Do You Need a CRM or an ERP?

Maybe you’re tired of managing your business with spreadsheets and handwritten notes, or perhaps you just can’t keep up with all of your customers anymore.

Whatever your reason for exploring the options for digital business management, there is a good chance you’ve heard the terms CRM and ERP.

So what do all these three-letter acronyms mean? And are either of them the solution you’re looking for?

The first step in determining what solution or solutions are right for your business is understanding what the options are.

The Difference Between CRM and ERP

CRM stands for customer relationship management and, as the name suggests, refers to software that specializes in tracking and managing all of your current and potential customers.

One of the goals CRM is to standardize the way the customer information is cataloged and stored so that it can be easily shared throughout the organization. Customers are the lifeblood of any business, so improving your ability to manage, convert, and retain them drives growth and profit.

ERP, or enterprise resource planning, is a little less self-explanatory. This kind of software is targeted towards back-of-house activities like inventory, accounting, or human resources.

This kind of solution is targeted towards improving efficiency and planning for the business as a whole. Rather than having a strict focus on sales and customers, an ERP can be used by people across the company's departments and hierarchy. By improving interdepartmental communication, costly problems can be spotted early and planned for. Overall, this improvement in efficiency and reduction in costs contributes to higher profit margins.

The two are not mutually exclusive, and you will frequently find software solutions (like Sellsy, for example) that incorporate elements of both.

Making the Decision to Invest

Both CRM and ERP have the potential to increase profit and spur growth, but the question of what (if any) solution or solutions are a good investment depend largely on the size, complexity, and needs of the business in question.

A small or new business where every department still operates within shouting distance of one another may have no need for an ERP, but a CRM may still be beneficial to boost sales and improve the way customers are handled.

Likewise, a chain of retail stores that doesn’t require meticulous customer management may still benefit from an ERP that can streamline inventory management and facilitate communications across multiple locations.

Because it is focused on driving sales, investments in CRM typically come long before those in ERP, which is more focused on cutting costs and improving efficiency. In fact, research from Capterra indicates that “the vast majority of businesses now adopt a CRM within the first two years of starting up.”

As businesses are dynamic and changing, it is important to ensure that whatever solution is chosen is flexible and scalable enough to meet the needs of the business farther down the road. Choosing a CRM without considering what kind of ERP functions may be important in the future could lead to incompatibility problems, painful and expensive switches to another system, or a lack of critical features.

Sellsy, the Best of Both CRM and ERP

Investing in a CRM can propel a business forward like the gasoline in a car, where an ERP is like the oil that keeps the whole engine running smoothly and efficiently - and both are important for any car or business that wants to go far. In planning for your company's future, it is essential to consider the long-term implications of your choice of CRM even if you are not yet looking for an ERP. You don’t want to end up with a patchwork of poorly integrated programs for each different area of your business that hinders communication and limits growth. This is the reason Sellsy takes a modular approach to ERP functions built around and integrated with our powerful CRM. You can choose what solutions are right for your business, and you are able to seamlessly integrate new features as you grow. Not only does it ensure your CRM and ERP are fully integrated, it ensures you don’t have to keep up with a dozen different usernames and passwords! Remember that choosing the right software for your company is as important as choosing the right employees! By investing in flexible, functional, and scalable solutions now you can lay the foundations for a thriving business for years to come.