The Insider’s Guide to Outsides – ERP and CRM, Inside and Outside

In today’s enterprise services market, the system functions of both enterprise resource planning (ERP) and customer relationship management (CRM) are becoming more and more overlapping. For example, both may have modules such as personnel management or order management. In fact, some ERP vendors also claim that CRM and HR are part of a complete ERP system. These have brought a lot of confusion to people. Where is the difference between ERP and CRM?

In fact, it is not difficult to answer this question because ERP has obvious differences with users of CRM systems.

The first is the CRM. The main users of this system are concentrated in the sales and support departments. They are aimed at the final customers, and they are not responsible for production and order fulfilment.

In contrast, ERP users come from the company’s internal production and logistics departments: engineering managers, production dispatchers, buyers, supply chain personnel, and finance personnel. ERP users are oriented to the company’s internal departments and suppliers. In addition to handling some complaints, ERP users rarely contact the end customer directly.

ERP and CRM users are at different stages of the business process, and it is almost impossible for them to effectively use each other’s software. In general, only those who log in to the ERP and CRM systems will be IT staff for integration, data warehousing or analytics.

However, manufacturers do not “always guard their own one-acre three-point”, some ERP vendors also have their own CRM products, and CRM vendors like Salesforce are also entering the ERP market (through FinancialForce). Despite the large differences in user groups, these vendors are reluctant to lose this opportunity. However, this creates additional problems for corporate customers who need to know as much as possible about each product, whether it is a more sophisticated heavy-duty system or a lightweight system.

Large companies have already defined their choices: they need a complete ERP system to manage multiple plants, distribution centers, supply chains and currencies. At the same time, they also need a comprehensive CRM system to manage their sales, support and marketing efforts in the international market. It is worth mentioning that Fortune 100 companies may use several ERP and CRM systems at the same time, so the key work is integration and maintenance, which will be an eternal problem due to system upgrades and technology advancement.

Of course, those small companies may never face this problem because they use fragmented ERP and CRM capabilities. For example, a professional service company (engineering, law, accounting, etc.) can be managed through an accounting package and a contact to achieve business operations and growth. However, these companies do have problems with cross-border and M&A, but professional service companies need to have the ability to manage multiple accounting systems and contacts. Although this approach is very challenging, it is not particularly fatal. Below we will further explain ERP and CRM.

ERP: Finance, Manufacturing and Internal Optimization

Let us return to the foundation of ERP: finance. Every company, even a non-profit organization, needs a financial management system. A set of financial management includes transaction records, accounts payable, accounts receivable, tax, cash flow management, quarterly reports, and reporting/decision support. The only remote connection that can be remotely connected to the CRM function is invoice and revenue recognition.

The next level of ERP functionality is those that involve factory production and manufacturing. These features help companies make more efficient products and manage their shipments effectively, such as enabling products to be shipped out of stock before the end of the quarter. Master production planning, procurement, inventory management, sales/transport/warehousing, and supply chain management are all associated with CRM, and there is a need for someone to make an order forecast.

The ERP’s highest level of functionality is in-house optimization and governance, which includes: coordinating multi-plant production, warehousing and distribution, scheduling and sequencing discrete production to maximize profitability or reduce constraints, improving supply chain performance, and extensive analysis and decision making. Support functions, etc.

In fact, even the most complete ERP system, the system itself does not have much detail related to customer relationship management, and these are the advantages of the CRM system. Therefore, only through extensive integration, a company can obtain better customer relationship management functions while applying ERP systems. (Of course, SAP and Oracle will explain that their CRM or ERP system does not require integration. This is a means of promotion for vendors, but not for users.)

CRM and sales automation

If the core of ERP is financial and factory planning, then the foundation of CRM is Sales Automation (SFA). Although both systems involve operations such as contacts, companies, and orders, their work environment is quite different. ERP users will focus on “completed transactions,” such as customer company addresses, released orders, and signed contracts. In contrast, SFA users have very different concerns, such as potential buyers, customers who are trading, and potential orders. Of course, there are also account management and after-sales customer service, but this is not the main job of sales representatives.

A complete CRM system must support the sales process:

  • Lead certification
  • Early sales cycle – leads and opts
  • Forecasting and pipeline management
  • Quotation generation and order configuration
  • Order confirmation and fulfilment
  • Contract generation and termination
  • Continuous account management
  • Renew and repeat orders

Of course, CRM systems like Salesforce.com may expand into eCommerce, customer service, call centres, and other customer relationships. However, even the most versatile CRM system, more than 99% of the data stored in the system is independent of the ERP system.

Obviously, the data and information output by the CRM system is required for the ERP system to be input. However, this link should only be used by companies that have signed a customer and order agreement. From the other perspective, it is also beneficial for CRM users to have access to goods, promise dates, invoices, unsettled balances, and other customer information in a read-only manner.

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