ERP or Capacity Planning Tool and CRM – Top Differences

If you think Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) tools are totally different, then you are wrong. ERP and CRM are alike in many ways but have differences too. Both of these software are used to increase the overall productivity and profitability of a business. However, the main difference is that ERP or capacity planning tool is used mostly by finance departments for working with financial data. Whereas CRM is used by sales and customer service departments for handling customer data.

ERP is often referred to as the back office, while CRM is the front office. Some capacity planning tools include a CRM component, however, others do not. But CRM software systems never include ERP components.

What is a CRM system?

A CRM tool is typically used for recording and storing all data regarding a company’s customer interactions. In other words, it is used for delivering a wide-ranging inventory of customer data. This data finally helps in improving the sales, boosting customer loyalty, and streamlining the business’ relationship with its customers.

Features that can be executed using a CRM system

  • Automate and handle marketing campaigns
  • Examine the purchasing patterns
  • Provide perfect customer support
  • Automate non-value add (NVA) tasks
  • Find new leads or customers
  • Streamline the sales process

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What is ERP or Capacity planning Tool?

An ERP tool includes a functionality for several business processes like HR, finance, inventory management, and distribution. It integrates these processes and then its final goal is to restructure operations and to centralize all the information. Many ERP or capacity planning tools are customizable or configurable. Thus, they allow the users to add various modules or functionality which suits their unique business requirements.

Features that can be utilized with an ERP system

  • Record real time business process information
  • Get notifications about various issues
  • Handle the hiring initiatives
  • Track manufacturing process and supply chains
  • Handle compensation, benefits, payroll and all the employee information
  • Develop enterprise-wide strategies
  • Update accounts
  • Process orders

Key Differences Between ERP and CRM

Let’s first see a comparison chart of ERP and CRM.

Comparison Chart

CRM ERP
Definition A software that enables organizations to record every transaction and customer interaction with the present and prospective customers. An integrated pre-packaged software that helps a company to manage and control their business processes.
What is it? Subset Superset
Created in 1990 1960 -1970
Utilized in Front office activities Back office activities
Aims on Enhancing sales Cutting costs
Oriented towards Customers Enterprise

Main Differences Between ERP and CRM

  1. CRM is a tool that handles the relationship with customers and clients of the company. Whereas ERP or capacity planning tool is a unified software that operates the business processes of the organization. It emphasizes on planning and management of the resources of an enterprise to further improve efficiency, effectiveness, and financial viability of the enterprise.
  2. ERP and CRM tools use different approaches to improve profitability. ERP aims on reducing overheads and slashing down costs. By making a company’s business processes more proficient, ERP reduces the expenditure on those processes. However, CRM focusses on increasing the profits of a business by generating greater sales volume.
  3. A capacity planning tool or ERP can enable business processes across multiple different workflows. This means that if you are planning to invest in a software that would benefit warehouse, finance, and other operations, then ERP is a good option. However, CRM is more of a customized solution. Ultimately, the major difference between ERP and CRM is their scope.
  4. An ERP system focusses on reducing the organization’s overall costs by streamlining workflows and various business processes. In this way, the number of resources utilized to run a company are reduced. On the other hand, a CRM tool focusses on increasing profits by enhancing the organization’s sales volume. A massive layer of customer data helps employees in improving their relationships with customers. That, in turn, results in improved brand loyalty and more profits.
  5. ERP or capacity planning tools help in consolidating the information given by various departments or verticals of the organization through software systems such as CRM, Human Resource Management (HRM), Supply Chain Management (SCM), etc.
  6. CRM tools are mainly used in conducting front office activities, whereas ERP tools are used in managing back office activities.

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ERP vs. CRM: Which one should you choose?

ERP and CRM are both great software systems for improving revenues. However, the actual aim of both the tools is different. ERP is an all-inclusive solution that integrates front- and back-office processes. On the other hand, CRM majorly deals with marketing, sales, and customer relationships. Which tool is ideal for your business depends on what’s the scope of your requirements and how much investment you are ready to make.

This choice usually depends on the requirements of every organization. But typically, a capacity planning tool or ERP system contains most of the functionality of a CRM software system; though not vice versa. Having said that, the functionalities in the CRM system for enhancing the customer experience and loyalty towards the company is still significant for both big and small companies. Why is it so? Because customer management is a vital part of the business and the service level is thus a substantial competitive parameter.