How are ERP and CRM related?

So that ERP and CRM do not become a relationship box

The relationship between CRM and ERP systems is similar to that between a chamber orchestra and a rock band: both use similar grading systems, but each for different areas and a different target audience. Even if a CRM system partially accesses the same data as an ERP solution, the associated tasks and users differ significantly. In contrast to orchestras and rock bands, ERP and CRM often have to work together. However, this only works harmoniously if clear demarcation rules apply. Otherwise discrepancies are inevitable, which quickly and permanently impair both systems. Used correctly, the CRM and ERP duo can boast strengths that offer every company decisive advantages.

CRM is more than a solution

CRM is also about software - but not only. The focus of the “CRM” discipline is on understanding and designing relationships with customers, suppliers, partners, etc. This includes topics such as viral marketing, customer experience, individualized products, new marketing and service models and much more. In other words, topics that are not directly related to IT. However, the implementation of CRM concepts and campaigns benefits enormously from the IT support. Only when filtered data and evaluations sorted according to various criteria are available, the CRM department can develop its effect. CRM is therefore primarily a mindset and primarily affects the departments in marketing, sales and service - and only then IT. It is undisputed that IT support brings great advantages, but it is not essential. So if you are looking for CRM applications, you should have appropriate considerations and already be “CRM-minded”.
When it comes to ERP, on the other hand, most people think of software-supported order management. The focus on IT is central and very functional or process-oriented. It is rather rare in SMEs that the use of ERP systems is deliberately geared towards conceptual approaches such as a specific strategy for production planning and control. There is no independent “ERP” department that is detached from IT. Knowledge of different manufacturing concepts or strategies for process optimization has to be laboriously gathered in various disciplines such as logistics management, production management, finance, accounting, marketing management, organization, industrial management or even CRM (!).

What is the difference between CRM and ERP?

It is not just the theoretical basics that differentiate CRM and ERP. The systems are of course also intended as IT applications for different tasks. If CRM solutions are about supporting users in marketing, sales and customer service, the focus of ERP systems is on continuous process control throughout the company. It is in the nature of things that the areas of application overlap, because the data and functional area of ​​CRM systems often represents an intersection of that of ERP solutions (although the way in which the data is viewed and used in CRM is different). So anyone who uses both ERP software and CRM is well advised to clarify and delimit the corresponding sovereign areas. The required depth of customer information serves as a simple reference point. Process-oriented, the ERP plunges into the areas of procurement, sales, materials management, finance and personnel; Here the customer or supplier only plays a role insofar as it requires the data integration of the upstream and downstream application areas. The focus is not on sales-driven relationship management, but on process efficiency. In most cases, an ERP system is therefore content with a customer number and address. Further "aggregate states" of the customer, e.g. as a prospect or part of a potential target group, are of no interest for an ERP.

Quite different with the CRM system. The value of a relationship manifests itself primarily in the past. The development via address, lead, prospect to the customer must be recorded. In addition, the CRM provides a sophisticated contact management and history for further processing in marketing campaigns, sales opportunities or in customer service. For sales it is of crucial importance to recognize the potential of new customers as early as possible and to stay in contact with them on an ongoing basis. With special functions and criteria, CRM systems ensure targeted communication and provide customer service with all the information necessary for optimal processing of customer concerns.

Relationship culture as a benchmark for the CRM system

Whether the use of a dedicated CRM solution makes sense is primarily not an IT question, but rather depends crucially on the existence of a CRM culture: The customer or the interaction with the customer is the focus of the company. Employees, organization and processes are based on customer value and customer life cycle. Here a powerful CRM system can offer valuable support in the creation of tailor-made offers, in maintaining contacts with targeted information, in establishing and maintaining customer relationships. The dynamics and complexity associated with looking after different target groups with different requirements over a longer period of time cannot usually be managed with an ERP system. The focus is clearly no longer on planning resources, but on maintaining relationships.

Clear rules of the game for shared data

The parallel operation of ERP and CRM as two independent stand-alone solutions is hardly practicable and therefore makes little sense. Both areas of application already have a lot in common in terms of data. A consistent "360 degree" CRM relationship management also includes classic ERP data such as
Payment conditions and status, products, price lists, offers, orders, delivery conditions, etc. Through the connection of the CRM and ERP systems, not only are comprehensive information available, but also an integration of front office activities (marketing, field service, sales, Service) and back office tasks such as order management, materials management or accounting. The result is integrated, efficient business processes and optimal customer transparency.
When sharing data, it is important to clarify which is the leading system. Depending on the origin and use of the data, certain fields such as customer number, payment terms, credit limit or price list can only be displayed for CRM contacts and be blocked for processing, as they are managed in the ERP system. The comparison of address data - be it when entering new data or when synchronizing with the other system - is of fundamental importance. An identical address may only appear once in both systems. That sounds simple, but in practice it is often made more difficult by different spellings (Muster H. AG instead of Hans Muster AG) or address details (e.g. PO Box instead of street). Organizationally, too, it must be clearly defined which body is responsible for data maintenance with which system. This is the only way to avoid unnecessary effort and data deficiencies. The data transfer usually takes place via automated interfaces. This can be done either as batch processing at night or if required - and usually only for individual data records - at the push of a button by authorized users.

Not least a question of resources

The use of business software always depends on the individual requirements and possibilities of a company. In a less competitive environment, it may be sufficient to manage the contacts with the on-board resources of the ERP system. These possibilities should not be underestimated with modern solutions and can be quite sufficient - especially if CRM functionality only means better address management.
The question of whether it should be an overall ERP solution with integrated CRM or the best of both worlds, of course, also depends heavily on the budget and the resources that are available for implementation and operation. From a financial point of view, Software-as-a-Service offers an interesting usage model, as it avoids high investments in software. Whether and how the symbiosis of ERP and CRM succeeds also depends on whether an integrated suite is used or whether two individual systems are used, which are possibly connected by an interface.

The Duden defines "relationship box" as an "unexplained relationship between the partners of a [two] relationship that is associated with all sorts of difficulties". Don't let it get that far with ERP and CRM. Clarify the relationship and clear up any difficulties in understanding the two systems. And remember: Whichever ERP and CRM strategy a company chooses, success is mostly not a question of the software. The decisive factors are the usage concept, the cultural environment and, in particular, the people involved - users, system partners or consultants.

The author

Felix Burri, Master of CRM and Bachelor of Business Informatics, is the managing director of SugarMountain CRM Consulting GmbH and has many years of experience in customer projects.

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