ERP vs CRM: Which Is Better for Small Businesses?

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. In this article, we compare ERP vs CRM systems by outlining their respective target users, common features, and top examples to help you find out out which one suits your business.

Who Uses an ERP vs a CRM System?

The primary users of ERP systems are medium to large enterprises with complex accounting processes who need a centralized tool for managing their business operations to improve productivity. These include business processes from supply chains, production, and human resources (HR). This kind of system often includes tools for financial management, accounting, order management, reporting, manufacturing, and CRM.

CRM systems, on the other hand, are typically used by small to medium-sized businesses and micro-enterprises that want to simplify sales processes to improve customer relationships and increase revenue. This software typically includes tools for automating sales, marketing, and service processes, as well as features for managing contacts, interactions, and documents.

One main difference between ERP and CRM systems is the ease of use, given the overview of their respective main features mentioned above. ERPs are also usually more powerful because of their larger scope of functionality, making them more expensive than CRMs.

When to Get 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 and improve internal communication systems and data exchange. Many systems can also be configured to add modules that 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.

When to Get 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, increase your revenue, and improve customer satisfaction. It also offers reporting and analytics capabilities that provide summary reports of sales figures, performance, and trends.

CRM software is a better choice for most small businesses, 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 on building customer relationships and 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 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.

If you want in-depth knowledge about CRM core features and benefits, read our article on the types of CRM.

How ERP & CRM Software Work Together

This may be an ERP vs CRM discussion, but note that both facilitate growth and help improve business profitability. Both systems store and analyze data in relational databases. These two are also commonly delivered through software as a service (SaaS) or cloud-based models, but there are still some that are delivered through the traditional on-premises model.

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. This is another difference between ERP and CRM systems. There are plenty of standalone CRMs, like Freshsales, which can be made more powerful by integrating with more entry-level and user-friendly accounting tools like QuickBooks.

ERP Pricing & Top 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:

Best For	Medium to large enterprises seeking a business management solution that automates core processes and provides real-time insights into their operational and financial performance	Companies looking for a system that offers both cloud-based and on-premise deployment for financial management, HR, and production management workflow automations	Businesses needing a set of software as a service (SaaS) that combines ERP and CRM capabilities	High-growth small and medium enterprises that need to automate complex financial processes like payroll, tax filing, and inventory management
Free Trial	14 days	14 to 30 days	30 days	30 days
Starting Price per Month*	$999 base license + $99 per user access cost	$150 per user	$65 per user	Contact sales for custom quote
	Visit NetSuite	Visit SAP ERP	Visit Microsoft Dynamics	Visit Sage

*Based on annual billing. Monthly pricing is also available at slightly higher rates.

According to the Software Path 2022 ERP Software Project Report, the average per-user cost for an ERP project is $8,571 for small companies, $9,000 for midsize companies, and $11,000 for larger companies with at least 500 employees. These figures reflect the projected cost of ownership of a new system over five years.

CRM Pricing & Top 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:

	Read our Freshsales Review	Read our Pipedrive Review	Read our Zoho CRM Review	Read our HubSpot CRM Review
Best For	Small and growing businesses looking for a CRM with built-in phone system	Business-to-business (B2B) companies with simple sales models that focus on direct selling	Organizations that heavily utilize social media marketing	Teams needing a scalable CRM with sales, marketing, and service tools
Free Trial	21 days	14 days	15 days	14 days (CMS and Operations Hubs only)
Starting Price per Month*	Free (unlimited users) or $15 per user	$12.50 per user	Free (3 users) or $14 per user	Free (unlimited users) or $45 (2 users)
	Visit Freshsales	Visit Pipedrive	Visit Zoho CRM	Visit HubSpot

*Based on annual billing. Monthly pricing is also available at slightly higher rates.

Bottom Line

There is no winner in the ERP vs CRM comparison because these two systems 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 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 Freshsales. You can also integrate this solution with an ERP software of your choice. Get started for free or sign up for a 21-day free trial to explore its features and benefits.

Visit Freshsales

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