Enterprise resource planning (ERP) software centralizes operations such as finance, human resources, inventory, and supply chain management. This makes ERPs more robust than customer relationship management (CRM) software, which helps businesses manage contact interactions and deals. As a result, ERPs are more expensive than CRMs, are difficult to learn how to use, and are typically more powerful than what many companies need to be successful.
Here’s when to use an ERP vs a CRM and who they are best for:
- ERP: Best for medium to large enterprises with complex accounting processes needing a centralized tool for all their business operations to improve productivity
- CRM: Best for small to medium-sized businesses and micro-enterprises that want to simplify sales processes to improve customer relationships and increase revenue.
You can learn more about how CRMs help startups and small teams succeed by visiting our guide on the best CRM for small businesses.
How ERP & CRM Work Together
ERPs and CRMs both facilitate growth and help improve the profitability of your business. Having an ERP system with a built-in CRM is considerably less expensive than maintaining two separate apps. It also helps foster better employee collaboration and faster contract approval processes. For example, a company’s finance department needs access to the CRM system to calculate the commissions of their sales representatives.
That said, it is worth noting that while most ERP systems come with a CRM module as one of their features, you do not have to use an ERP to get added functionality. There are plenty of standalone CRMs, like HubSpot CRM, which can be integrated with more entry-level and user-friendly accounting tools like QuickBooks.
When to Use an ERP
ERP systems are used to manage both front- and back-office functionalities of a business or organization. You should use an ERP if you need a program to integrate multiple business processes, as well as to improve internal communication systems and data exchange. Many systems can also be configured to add modules that can address specific business needs.
Consider using an ERP if you want to combine all of the following business processes:
- Financial management: Helps you plan, organize, and determine the best use of your business funds, as well as manage risks to operations and financial stability.
- Accounting: Tracks, stores, and analyzes financial data, such as accounts receivable, budgets, and general ledger.
- Human resource (HR) management: Handles HR functions like payroll, hiring, onboarding, compensation management, and timekeeping.
- Order management: Tracks orders from receipt to delivery to prevent orders from being lost, improve delivery rates, and maintain customer satisfaction.
- Manufacturing: Assists with product planning, monitoring, and forecasting, as well as the sourcing of raw materials needed in the business.
- Reporting and analytics: Compiles information about business operations and generates visual reports for internal use, audit trails, and regulatory requirements.
- CRM: Stores and organizes customer relationship data in a centralized database and automates sales and marketing processes.
The combination of modules in ERP software varies from one provider to another, but finance and accounting modules are typically included in base packages. Other modules that may be offered separately include purchasing, inventory management, supply chain management, project management, workforce management, ecommerce, and marketing automation.
Examples of Top ERP Providers
The best ERP providers offer packages that can run all your business processes from a single platform and can be configured to fit the industry-specific requirements of an organization. An excellent ERP system also allows all team members and departments to access real-time data from one database. Here are a few of our top recommended ERP providers:
- NetSuite: A cloud-based business management solution that automates core processes and provides real-time insights into the operational and financial performance of medium to large enterprises.
- SAP ERP: A system that offers a centralized location for a variety of workflows, such as financial management, human resources, and production management via on-premise or cloud-based deployment.
- Microsoft Dynamics 365: A set of modular software-as-a-service (SaaS) that combines ERP and CRM capabilities, helping businesses manage and streamline their customer relationships, human resource processes, and business activities.
- Sage Intacct: A cloud ERP system that offers applications for finance, accounting, purchasing, order management, and reporting for high-growth small and medium enterprises.
An ERP system’s cost depends on the type of deployment, pricing model, and implementation that a provider offers. Companies that use on-premise deployment usually pay an average perpetual licensing fee of $7,400 per user. For cloud-based ERPs, subscription fees range from $10 to $150 per user, per month. There are usually options for monthly and annual subscriptions.
The implementation process typically costs between $75,000 and $750,000 for small to medium-sized businesses. For large enterprises, this could range from $1 million to $10 million. The implementation fee typically covers additional modules, customizations, consultants’ fees, hardware, and training.
When to Use a CRM
CRM solutions help businesses manage their leads, customers, and deals. You should choose a CRM if you need a tool to streamline your sales and customer engagement and to increase your revenue and improve customer satisfaction. It also offers reporting and analytics capabilities that provide you with summary reports of sales figures, performance, and trends.
CRM software is a better choice for most small business, especially compared to managing deals on a spreadsheet, if you want the following:
- Sales automation: Streamlines manual administrative steps in the sales process to allow your sales team to focus more on selling.
- Marketing automation: Automates email marketing campaigns, workflows, social media content, and other marketing tasks to nurture leads and grow your business.
- Service automation: Significantly reduces human labor in customer service to improve customer satisfaction and lower labor costs.
- Data warehousing: Saves data from various sources and organizes them in a centralized location.
- Data mining: Analyzes and interprets stored data to uncover trends and patterns helpful in improving sales, marketing, and customer service strategies.
- Online analytical processing (OLAP): Gives the CRM its forecasting capabilities to allow you to make data-driven business decisions.
- Interaction management: Logs your customer’s touchpoints with your company in a centralized database.
- Channel management: Tracks customer engagement and streamlines your communication with them on their preferred channels.
- Document management: Captures, tracks, stores, and facilitates the sharing of your company’s electronic documents.
Did you know?
Some CRM platforms offer tools that are usually included in ERP systems, like digital signatures, configure, price, and quote (CPQ), HR functions, and financial management. These features are either built into their plans or offered as add-ons with a third-party integration. Add-on features and integrations provide small businesses a more affordable option for expanding their CRM’s capabilities than upgrading to an ERP system.
If you want in-depth knowledge about CRM core features and benefits, read our article on the types of CRM.
Examples of Top CRM Providers
The best CRM solutions for small businesses are easy to use and have affordable pricing options. They also include core CRM features like contact and sales management, reporting, and email automation. Here are some of our top recommendations for small businesses:
- Freshworks CRM: A full-featured CRM that offers contact management, sales pipeline, and reporting tools that are easy to use. It also has a built-in phone system.
- Pipedrive: A CRM that offers a visual sales pipeline to make it easier for you to track your deals.
- Zoho CRM: A customizable CRM solution that comes with multichannel engagement, two-way help desk integration, social media integration, email analytics, and a native dialer.
- HubSpot: A free, scalable, and easy-to-use solution that has comprehensive contact, deal, and lead management features for an unlimited number of users. It also offers modules for sales, marketing, and customer service.
If you are looking for providers that offer free options, check out our guide to the best free CRM software.
There is a wide range of CRM providers that offer a free plan with limited features, data storage, and customization options. Paid plans for small businesses start at around $12 per user, per month.
Packages for medium to large companies that offer more advanced customizations cost between $50 and $150 per user, per month. Enterprise-level options are priced at $300 per user, per month, or more. Most providers also offer free trials of their most popular plans for 14 to 30 days.
When comparing ERP and CRM, there is no winner because they have different target users and scope of functions. An ERP is recommended for running the business operations of high-growth medium to large enterprises. For smaller companies, it is better to start out with a standalone CRM because it addresses the sales, marketing, and service automation needs necessary to improve customer relationships and grow the business.
If you are looking for a full-featured CRM with free and easy-to-use contact management tools, consider HubSpot. You can also integrate this solution with an ERP software of your choice.