing procedures and implementing management activities.

Both tools improve the global vision of the company and the collaboration between departments.

To learn more about the business solutions offered by HT Apps, like our management software JO Hall, please fill out the contact form and we will contact you shortly.

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